INTERVIEW-Vietnam stocks seen up strongly by end-2010-exec

Published: 20 Nov 2009 05:22:11 PST

HANOI, Nov 20 - Vietnam's main stock index could rise by a quarter to 700 points by the end of next year and a new wave of foreign investment is likely to follow, a senior executive at one of the country's top brokerages said.

That growth, however, depends on how the economy looks in the first half of 2010, Ngo Phuong Chi, Deputy Director General of Bao Viet Securities, said on Friday.

Vietnam's share markets have experienced dramatic ups and downs since the country's first stock exchange opened in Ho Chi Minh City in 2000, including a period in 2006-7 when it became a darling of emerging market investors.

Starting in March 2007, however, the market started to crater, shedding 80 percent before hitting bottom in February this year. Since then, it has soared nearly 140 percent on the back of government-led economic stimulus.

"I don't think that because of the losses, interest in investing in Vietnamese markets is gone and that it has lost its attractiveness," he said, adding he expected a new wave of foreign investment in two or three years.

He pointed to the country's vaunted "natural" fundamentals -- a large population, relative stability and high-speed economic growth -- as drivers, as well as government policy.

"The policies are already quite open. The nature of the market is that it is vulnerable, volatile. How we get that under control will determine if we will attract long-term investment."

And next year's economic conditions would be key, he said.

"If we get past the test of the first and second quarters of 2010 and the economy can make it, the index will pass 700, but if not it will return to weaker levels," he told Reuters.

The government is targeting 5.2 percent GDP growth this year and 6.5 percent next year.

Bao Viet was Vietnam's first brokerage. It celebrated its 10th anniversary on Friday.

Chi said its market share had fallen almost across the board in recent years due to a proliferation of competitors. There are 105 securities companies in Vietnam now. Bao Viet, or BVSC, is in the top five, he said.

The firm had also been slow to invest in technology to take advantage of a shift to online trading, which is already available on the Ho Chi Minh Exchange and will be allowed on the smaller Hanoi Stock Exchange next year, he said.

BVSC was making up for lost time with aggressive investments in IT starting in the middle of this year, he said. "We think this will create conditions for us to re-claim the number one spot in the market," Chi said without giving a figure.

BVSC is a subsidiary of Bao Viet Holdings Ltd., Vietnam's leading insurer, which is part owned by HSBC. Since dipping to around 8,000 dong in February, BVSC's shares have risen nearly 500 percent to Friday's close of 46,800 dong.