Well-organized pandemic control and strong cash flow of new investors have helped the stock market regain almost what it lost. 

Scenarios for Vietnam’s stock market in 2020. Photo: Cong Hung

Keep growing

Ending September, Vietnam’s stock market saw a surprise ending when all three indices – VN-Index, HNX-Index and UPCoM-Index – rose by almost 3% compared to August. This result placed Vietnam in the 4th position in the top 10 best performing markets in September, trailing behind only Mongolia (4.27%), Turkey (4.06%) and Denmark (3.48%). Many stocks were priced even higher than the pre-pandemic levels.

According to Mr. Phan Dung Khanh, Investment Advisory Director of Maybank KimEng Securities Co, powerful new cash flow, also known as money of investors “F0” (even F0-1), is the key factor that kept the market growing.

On the Ho Chi Minh Stock Exchange (HoSE), during April-September, liquidity soared 50% compared to the previous six months, averaging 320 million shares per session. Trading value also climbed 34.5% to a daily average of VND5.5 trillion (US$238.6 million).

“Contrary to the trend of buying gold or government bonds of big investors, individual investors in the world are beating big investors this year when they’ve created an investment wave pulling new investors to the stock market during the pandemic,” Mr. Khanh said. “They’re people who are bored of having to stay at home due to the lockdown measures, lose their jobs and try their luck on the stock market which is increasingly convenient.”

According to many experts, lower deposit interest rates (which have decreased by 1-2.5 percentage points from the start of the year) have also made the stock market more attractive than other investment channels including gold or real estate.

The latest data showed the number of new brokerage accounts in August increased by 4.8% from the previous month (to 28,300 accounts), the highest since 2019. In addition, there were signals showing margin loans started to pick up since end-July.

Investors at the Hanoi stock exchange. Photo: Chien Cong

Awaiting “vaccine” for the market

According to the KB Securities Vietnam Co (KBSV), the supporting factors for the market towards the year’s end will be maintained.

In its report on the prospect of Vietnam’s stock market in Q4, the company pointed out main risks of this period such as stronger resurgence of the disease which will delay the re-opening plans of other countries; the market has risen sharply and fell into an unattractive pricing zone; businesses may recover slower than expected along with rising bad debts; and the US election results.

In addition, the world markets and Vietnam are watching very closely the Covid-19 vaccine development process. For Vietnam, KBSV said the market has built a strong resilience against the pandemic. The sell-off activities happening in the second wave of Covid-19 appeared short time and recovered soon.

The KBSV expects Vietnam’s stock market to continue its recovery in the last months of 2020. 

“The Q3 business results of listed companies will be better than the previous quarter due to the success in controlling the second wave of Covid-19 infection. Vietnam’s economy has also shown signs of recovery with the Q3 GDP increasing 2.62%, higher than the 0.36% growth rate of the second quarter. Those are the factors supporting the market in the last months of the year,” analysts of VNDirect Securities Co wrote in its report.