The bright point

Increasing FDI is another bright point of the macro-economy. According to the latest news from the Foreign Investment Agency (Ministry of Planning and Investment), FDI attraction has passed its target for 2013. Specifically, as of October 20, total newly registered and added FDI reached US$19.23 billion, up 65.5 percent over 2012, and 1.5 times the target of US$13 – 14 billion.

Foreign exchange remains stable, at around VND21,000 for a USD. Foreign exchange management policy of the State Bank is focusing on two major issues: active management and reduction of dollarisation in the economy. Analysing effects of these policies, experts from the Viet Dragon Securities Company expect that foreign exchange will follow a planned routine and VND will be devaluated in the near future. However, the devaluation will probably not occur in the last months of this year, but next year, depending on the market’s situation.

Inflation becomes a smaller worry when CPI of October 2013 increased only 0.49 percent over September, according to the General Statistics Office. Compared with the beginning of the year, inflation went up only 5.14 percent. Inflation of 2013 is estimated to be around 6.5 percent. In case of new effects, inflation will not exceed 7 percent.

Accumulation demand

In the securities market, capital flow is still proving the accumulation demand at current prices, which helps liquidity in October. Stock groups attracting investors are stocks with low or average capitalization, as well as stocks that have not regained the growth rate from the beginning of the year. The trend is hoped to continue in the last two months; however, these types of stocks are suitable only for investors accepting risk. Mid and long term investors can consider bluechips whose prices have not strongly increased since the beginning of the year and wait for higher prices supported by foreign capital flows and more positive recover of macro-economic sectors.

Accumulation trend may occur in November at the point of 495 – 515 for VN – Index and 62 – 65 points for HNX.

The optimism in November depends on economic growth prospect of the last quarter. Capital flows will keep moving among stocks groups. And foreign investors will continue accumulating, as well as wait for the policy on widening room for them and the economic management direction for 2014 after the sixth session of the National Assembly XIII.

Source: VCCI