Strong Buy Signals for Vietnamese Stocks - Jones Falls Securities

Traders at Jones Falls Securities remain optimistic on Vietnam in the face of tumbling share prices and corporate scandal, stating that the conditions represent a great buying opportunity for investors.

Vietnamese stocks falling into a bear market dragged valuations to a six-month low against Southeast Asian peers as the arrest of bank officials last week fueled concern of instability in the nation's financial system. However, analysts at Jones Falls Securities remained upbeat about the regions prospects in their weekly shareholder address, stating that "Strong fundamentals and growth projections for the former Asian Tiger Economy are likely to buoy share valuations in the medium term," suggestive of a opportunity to purchase cut-price equities.

The gauge has fallen 21 percent from its high this year on May 8, more than the 20 percent some investors consider a bear market falling to its lowest level since May 25 and a 33 percent discount to the 141- member MSCI South East Asia Index, according to data referenced in the JFS report.

The Vietnamese gauge slumped 12 percent since Aug. 20 after Nguyen Duc Kien, a founder of Asia Commercial Bank (ACB), was detained for what the central bank called "conducting business illegally." The lender's former Chief Executive Officer Ly Xuan Hai was subsequently arrested for alleged economic mismanagement, according to a police statement.

The arrests "will provide medium- to long-term investors with a buying opportunity," Wes Bernstein of Jones Falls Securities SE Asian office, said by phone yesterday. "The market is now relatively inexpensive."

Bernstein intimated that JFS (jonesfallssecurities.com), are taking up a strong position in the nations equities and is considering bank shares as well.

State Bank of Vietnam Governor Nguyen Van Binh said Aug. 21 the monetary authority stands ready to ensure banks have adequate cash after Kien's detention. The central bank injected 13 trillion dong into the financial system through open-market operations on Aug. 22, the most over a seven-day period this year. It added 3.5 trillion yesterday.

Last week's arrests are "positive news rather than negative," Bernstein said. Authorities are "not going to clean up 100 percent. They can clean up 30 percent, which would already be an improvement," he said.

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Jones Falls Securities
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