Stocks to keep an eye on in 2014

Stocks to keep an eye on in 2014

As the economy recovers and the government issues new policies to develop the stock market, the shares of companies in certain sectors are predicted to gain.

The following predictions are by Military Bank Securities' senior analyst Le Van Thanh Long.

Real estate

The sector will benefit from policies on credit growth, inflation and low interest rates. This year, the lending rate is expected to remain low, which should drastically reduce the borrowing costs of real estate and construction firms.

Meanwhile, the authorities are actively disbursing the VND30 trillion (US$1.4 billion) stimulus package for the industry, which will contribute to addressing property inventories.

In the near future, real estate companies with large-scale assets will attract foreign capital as a regulation to permit an increase in foreign share holdings is adopted.

In addition, the market value of real estate shares is relatively low, so these shares will attract the interest of keen investors.

Securities

Some leading securities firms remain the target of domestic and foreign investors, although HCM City Securities (HCM) and Saigon Securities (SSI) are reaching their limits of foreign ownership of their shares.

The financial performance of the sector has improved over the past year. In addition, the market prices of these companies are low compared with average stock prices. Companies that show strong financial performances will be among the first to attract investor interest.

Pharmaceuticals

Shares of these sectors, especially large-cap stocks, have been the backbone of the market's gains in recent years.

Thanks to strong growth performances and financial results, these industries are often favoured by foreign investors. The foreign ownership in these companies is higher than the foreign ownership across the overall equity market. The shares of these companies will be the top gainers from the expected decision to increase the foreign ownership limits of shares.

However, as the market value of this group is higher than the average value of the market, the stock prices will not rise significantly, making them suitable only for long-term investors.

Export difficulties

These companies have struggled with several difficulties in recent years, especially when the global prices for their products plummeted. Apart from companies with large production capacities, such as Ben Tre Aquaproduct Import And Export (ABT) and An Giang Fisheries Import and Export (AGF), several export companies struggled to survive. However, some companies restructured their operations, and that led to a recovery in their stock prices.

If the exchange rate rises by 2 per cent this year, as several experts predict, exporters will increase their revenue and gross profit margins.

In 2013, the United States acknowledged that Vietnamese shrimp exporters did not dump their goods during 2011-12. As a result, domestic firms could hope for a zero tax rate in the coming months, if production conditions remain stable. 

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