Valuations of stock exchange-listed companies in Vietnam are still attractive and even low following the recent sharp correction, said Dominic Scriven, chairman of Dragon Capital Group, the largest fund manager in Vietnam.
Dominic Scriven, chairman of Dragon Capital
The price to earnings (PE) ratio of Vietnamese companies currently hovers around ten to 12 times while the earnings per share (EPS) growth is projected at 25%, meaning that Vietnamese equities are more attractive than their regional peers, Scriven spoke on behalf of the Capital Markets Working Group at the Vietnam Midterm Business Forum (VBF) 2018 in Hanoi on July 4.
He pointed out that Vietnam has not been immune from ongoing uncertainties in global markets caused by the strengthening of the US dollar and trade tensions between the US and its major trading partners including the EU and China. In addition, higher inflation and a weaker dong have also unnerved investors.
The benchmark VN Index of the Ho Chi Minh City Stock Exchange has lost 7% so far this year from end-2017 and plunged more than 20% from an all-time peak reached in early April.
Despite all these facts, foreign players have net bought US$1.5 billion worth of Vietnamese securities year to date, indicating that Vietnam is still their favored place to put money in, Scriven added.
To help boost the local stock market, Scriven recommended the Vietnamese government quickly announced the Amended Law on Securities, build up an ecosystem of domestic institutional investors, introduce more financial products and hasten state-owned enterprises to list shares after their initial offerings.
In addition, the veteran fund manager suggested establishing Vietnam’s own credit rating agency that can help firms issue corporate bonds to the public or in private placement.