JPMorgan's Fernandez Says Foreigners Buying Vietnamese Stocks

Tuesday, June 10, 2008
David Fernandez, head of emerging markets research at JPMorgan Chase & Co. in Singapore, comments on Vietnamese stocks. Fernandez spoke in a Bloomberg Television interview today.

The VN Index, a measure of 151 companies on the Ho Chi Minh City Stock Exchange, fell 1.61% to 373 today, the lowest since Feb. 23, 2006. The benchmark has lost almost 60% from the start of the year on concern the government will raise interest rates to quell inflation of 25.2%, the fastest since at least 1992.

On inflation and stocks:

``The inflation data are probably close to peaking. You could probably still end the year at closer to 20%.

``For equities in Viet Nam, everyone agrees that the past couple of years have been an extremely frothy time, with valuations just at levels that were unreasonable.

``Talking to our investors, who continue to want to get exposure, if you look at the foreign numbers, foreigners continue to be buyers in this market. These are buyers who are dedicated to Viet Nam, who are there for the long term.

``I would look at other asset prices as an indicator as to whether the worst is over.''

On the Viet Nam dong:

``The market had started to price in that there would be an immediate and very sharp devaluation. Meetings I had with the government last week indicate that there's no plan to do that. There's no pressure on the balance of payments for Viet Nam to devalue the dong.

``The first thing is to make sure markets understand that there is no plan to devalue the dong. Viet Nam has run very large current account surpluses, they need to intervene more aggressively to show the market they're serious.'' (Bloomberg)