Since the beginning of April, the benchmark Vn-Index fell by 118 points from its peak of 1,524, causing a sharp drop in stocks’ value and subsequent evaporation of over $19 billion in market capitalization.
|Investor at a securities company in Hanoi. Photo: Cong Hung|
Contrary to the sell-off trend of domestic investors, their foreign peers have been looking to buy stocks with a combined net value of VND1.7 trillion ($74 million) since April 13, of which VND1.6 trillion ($69.6 million) in securities were bought on the HoSE, and the remaining on the HNX.
According to experts, this showcases the strong confidence of foreign investors in the market outlook, especially as their focus is turning to stocks from companies with high potential for development such as GEX, VPB, MWG, NVL, or CTG.
Among foreign funds joining the trend, Dragon Capital was one of the largest buyers by spending VND600 billion ($26 million) to purchase MWG stocks on April 15, or buying in shares of GEX, DGC to become their major shareholder.
A recent report from Dragon Capital suggested investors have become cautious following the recent arrests of FLC and Tan Hoang Minh, two major property developers, due to alleged stock market manipulation and violations in corporate bond issuance.
The fund noted the arrests may impact investors’ sentiment in the upcoming weeks, especially in stocks from real estate firms.
But in the long-term, the move would benefit the market development by enhancing its transparency and encouraging investors to turn to stocks with solid fundamentals.
As public firms are scheduled to hold their respective general meetings of shareholders in 2022, Dragon Capital forecasts profit growth would still average 15%, and even at 20-25% for the banking sector.
Vietnam’s GDP growth rebounded to a 3-year high of 5% in the first quarter, higher than the 4.7% and 3.7% in the same period of 2021 and 2020.
Manufacturing and processing continued to be the driving force for growth with an expansion rate of 78% year on year.
Trading activities remained positive during the period with exports of $89.1 billion, up 13.4%, and imports of $87.6 billion, up 15.2%. This resulted in a trade surplus of $1.5 billion during the three months.
Meanwhile, the services sector has been gaining momentum from last October by expanding 4.6% year-on-year in the first quarter, for which Dragon Capital expected the sector to be the new engine for growth in the coming time as the country has now reopened its borders for foreign visitors.
Dragon Capital forecast Vietnam’s GDP growth at 7% in 2022, and up to 8.6% in case the upcoming socio-economic recovery program is well implemented.
Rating agencies such as Fitch and Moody’s also maintained Vietnam’s sovereign rating at the positive outlook of respective BB and Ba3.
Finland-based Pyn Elite Fund shared the view by expecting local authorities’ efforts in tackling market violations would better protect the lawful rights of investors.
Petri Derying, portfolio manager at the Pyn Elite Fund, expected strong growth by 25% of public companies in the 2022-2023 period, with a P/E of 13.3 in 2022.
The Ministry of Finance suggested the stock market remains a key capital mobilization in the medium and the long term for the Government and enterprises despite recent turbulence.
Liquidity has been on the rise in the first quarter of this year with an average of VND30.8 trillion ($1.33 billion) per session, up 15.9% year-on-year.
According to the ministry, the transaction volume has now exceeded that of Singapore and stood second in ASEAN, after Thailand.
Total market value as of late March rose by 3.37% against the end of 2021 to VND1,797 trillion ($78 billion), or 21.4% of the GDP, with 768 public firms on HoSE, HNX, and 883 on the UPCOM.
In the first quarter, the market recorded 6,76,616 new securities accounts, equivalent to the figure for the whole of 2021.
This put the total securities accounts in Vietnam to over 4.98 million, up 15.7% against late 2021, or around 5% of the population.
With the country’s population estimated at 98.7 million as of April 4, the number of securities accounts per head has officially reached the 5%-mark, three years earlier than the target set by the Government for 2025.
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