2018 - More of the same stock market boom

Ho Chi Minh City Stock Exchange Executive Committee board member and deputy CEO Nguyen Vu Quang Trung

What were the Vietnamese stock market’s outstanding achievements in 2017?

Last year was a boom year for the Vietnamese stock market in both size and market liquidity.

The benchmark VN-Index on the HoSE gained 0.77 percent to end 2017 at a 10-year high of 984.24 points. This key stock index increased by 48.03 percent since the beginning of 2017. As a result, the benchmark VN-Index was among the top three stock indices with the best growth rates worldwide, along with Argentina and Mongolia’s markets. In addition, liquidity was improved sharply with average trading value of nearly VND 4.981 trillion per session, an increase of 63 percent compared to 2016. Total value of stock market capitalization in 2017 was equal to 74.6 percent of the country’s gross domestic product (GDP), reaching VND3,360 trillion. This surpassed the government’s target (market cap to GDP ratio) for 2020.

The bond market reached total listing value of more than VND1,000 trillion in 2017, up eight percent over 2016 and equal to 23 percent of Vietnam’s GDP. The average trading value was nearly VND8.9 trillion per session, up 38 percent year-on-year.

The derivatives market was launched on August 10, marking a milestone in the development of Vietnam’s stock market. The derivatives market, starting with the VN30-Index future contracts first, is an important component to completing the structural development of the financial market as well as a key part of the development strategy for the stock market in the future. This market saw over 946,300 contracts traded and over 15,800 trading accounts set up over the past two months.

Total capital mobilized from the stock market in 2017 reached more than VND224 trillion. Of this figure, auctions of shares on the two national stock exchanges totaled nearly VND14.8 trillion.

Many large companies with capitalization of US$1 billion or more were listed on the HoSE in 2017 such as Petrolimex, Habeco, VPBank and Vincom Retail, providing additional options for investors. In addition, the participation of Vinamilk and Sabeco energized the share auctions on the HoSE.

The growth of the Vietnamese stock market in 2017 was considered unsustainable as prices of some blue chip stocks were pushed up. Can you explain this assessment?

The price hikes on the VN-Index and VN30 were partly attributable to an increased flow of foreign capital into Vietnam’s blue chips.

According to the overall assessment, the growth of the VN-Index in 2017 was firm. The quality of stocks listed on the HoSE was considered positive. In the first nine months of 2017, about 92 percent of listed companies made profits.

All market capitalization segments had good and impressive growth in 2017. The VN30 increased by 48.77 percent since the beginning of 2017, while the VNMidcap and VNSmallcap increased by 31.15 percent and 21.7 percent, respectively.

How do you see the Vietnamese stock market performing in 2018?

Vietnam’s benchmark stock index, the VN-Index, could exceed 1,300 points in 2018

With the positive results of the Vietnamese economy and stock market in 2017, I hope it continues to maintain its growth momentum. As Vietnam’s economic development policies are on the right track, growth in the next years will remain high.

According to the Business Monitor International (BMI), Vietnam’s economy will continue to grow in 2018 at more than six percent.

The Vietnamese stock market is growing rapidly in scale, providing more and more opportunities for investors. Total value of stock market capitalization in 2017 was equal to 74.6 percent of the country’s GDP, and it could equal 100 percent in the near future.

The Vietnamese stock market also expects to draw more foreign investment as the government tries to make the private sector the central factor in national socioeconomic development and push more state-owned enterprises to list shares on the local exchanges.

To ensure sustainable development of the stock market, Vietnam must be cautious about implementing monetary and fiscal policy, and control inflation to gradually reduce interest rates. In addition, encouraging investment in priority areas, and creating favorable conditions for the development of the private sector are also mentioned as necessary.