Promising year ahead for Vietnam’s stock market

06:00 | 18/03/2021 Economy

(VEN) - The Vietnamese stock market continues its optimistic upward trend.

promising year ahead for vietnams stock market

Increased confidence

The Vietnamese stock market underwent a correction at the beginning of the year after a streak of increases since August 2020. Correction pressure stemmed from investor caution as the VN-Index approached 1,200 points, risk management to reduce outstanding loans of securities companies, and the third wave of the Covid-19 pandemic.

However, starting in February, the stock market saw recovery in many trading sessions that brought the VN-Index back to the 1,100-point level.

Given the relative control of the pandemic and expected start of vaccinations in Vietnam, the SSI Securities Corporation is forecasting that the VN-Index could approach the thresholds of 1,175-1,200 points in March.

According to experts, foreign cash flows are expected to return in the coming months. Despite net selling by foreign investors through most of 2020, investors have also bought exchange-traded fund (ETF) certificates and now hold about 90 percent of ETFs listed on the Ho Chi Minh Stock Exchange (HoSE). The scale of domestic ETFs is expected to continue to expand once room limits for foreign investors are resolved. In addition, Vietnam’s stock market will soon be eligible for upgrading to emerging market status.

On track to overtake the Philippines

Kelvin Tay, regional chief investment officer at UBS Global Wealth Management, said Vietnam is a favored market due to the country’s major economic potential. In fact, he added, the Vietnamese stock market is on track to overtake the Philippines in terms of market capitalization by the middle of 2021.

Peter Monson, portfolio manager at Nikko Asset Management, said Asia is in a stronger position than it was pre-pandemic owing mainly to higher government budgets, better stimulus packages and an increase in global export demand.

Le Minh Tam, chair of Yuanta Securities Vietnam, said Vietnam has become a bright spot in Asia in particular and the world in general as one of the few nations achieving positive GDP growth in 2020 (nearly three percent). Low interest rates and stimulus policies were important driving forces to promote the growth of Vietnam’s stock market in 2020.

According to estimates of professional investment organizations, profit growth of listed companies in 2021 will be high.

The Viet Capital Securities Company (VCSC) predicted that earning per share (EPS) will increase by 30 percent in 2021 compared to a year ago, while VNDirect, BSC and Mirae Asset put the figures at 22-24 percent, 22 percent and 19 percent, respectively.

Many investors believe Vietnam’s stock market holds out great promise in 2021 given its lower valuation than those of other exchanges in the region. However, fierce competition, legal barriers and lack of transparency are still challenges for Vietnam’s stock market.

Thanh Thanh