Stock market prospects

Experts optimistic about 2018 stock market prospects

The positive factors will create space for the growth of stock market. Photo: Internet

Positive fundamental factors in the stock market will be the premise for market growth.

In the first three months of 2022, the VN-Index saw positive growth and set a new peak and reached 1,528.48 points.

However, since the end of March, the market has fluctuated strongly and seen a significant decline.

The market recorded a point drop of 68 on April 25 (or about 5%). The VN-Index decreased about 200 points to 1,310 points compared with the end of March. The sharp decline of the VN-Index results from impacts of the domestic and global markets and objective and subjective reasons.

The sharp increase in inflation has caused a point decrease in the global stock market, including Vietnam’s stock market.

Notably, the issue related to stock market manipulation and illegal issuance of corporate bonds has had great impacts on the market.

Although the market has fluctuated, Vietnam’s stock market still sees good prospects. According to Minister of Finance Ho Duc Phoc, the violations are single violations and only have an impact on the market’s sentiment in the short term. This shows the great efforts of the Government and competent agencies to make the stock market transparent. Despite the effect of the market’s sentiment in the short term, the handling of violations will have a positive impact on the development of the stock market in the medium and long term.

“We think that Vietnam’s stock market still has positive fundamental factors from the macroeconomy and internal market. Therefore, we believe in the future, the market will develop more and more effectively, showing the key medium and long-term capital mobilization channel of the economy. It also is an attractive, safe and effective investment channel for investors," said the Minister.

According to Ms. Ta Thanh Binh, Director of Market Development Department (State Securities Commission), since March, the market has witnessed correction sessions and was affected by violations of some companies or rumors in the real estate market, causing concerns for investors, especially individual investors that increased selling. Therefore, a positive outlook of the economy and profit growth of listed companies in 2022 will help the market avoid the corrections.

For example, in the first quarter, the number of investor accounts continued to surge. By the end of March, the number of individual investor accounts reached nearly 5 million, meeting the Government’s target of 5% of the population three years early.

Maintaining high growth rate in 2022

According to Vietcombank Securities Company (VCBS), investors have remained confident in Vietnam’s stock market with the expectation that the economy will gradually recover after the pandemic. Head of Analysis Division of VNDIRECT Securities Company Tran Khanh Hien said that the efforts of the regulator in making the market more transparent will increase investors' confidence because they will see that the management agency is protecting their legitimate interests. The market is developed in a more transparent manner for Vietnam’s stock market to be upgraded to an emerging market by MSCI and FTSE.

According to experts, in 2022, fundamental macro-economic factors and internal factors of the stock market and the health of listed companies will be the positive signs to support market growth such as the better control of the pandemic, economic recovery, low interest rates, and execution of fiscal and monetary policies.

Regarding internal factors, Ms. Ta Thanh Binh said that the business results of enterprises showed positive achievements despite the effect of the Covid-19 pandemic.

As of March 31, 80% of listed companies and large publicly-traded companies that implemented UPCoM trading registration, have announced audited financial statements for 2021, of which 89% of companies reported profits. With the prospect of economic recovery, business results of enterprises on the stock market are expected to continue to maintain a high growth rate in 2022.

Also according to a representative of the Securities Commission, the cash flow in the market in 2022 from both domestic and foreign investors is expected to see positive signs. When global risks are reduced, foreign investors will seek potential markets. For domestic cash flow, despite the sharp increase in recent years, Vietnam's stock market still sees a lot of potential to attract domestic investors.

Assessing the prospect of the stock market in the next quarter as well as for the whole year of 2022, Vietcombank Securities Company forecasts that the highest level of the VN-Index in 2022 may be up to the score range of 1,580-1600 or increase about 6-8% compared with the peak of 2021.

The average trading volume in 2022 is forecast to rise slightly year-on-year and reach an average of over 1 billion shares per session on all three stock exchanges. The average trading value in 2022 is predicted to grow by 17-20% compared with a year ago, or VND28,000-30,000 billion per session on all three exchanges.

“In the second quarter, speculative stocks may reduce for a long time and cash flow will be invested in stocks with good fundamentals, especially large-cap stocks," VCBS said.