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VinaCapital economist warns against irrational exuberance in stock markets

VinaCapital economist warns investors not try to play the stock market “timing” game by selling stocks now and try to re-enter later. — Photo

HCM CITY — Investors should not try to play the stock market “timing” game by selling stocks now and try to re-enter later, investment fund VinaCapital has warned.

Michael Kokalari, chief economist at VinaCapital, said: “The consensus expectations for 38 per cent EPS growth in 2021 are too optimistic. That said, earnings should rebound vigorously next year, so we caution investors not to play the market timing game.”

 “We are monitoring some unorthodox indicators of industrial activity at factories that produce high-value products (inspired by hedge funds use of unorthodox data, such as satellite imagery of Walmart parking lots).

“From early July we observed many buses transporting workers back and forth between hotels in central HCM City and factories located in Việt Nam’s industrial suburbs.”

He said foreign companies like Panasonic and Samsung could afford to house employees at hotels and take other COVID mitigation steps, but the profit margins of firms that produce low value-added products such as garments and furniture are much lower.

“Consequently, companies producing garments, shoes, and other low-margin products are having a hard time maintaining their production, and Việt Nam’s exports of such products plunged in August.

“This drop will act as a drag on Việt Nam’s GDP growth.”

“We are currently revising our GDP growth forecast and note that our forecasts have consistently been below and more accurate than the consensus.”

The Government is prioritising vaccinating people in the greater HCM City area, given the region’s economic importance and considering it and the industrial suburbs of Bình Dương, Đồng Nai and Long An account for over one-third of the country’s GDP.

The proportion of adults who have received at least one dose of a COVID vaccine has increased from less than 5 per cent in late July to more than 15 per cent.

Kokalari said the Government’s strategy now incorporates objective criteria to assess COVID risks by neighbourhood, which should enable an orderly reopening once certain public health milestones are met.

They include a reduction in the number of daily new COVID cases and deaths, and an increase in the number of people who are vaccinated, he added. — VNS

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