The benchmark Vn-Index could reach the 1.500-mark by the last half of 2021 as domestic investors continue pumping money into the stock market.

Investors at a securities center in Hanoi. Photo: Tran Quynh

VNDirect Securities Company made the forecast in a semi-annual strategy report, saying the price-to-earnings (P/E) ratio of the Vn-Index is expected to be 17.5-18x by late 2021.

“An acceleration of Covid-19 vaccination roll-out would help ensure the reopening of the global market in the second half of this year. Vietnam with a high level of economic openness, would benefit from a recovering global demand,” stated the securities firm.

Given Vietnam’s positive economic growth at 5.64% in the six-month period, VNDIrect predicted the country’s GDP growth in 2021 to reach 6.5% and jump to 7.4% one year later, saying the expansion of production and services sectors are key factors.

With a strong economic prospect, VNDirect said the fear of missing out (FOMO) sentiment and strong inflows of capital from domestic investors would maintain strong growth of the stock market.

“The FOMO is increasing among investors as the Vn-Index keeps setting new heights and attracting attention from market participants,” it noted.

Meanwhile, the low-interest rates offered by banks at an average of 5.7% per annum, significantly lower than the 7% rate in the 2017-2019 period, would only keep up the stock market's attractiveness.

While the recurring system crash due to surging orders in the Ho Chi Minh City Stock Exchange (HoSE) has been a source of frustration among investors, the new system, scheduled to go online on June 5, would completely solve this issue is another positive factor.

KB Securities Vietnam (KBSV) also shared the same positive view on the stock market by referring to an increase of 23% of the Vn-Index since early 2021 to date and a four-fold increase in market liquidity compared to the same period of last year.

KBSV expected earnings-per-share (EPS) of listed firms could expand by an additional 13% by late 2021, leading by those in the material production (+35%), utilities (+26%), and non-essential products (+19.7%).

The firm expected foreign investors may maintain their net-selling position in the coming time, but noted: “this would have little impact as their domestic peers still dominate the market.”

“A P/E ratio of 18x is an attractive point compared to those in the region, especially as listed firms are posting strong business performance,” stated the KBSV.

In case of the pandemic is contained early and Vietnam could maintain its economic growth around 6-6.5%, KBSV expected the Vn-Index to be around 1,480 by late 2021.

A potential driving force for the stock market, as the KBSV pointed out, could come from the Government’s push for privatization and divestment of capital in the State firms that had happened during the 2017-2018 period.

The KBSV expected these activities would heat up since late 2021 after a freezing period in the past two years, which could come from major state-owned firms, including the privatization of Agribank, Mobifone, and divestment of state capital at Sabeco, Bao Minh, Vinatex, or Tien Phong Plastic.