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Expect a prosperous year for Vietnam's stock market

10:15 | 28/02/2021

VCN - In the first sessions of 2021, the market has risen quite strongly and the VN-Index peaked at 1,194.28 points on January 15, 2021. Will the rise of Vietnam's stock market in 2020 continue?

Vietnam's stock market continued receiving support by positive factor. Source: Internet

Continue growth momentum

Tran Anh Thang, Chairman of the Board of Nhat Viet Securities Joint Stock Company (VFS) said this momentum would continue to be maintained in 2021. According to Thang, 2021 would continue to be a year of growth for the stock market in terms of liquidity (with an increase of about 30%) and points (about 14%), however, the speed would be slower than 2020 as the economic outlook had been partly reflected in the index. The bottom of ​​the market could happen in the second half of 2021 when the interest rate increases and the demand for buying in the market is stable.

Thang also gave two scenarios for the stock market in 2021, whereby scenario 1 occurs with the vaccine tested and distributed in 2021 as intended, the earning per share (EPS). The whole market has a good growth of more than 18% and the index can reach from 1,250 to 1,280 points. Scenario 2 occurs when new risks impact and EPS increase 15-16%, whereby the index can correct and fluctuate around the 950 - 1,050 point range.

Regarding market dynamics in 2021, experts said Vietnam's stock market continued to be supported by positive factors from home and abroad like the world economy is forecasted to recover and vaccines for Covid-19 prevention has been licensed in a number of countries; Vietnam's economy is forecast to recover with a GDP growth rate of 6.5% (according to the forecast of the International Monetary Fund) and 6.8% (World Bank) in 2021; at the same time, the stock market will have many positive qualitative changes on the basis of a standardised legal corridor, while the establishment of the Vietnam Stock Exchange will contribute to creating a centralised stock market, creating favourable conditions for supervising, market development, raising the position of Vietnam's stock market in the eyes of international friends and contributing to attracting foreign capital.

The market will move to new highs

Commenting on the stock market in 2021, Do Bao Ngoc, Deputy General Director of Vietnam Construction Securities Joint Stock Company (VNCSI), said that with the premise of quarter 4/2020 and large cash flows pouring into the market as at present, it was clear that Vietnam's stock market faces a turning point in terms of development. Previously, liquidity was about VND 2-3 thousand billion daily, now on average VND 10 thousand billion and this was a big change.

“The years 2020-2021 were the milestones showing that the market was almost transforming in terms of liquidity. There has been a major shift of the investment in the economy and up to this point, it can be confident that the stock market will surpass its historic peak in Quarter 1 to move to a new high. The market peak might fall in the second quarter and market exchanges would continue to be stable next quarter. At present, we have reached the level of liquidity; it was only a matter of time before we reached the index. Therefore, we still expect that 2021 will be a very prosperous year for Vietnam's stock market this year. In the present conditions, there is no investment channel with high liquidity but easy to grasp, learn and invest in like the securities channel. In 2021, when the economy recovers, it was expected that stocks would be improved further,” Ngoc said.

In terms of scores, the representative of VNCSI forecast that in 2021, the Vietnamese stock market could reach from 1,300 to 1,350 points and the liquidity would continue to maintain an average of more than VND 10,000 billion/session. The market would have significant growth, about 15-20% compared to the closing level of 2020. Scores might rise or fall but high liquidity was the most obvious development.

Commenting on the group of stocks leading the market in 2021, Ngoc said that the leader would still be banking stocks. This was the group of stocks with the largest market capitalisation in Vietnam and it is the leading of the general trend of the market. The second group was construction stocks and building materials, this group has quite good growth in 2020 and could expect to continue in 2021. This was the group that benefits from boosting public investment. As most of Vietnam's key public investment projects such as Long Thanh airport and North-South expressway would be promoted more in 2021. The third group with positive growth was stocks related to export thanks to benefiting from Vietnam's joining many FTAs.

The stock market has a lot of room for growth in 2021, however, according to the State Securities Commission, the Covid-19 pandemic is still occurring complicatedly and the number of cases in many countries continues increasing along with the emergence of a new variant of virus. With the pandemic still not repelled, the world still has to apply control measures and the interruption of supply chain will also affect world production in general and Vietnam in particular. Besides that, Vietnam's stock market after reaching a peak on January 15, 2021, there were relatively strong corrections, so the State Securities Commission recommended investors monitor and closely follow stock market movements to gain an appropriate investment strategy.

Huynh Anh Tuan, Deputy General Director of DongA Bank:

“The biggest advantage of Vietnam's stock market in 2021 was the return of foreign investment inflows. Only for three spring opening sessions, foreign investors bought more than VND 1,000 billion. This would be a strong cash flow and create strength for the market this year. Previously, foreign investors strongly withdrew capital in 2020 due to concerns about the Covid-19 pandemic and the excitement of the US stock market. However, in 2021, the pandemic has been somewhat controlled as the increase in new cases has decreased and vaccines are increasingly available. This ill stimulate foreign disbursement and emerging markets would be the most concern, of that, Vietnam was a bright spot when Vietnam's PE was still relatively low compared to other markets. The growth rate of businesses, especially the VN30 group, is currently quite good.”

Le Duc Khanh, Director of Investment Capacity Development Department of VPS Securities Company:

“In 2020, Vietnam's stock market boomed in terms of both size and liquidity on both exchanges. Compared with previous years, the growth was 2-3 times higher than the previous years. By 2021, the wave of new money, the number of new investors entering the market would be more. With the prospect of a stronger economy amid a loosening monetary policy, market liquidity in 2021 was expected to continue to increase strongly. Following 2020, 2021 will still be a booming year of the market when the booming wave of investors interested in securities had not shown signs of stopping. The year 2021 is expected to exceed 3% of the population participating in the stock market. We did not have many attractive investment channels like stocks, which creates opportunities for more people.”

By Hoài Anh/Thanh Thuy