VietNamNet Bridge – The stock market has been stirred up by the prediction of HSBC’s securities expert Garry Evans who said that the VN Index would fall to the 900 point level by the end of this year. However, analysts have said that the warning is not reliable.
HSBC once had to correct its report
The Hong Kong and Shanghai Banking Corporation (HSBC) has relied on the P/E indexes of listing companies as the main basis for the warning.
HSBC concluded that the P/E indexes of many share items were too high though they had been adjusted recently.
It is not understandable why HSBC just refers to the P/E indexes to give such a conclusion. Both foreign and domestic securities experts think that it is a correct method, but ultimately insufficient.
Huy Nam, a securities expert, said: “If only looking at the P/E Index, no one would dare inject money in blue chips like FPT, VNM, STB, ITA, TDH, and VHS. I think it is necessary to consider other indexes as well, including profit, prospects and demand and supply basis.”
The director of a securities company said that HSBC was presumptuous to give such a conclusion. Investors should still buy share items which have a high P/E index as long as they have good prospects and profitability. If the profit is big next year, the P/E will decrease, he said.
Securities expert Tran Ngoc Nam also questioned if HSBC wasn’t too hasty giving the warning at a very sensitive moment. He recalled that in May 2007, HSBC cited false information about the P/E indexes of SSI, PVD, BVS, BTS and VNR, creating bad impacts on the market. The banking corporation had to correct the information but the share items suffered before the correction.
In fact, the warning has not caused havoc because investors are wise enough to question: why are foreign investors still buying shares despite HSBC’s warning?
Why are foreign investors buying more than selling?
In the six consecutive trading sessions from June 26 to July 3, foreign investors bought more than they sold, while they bought more than at any other time during the trading sessions just before and after HSBC’s warning was released.
On July 2, when the VN Index fell down to below 1,000 points and disappointment pervaded the trading floors, foreign investors bought shares in large quantities. The purchasing volume was 2.5-fold higher and the purchasing value was 3-fold higher than the sales (bought: 1.673mil units, VND252bil; sold: 633,000 units, VND71bil).
On July 3, 2007, a lot of share items that, according to HSBC report, had high P/E indexes like FPT, SJS, TAC, HRC, and PVD, were hunted by foreign investors, and many of the items have run out of room for foreign investors.
Huynh Anh Tuan, Head of the Brokerage Division under ACB Securities Company, said that in most cases, domestic investors should not follow foreign investors, but they should analyse the recent moves by foreign investors.
Vu Ngoc Huy, a Viet Kieu investor on SBS trading floor, noted: “If foreign investors believed the warning of HSBC, they would not buy shares in such large quantities. Having 20 years of experience as an investor in the US, I dare say that foreign investors do not pay any attention to the warning.”
Director of an investment fund also said that foreign investors all had their own sources of information and analysis, and they knew what to do at a given time. Domestic investors prove to be too hasty when selling shares for fear that the VN Index will fall to below the 1,000 point level.
Analysts have reminded the public that the scenario has occurred at least three times so far this year. Domestic investors, believing warnings of foreign experts, tried to sell shares while foreign investors tried to buy. And domestic investors have since had to buy shares from foreign investors at high prices.
(Source: Viet Nam Net) | 
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