Stock market has reason to recover

The market still believes that the pandemic will soon be under control and the recovery of the economy. Source: Internet

At the online discussion "Vietnam's economic destination in the second half of 2021", Nguyen Hoai Thu, CEO of the Securities and Bond Investment Division - VinaCapital said that, at the current time, with the pandemic unpredictable, leading to fears the economy would be affected and economic growth would definitely go down, investors had reduced their expectations.

However, many people still believed the economy would recover in the fourth quarter, which was why the stock market could start recovering better.

Nguyen Thi Phuong Lam, Analysis Director - Rong Viet Securities Company (VDSC), said the growth of the stock market depended a lot on cash flow. The current cheap money factor would be the driving force to support cash flow into securities. Low bank interest rates would stimulate cash flow into higher profitable channels. With the growth potential of the stock market, cash flow would be poured into investment as a possible profitable channel.

“In the first six months of this year, the amount of money from domestic investors also equaled the withdrawal of foreign investors. Therefore, the long-term development of Vietnam's stock market in the future would depend more on domestic investors and domestic resources," Lam said.

Nguyen Hoai Thu also shared that in a recent letter to investors she mentioned two reasons why they should continue to keep their investment. Firstly, this Covid-19 outbreak would be controlled and end soon, resulting in the recovery of the stock market. Secondly, investors who withdraw from the market at the time of a deep correction would often miss out on significant profits.

Thu also recommended individual investors when entering the market must learn carefully about the industry group. For investors who want to invest in the long term but do not know which industry group to invest in, they should learn and choose a fund management company to invest or learn about the stocks that they intend to invest to diversify investment stocks. They should invest in 20-30 stocks for each fund.

“Of course, the level of profitability is different, so investors need to learn carefully. For example, VinaCapital was also managing the fund. If the market recently recorded a growth of about 15-50%, funds managed by VinaCapital would have a profit of about 33%," Thu said.

Forecasting the cash flow of foreign investors in the last months of the year, Thu said the valuation of Vietnam's stock market was still very attractive and the market's profit was still better than many markets in the region so foreign investors were still interested.

In addition, VinaCapital recognised some investors in Asia, including Taiwanese investors, were still very interested in Vietnam. While investors withdrew net $1.3 billion, investors from Taiwan still poured money into the Vietnamese market, for example, the Fubon FTSE Vietnam ETF invested more than $480 million in Vietnam’s stock market.

Meanwhile, according to La Giang Trung, General Director of Passion Investment, with a 13% decrease in July 2021, the market has basically hit the bottom. After the correction, the market might increase to 30-40% and soar to 1,600-1,700 points by the end of this year, if Covid-19 is controlled in August and September.