Việt Nam stock market bounces back, more gains predicted: VinaCapital

Việt Nam’s stock market is still cheap at 11.5 times forward P/E and expectations ofnbsp;EPSnbsp;growth of over 20 per cent this year compared to an average P/E of 16.2 for its emerging market ASEAN peers.


Việt Nam’s stock market is still cheap. — Photo courtesy of tuoitrethudo.com.vn

Việt Nam’s stock market is still cheap at 11.5 times forward P/E and expectations of EPS growth of over 20 per cent this year compared to an average P/E of 16.2 for its emerging market ASEAN peers.

“All of this sets the stage for further gains in the VN-Index as 2022 progresses and we see signs that both foreign and Vietnamese investors agree,” Michael Kokalari, chief economist at VinaCapital, said.

The Government’s renewed efforts to strengthen regulatory oversight of the stock and bond markets initially fuelled a sell-off in April and in the first half of May.

However, on May 20, several leadership changes were announced at the State Securities Commission and HCM Stock Exchange, which made investors start looking beyond the recent anti-corruption drive.

There had been concerns that the State Bank of Vietnam would curtail the flow of credit to the real estate market, following recent guidance on this issue.

This was another Việt Nam-specific factor that had been weighing on the stock market.

But it now appeared that the SBV’s guidance urging banks to be prudent in their real estate lending, which was issued in conjunction with the Government’s other regulatory crackdown activities, was similar to guidance it had regularly issued over the last few years.

Furthermore, last week a senior official said the SBV did not aim to curtail the flow of credit to the real estate sector, but was only monitoring the situation closely.

Finally, corporate bond issuance by real estate companies plunged in April, but loan growth to the sector probably outpaced overall credit growth, and developers’ pre-sales were reportedly strong, which would limit their need to borrow money.

“Việt Nam’s benchmark VN-Index has rebounded by 12 per cent since hitting a bottom on May 16, driven by a modest thawing of recent bearish sentiment in global stock markets over the last few weeks, and by positive developments in Việt Nam.

“Specifically, the expectation that the Fed may pause its rate hikes boosted global stock markets, while the easing of COVID restrictions in China improved sentiment towards Việt Nam’s stock market, and some of the Việt Nam-specific concerns that weighed heavily on the VNI in May have eased.”

Việt Nam’s economic recovery continued to accelerate in May.

Even as the market sold off, foreign investors bought over US$150 million in stocks in May (including about $125 million of foreign inflows into ETFs) after having sold around $290 million worth of stocks in Q1.

Trading volumes plunged by over 33 per cent month-on-month in May, implying that Vietnamese retail investors were not panicked into selling.

“We believe the confidence exhibited by both local and foreign investors stems in part from the 33 per cent year-on-year surge in Việt Nam’s earnings growth in Q1, which in turn should also help drive further gains for the VN-Index later this year, although the next 2-3 months are likely to be fairly volatile.”

Positive developments boosting market

According to VinaCapital, four developments are currently supporting local investor sentiments: the perception that the recent wave of margin-prompted selling is over, the announcement of a 2 per cent interest rate subsidy by the Government to support SMEs and other businesses, continued positive developments in the economy including a record year-on-year surge in retail sales in May, and the growing perception that current global events will benefit Việt Nam’s economy.

Kokalari said: “The post-COVID economic recovery is going to be much stronger than most analysts had previously expected, driven by a resurgence in domestic consumption and foreign tourist arrivals.

“We are still forecasting 6.5 per cent GDP growth this year, but we see increasing upside to that forecast, and are aware of some forecasts that are as high as 9 per cent.

“In short, the jump in retail sales has dramatically accelerated as 2022 has progressed and the manufacturing sector output grew by 9 per cent year-on-year in the first five months of this year, which is a much stronger performance than we expected.

“Việt Nam’s PMI index rose from 51.7 in April to 54.7 in May, the biggest one-month acceleration in over a year, driven by an acceleration in new orders.

“We estimate that outstanding stock margin levels have fallen by about 30 per cent, which has washed out the most aggressive source of selling pressure in May, paving the way for a further recovery in the market.

“We expect earnings growth of over 20 per cent for Việt Nam’s stock market this year, although we expect earnings for companies in our funds to grow by over 35 per cent, which helps explain why those stocks are trading at an even lower P/E valuation multiple than the overall market.” — VNS

Source: VNS
vietnamnews.vn

Related News

Top legislator’s official visit expected to help boost Vietnam-Bulgaria multifaceted cooperation

Top legislator’s official visit expected to help boost Vietnam-Bulgaria multifaceted cooperation

National Assembly (NA) Chairman Vuong Dinh Hue’s upcoming official visit to Bulgaria is expected to help consolidate and enhance time-tested friendship and multifaceted cooperation between the two countries in general and the two parliaments in particular.
Int"l conference discusses Vietnam-Laos-Cambodia cooperation in digital economy

Int"l conference discusses Vietnam-Laos-Cambodia cooperation in digital economy

More than 100 Vietnamese, Lao, and Cambodian experts, managers, and diplomats joined an international conference on the three countries’ trade and investment cooperation given the digital economy, which took place in Ho Chi Minh City on September 20.
Vietnam becomes one of first nations to sign High Seas Treaty

Vietnam becomes one of first nations to sign High Seas Treaty

Vietnamese Minister of Foreign Affairs Bui Thanh Son on September 20 signed the United Nations agreement on the conservation and sustainable use of marine biological diversity of areas beyond national jurisdiction, making Vietnam one of the first countries to sign the international-legally binding instrument under the 1982 United Nations Convention on the Law of the Sea (UNCLOS).
PM suggests Vietnam, US create cooperation breakthroughs

PM suggests Vietnam, US create cooperation breakthroughs

Prime Minister Pham Minh Chinh suggested Vietnam and the US create breakthroughs in cooperation in science-technology, innovation, and education-training at a meeting with US Trade Representative Katherine Tai in Washington D.C. on September 19.

Latest News

BIS pledges support for Vietnam in banking infrastructure development, digital transformation

BIS pledges support for Vietnam in banking infrastructure development, digital transformation

The Bank for International Settlements (BIS) will continue to accompany and support the State Bank of Vietnam (SBV) in investing in payment and financial infrastructure development and promoting digital transformation, contributing to improving risk management in the local banking sector, stated BIS General Manager Agustin Carstens.
Removing barriers and difficulties for businesses is a top political task

Removing barriers and difficulties for businesses is a top political task

VCN – The leaders of the Ministry of Finance requests heads of units under the Ministry to fully and effectively implement resolutions, guidelines and policies of the Party and State on encouraging business development; protecting the legal property ownership rights and freedom in business of people and businesses according to the Constitution and law.
General Department of Taxation provides training course on digital transformation

General Department of Taxation provides training course on digital transformation

VCN – On September 20, the General Department of Taxation organized a training course on digital transformation for tax officers. Contents of the training course include an overview of digital transformation; national digital transformation program; digital transformation plan of the Ministry of Finance and Vietnam Tax sector.
Export difficulties affect budget revenue

Export difficulties affect budget revenue

VCN - The economic situation in the first 8 months of the year faced many difficulties and challenges, which affected the implementation of financial and budgetary tasks. According to the Ministry of Finance, budget revenue in the first 8 months of the year decreased compared to the same period in 2022. In that context, the Finance sector will have to make every effort to ensure completion of tasks in 2023.

More News

Transferring 10 million VND may require biometric authentication

Transferring 10 million VND may require biometric authentication

It is expected that biometric authentication such as fingerprint, iris, or facial recognition will be mandatory for money transfers exceeding the minimum level, possibly starting from 10 million VND (410.93 USD), said Deputy Head of the State Bank of Vietnam (SBV)’s Payment Department Le Anh Dung at a September 19 seminar on protecting bank accounts from increasing online fraud risks.
Remove problems for enterprises in using e-invoices and documents

Remove problems for enterprises in using e-invoices and documents

VCN – The amendment and supplementation of Decree No.123/2020/ND-CP regulating invoices and documents aims to implement the Party’s policies and guidelines on building e-Government towards Digital Government and Smart Government, removing difficulties for enterprises in using e-invoices and documents, reforming administrative procedures, providing solutions to prevent origin-related frauds and in accordance with international practices, the Ministry of Finance said.
Derivatives transaction soars in August

Derivatives transaction soars in August

VCN – Along with the excitement in the underlying market, transactions of the derivatives market in August 2023 also surged compared with the previous month.
Banks lower deposit interest rates to COVID-19 levels

Banks lower deposit interest rates to COVID-19 levels

Two more State-run commercial banks, Vietinbank and BIDV, on September 19 lowered their deposit interest rates matching the lowest level recorded during the COVID-19 pandemic.
Many real estate enterprises to be inspected by tax agency

Many real estate enterprises to be inspected by tax agency

VCN - The General Department of Taxation has just issued a decision approving the specialized inspection plan for 2023. According to the list of businesses attached to this decision, there are 42 enterprises in many industries under the management of eight tax departments and the Large Enterprises Tax Department (General Department of Taxation).
MoF deploys 6 key tasks in economic diplomacy work

MoF deploys 6 key tasks in economic diplomacy work

VCN - The Ministry of Finance has just issued Decision No. 1934/QD-BTC approving the Action Plan to implement Resolution No. 21/NQ-CP promulgating the Government's Action Program for the period 2022 - 2026 to implement the Directive No. 15-CT/TW of the Secretariat on economic diplomacy work to serve national development until 2030.
Capital questions for the import-export sector

Capital questions for the import-export sector

VCN - Credit capital flow is always evaluated as one of the "pedestals" to revive the import-export sector quickly. However, just having cash flow is not enough.
Financial policies effectively impact all aspects of economy

Financial policies effectively impact all aspects of economy

VCN - Dr Le Duy Binh, CEO of Economica Vietnam, spoke to Customs Magazine about the impact of financial policies to support businesses and people from the beginning of the year.
Ministry of Finance answers voters about on-the-spot imported goods for export production

Ministry of Finance answers voters about on-the-spot imported goods for export production

VCN - According to the Ministry of Finance, imported goods for processing and imported goods for export production have differences in ownership.
Read More

Your care

Latest Most read
BIS pledges support for Vietnam in banking infrastructure development, digital transformation

BIS pledges support for Vietnam in banking infrastructure development, digital transformation

The Bank for International Settlements (BIS) will continue to accompany and support the State Bank of Vietnam (SBV) in investing in payment and financial infrastructure development and promoting digital transformation, contributing to improving risk management in the local banking sector, stated BIS General Manager Agustin Carstens.
Removing barriers and difficulties for businesses is a top political task

Removing barriers and difficulties for businesses is a top political task

VCN – The leaders of the Ministry of Finance requests heads of units under the Ministry to fully and effectively implement resolutions, guidelines and policies of the Party and State on encouraging business development; protecting the legal property owner
General Department of Taxation provides training course on digital transformation

General Department of Taxation provides training course on digital transformation

VCN - At the opening of the training course, Deputy Director of Reform and Modernization Board Hoang Thi Lan Anh said that digital transformation is the use of data and digital technology to reform working method aiming to improve management efficiency an
Export difficulties affect budget revenue

Export difficulties affect budget revenue

VCN - In the first 8 months of 2023, total state budget revenue is estimated to reach 1,124.5 trillion VND, equal to 69.4% of the estimate, down 8.8% compared to the same period in 2022. Domestic revenue is estimated to reach nearly 931 trillion VND, equa
Transferring 10 million VND may require biometric authentication

Transferring 10 million VND may require biometric authentication

It is expected that biometric authentication such as fingerprint, iris, or facial recognition will be mandatory for money transfers exceeding the minimum level, possibly starting from 10 million VND (410.93 USD), said Deputy Head of the State Bank of Vietnam (SBV)’s Payment Department Le Anh Dung at a September 19 seminar on protecting bank accounts from increasing online fraud risks.
Mobile Version