Vietnamese securities attractive compared to elsewhere

If the market grows by more than 20 per cent in 2022, as expected, the total market P/E would be estimated at around 14x on a PEG basis, which is a very attractive valuation, Mr. Michael Kokalari, Chief Economist at VinaCapital, said in the company's market evaluation report.

The VN-Index increased significantly compared to similar countries in the region in 2021, despite Vietnam’s Covid blockade measures earlier this year being considered the most stringent in the region. Vietnam’s stock market has suffered a comparable loss of cash flow from foreign investors since the beginning of the year.

The Index has risen 34 per cent this year, thanks to forecast EPS growth of 34 per cent. Data shows that the P/E of the VN-Index was almost unchanged since the beginning of the year, at around 17 times.

Banks and real estate developers contributed significantly to the positive results of the VN-Index. Bank stock prices increased 40 per cent compared to the beginning of the year, with a weight of about 30 per cent in the VN-Index, contributing 12 percentage points growth on top of the VN-Index’s 34 per cent growth. Share prices of real estate companies, which have a weight of 25 per cent, increased 55 per cent since the beginning of the year, contributing 13 percentage points more to the overall increase.

However, Vietnam’s stock market also experienced a significant divergence in the business results of stocks in the banking and real estate sectors as well as in other sectors.

VinaCapital believes Vietnam’s resilience reflects solid earnings growth, continued optimism among domestic investors, and an approximately 10 per cent valuation discount compared with other countries in the region.