According to PetroVietnam Securities Inc. (PSI), Vietnam’s stock market is likely to continue to experience adjustments in line with global markets but will recover soon after. PSI offered three scenarios for the VN-Index, with it reaching 1,550 points before the end of the year in the most optimistic and only 1,080-1,150 points in the most pessimistic.
There remains much room for growth in Vietnam’s stock market in the medium and long terms, analysts believe, because positive supporting factors from the macroeconomy are still in place. The State Securities Commission (SSC) said it is actively completing the legal framework and formulating a strategy to develop the stock market to 2030.
The upgrading of Vietnam’s stock market has become simply a matter of time, but it is still necessary to create a transparent, efficient market and protect the interests of investors as much as possible. The gap between laws on paper and in practice also needs to be bridged.
Prime Minister Pham Minh Chinh has asked the Ministry of Finance to review and amend inadequate existing regulations, strengthen sanctions on violations of the law on the stock market to protect investors, and urgently introduce measures to upgrade Vietnam’s stock market from frontier market to emerging market status.
According to Ms. Ta Thanh Binh, Director of the Securities Market Development Department at the State Securities Commission of Vietnam (SSC), although the country’s stock market has been down slightly since March, it is still considered attractive and space remains for growth over the course of 2022. It also has many supporting factors, such as expectations of an upgrade to “Emerging Market” status and accelerated equitization and divestment by State-owned enterprises (SOEs).
Inflationary pressure and the Russia - Ukraine conflict have contributed to foreign investors leaving Vietnam’s stock market recently, offloading nearly VND7 trillion ($307.7 million) in shares since the beginning of March. But many analysts believe withdrawals will slow and then return as foreign investors recognize that economies like Vietnam’s will benefit from the greater economic openness to come.
Vietnam’s stock market has seen positive results in early 2022, making market valuations more attractive and bringing in foreign cash flows. Foreign investors net bought by more than VND2 trillion ($88.5 million) in the opening month of the year. The market is soon to welcome another investment fund from Taiwan (China) - the Jih Sun Vietnam Opportunity Fund (JSV Fund).
The proportion of foreign transactions in Vietnam’s stock market has continually fallen sharply and currently stands at just 6 per cent of liquidity, while in late 2017 and early 2018 it was 20 per cent. Total net selling by foreign investors in 2021 was VND62.6 trillion ($2.7 billion).
Vietnam’s stock market is similar in many ways to Taiwan (China)’s stock market in 1986, such as the percentage of individual investors participating and GDP per capita. VinaCapital has predicted that the development of the local stock market will continue for many decades. Vietnam aims to increase the proportion of individuals participating in the market from 3 per cent of the population to 5 per cent by 2025 and 10 per cent by 2030.
