The latest reports released by securities companies do not give a clear answer about if the national economy is better off in 2012, but say there are many positive signs, and the stock market is showing big opportunities when it nearly bottoms out.

A lot of economic scenarios

In the 2012 report to investors, named “Flying Dragon or Dragonfly?”, the Saigon Securities Incorporated SSI keeps cautious in giving predictions about Vietnam’s macro economy in the year of the Dragon. SSI said that the economic performance would much depend on the restructuring of the banking system, the public investment and state owned enterprises.

“One could see many similarities in the years of 2008 and 2011. Will the happenings in 2009 be repeated in 2012, then? No, we believe. What we have to face in 2012 would be much more challenging,” the report reads.

Vietnam’s national economy will not only face the global risks, but also deal with the problems of its own, including the public debt tightening, the high inflation, the weak liquidity and bad debts.

The Ban Viet Securities Company showed three scenarios for 2012, under which the GDP growth rates would be 5.5 percent in a cautious scenario, 5.9 percent in an average level and 6.8 percent in an optimistic scenario. The CPI increases would be 10 percent, 13.6 percent and 9.3 percent, respectively, and the dong/dollar exchange rate would be 22,130 dong, 21,275 dong and 20,780 dong per dollar, respectively.

Of the three scenarios, Ban Viet believes that the first one proves to be most feasible, with the GDP growth rate of 5.5 percent and the dong devaluation of four percent.

Meanwhile, the Saigon-Hanoi Securities Company believes that the GDP growth rate in 2012 may reach 6-6.4 percent, depending on the priority tasks to be set by the Government.

Bao Viet Securities Company BVSC has predicted that the CPI increase in 2012 would reduce to 8-9 percent, while the trade deficit would be at 10 billion dollars. However, the deficit would be offset by the foreign direct investment (FDI), foreign portfolio investment and official development assistance (ODA).

It is expected that the FDI disbursement would be some 9-10 billion dollars, while the foreign portfolio investment net would reach one billion dollars. Besides, Vietnam would have some 8 billion dollars in kieu hoi (overseas remittance) and 3.65 billion dollars in ODA.

BVSC has forecast that the dong/dollar exchange rate would fluctuate between 21,700 dong and 22,100 dong per dollar. The dong deposit interest rates may reduce to 11-12 percent from the end of the first quarter, while the lending interest rates would be lowered to 15-16 percent per annum.

Stock market nearly bottoms out

The reports of all securities companies show that the stock prices are at very low levels. Ban Viet has predicted that it is highly (70 percent) possible that the stock index would increase by 20 percent in comparison with late 2011.

Though the stock market is backed by the lower inflation rate and interest rates, it would also bear negative impacts from the tightening of the credit to non-production sectors and the electricity price increases.

Meanwhile, the Saigon-Hanoi said that one would not have many opportunities to success if investing in stocks at this moment. It would be better to make investment when the inflation rate stabilizes at a low level. “Safety” and “capital preservation” should be seen as the principle for the investments in 2012.

SSI thinks that the P/E in 2012 would be lowered to 6.1 times from 6.77 in 2011.

Source: Saigon times