With prices escalating, Vietnam stocks no longer cheap The VN Index increased by 35.8 percent by November 20 compared with the 2016 closing trading session, making the stock market one of the fastest growing markets in the world.    The VN Index surpassed the 900 point threshold on November 20  The VN Index surpassed the 900 point threshold on November 20, while one year ago, the record high was 664.87 points.  Vietnam attracted VND22 trillion worth of foreign capital this year. However, according to Rong Viet Securities, though the stock index is on a sharp rise, few investors are excited about the market.  Rong Viet’s analysts believe that the most brilliant period of the stock market was mid-year when the stock index increased to the 800-820 point threshold.  After the period, the index continued to rise thanks to the strong rise of ROS (construction & real estate), SAB (brewer) and bluechips such as VNM (Vinamilk) and VIC (Vingroup). As the VN Index rose, the P/E (price/earnings ratio) has reached 17.7x, a very high level since 2012. If compared with other regional markets and the P/E of a frontier market, the P/E of the VN Index is no longer the ‘cheapest in the region’. As the VN Index rose, the P/E (price/earnings ratio) has reached 17.7x, a very high level since 2012. If compared with other regional markets and the P/E of a frontier market, the P/E of the VN Index is no longer the ‘cheapest in the region’. An analyst said the P/E once climbed to a record high of 35x in 2007 and 23x in 2009 when the credit growth rate was high at 37.7 percent, which ‘exaggerated’ the P/E. In recent years, the P/E escalated to 17x in 2014, but the illegal deployment of the Chinese HD-981 oil rig and the collapse of the crude oil price, which led to the fall of a series of shares later, forced the P/E down. It took the VN Index three years to bounce back to the 17x P/E. The analyst said Vietnam is in stable and favorable macroeconomic condition, but the new  P/E index doesn’t reflect the performance of the market. He cited a report as saying that many shares of the top 50 companies in terms of capitalization value now have an abnormally high P/E.  The top 50 companies have seen P/E increase very sharply, by 20 percent on average this year. Rong Viet believes that stocks have become more expensive compared with other markets.  The KSE Index of the Pakistani market once increased sharply from 10x to 16x due to information that the market would be upgraded from frontier to emerging in 2017. If the upgrading also occurs to Vietnam, the P/E will continue to rise.  Thanh Mai, VNN