Factors favorable for stock market development

Vietnam’s stock market still has many opportunities to develop in the time to come, according to a report on the stock market’s outlook in 2022 from Mirae Asset.

The report predicts that the VN-Index in 2022 will increase by about 1,700 points, up 15 per cent compared to the end of November. Most industries will post positive growth next year, with earnings per share (EPS) growth forecast at 24 per cent year-on-year.

There are five main drivers of development. The first is that fiscal policy will continue to support the recovery of the economy. The second is monetary policy, as the economic restart in October means credit growth is expected to accelerate in the fourth quarter, for 13 per cent both this year and next. The third is that market valuations are relatively attractive and there is potential to attract more foreign capital flows.

The fourth is State divestment being promoted, with the Department of Corporate Finance developing a divestment plan in 2022 while the divestment of six enterprises managed by the State Capital and Investment Corporation (SCIC) is expected to earn VND40 trillion ($1.72 billion). The fifth is the stock market remaining attractive compared to low interest rates. The upside potential of the VN-Index is therefore still substantial.

Regarding the value outlook of stocks, the report showed that industrial real estate, steel and galvanized steel, consumer and retail, banking, and textiles will experience positive growth momentum during the recovery from Covid-19.