Vietnam's stocks fall most in Asia as valuation concerns mount

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Vietnamese stocks dropped the most in Asia on concern the benchmark index's surge to an eight-month high was excessive relative to earnings prospects.

The VN Index slid 1.8 percent, the biggest drop since Nov. 2, to 456.76 at the close in Ho Chi Minh City. It settled yesterday at the highest level since May 14. Vietnam Dairy Products Joint-Stock Co., the biggest company by market value, lost 1.5 percent. PetroVietnam Gas Corp. fell 3.9 percent.

The VN Index gauge rallied 24 percent through yesterday from last year's low on Nov. 2 after the central bank cut interest rates and the State Securities Commission said it may increase the foreign-ownership cap on some companies. The index traded at 12.9 times reported profit yesterday, the highest level since January 2010, data compiled by Bloomberg show.

"The index is under profit-taking pressure and even the most bullish investors don't want to buy at the current price levels," Le Chi Phuc, investment director at SGI Capital, a unit of Saigon Invest Group, said by phone today. "Given historical earnings, or expected earnings in a short term, valuations are no longer so cheap."

The Vietnamese stock gauge's 14-day relative strength index, a measure of how rapidly prices have risen or fallen in that period, was at 76 today, according to data compiled by Bloomberg. That's the 16th straight day the level has been above the 70 reading some traders use as a signal to sell.

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