Vietnam stock market has recover in term of indicators, scales and internal force

Scene of the talkshow

The market has regained what has been lost

At the talkshow “The Rise of the Vietnam Stock Market after Covid-19 pandemic”, Ta Thanh Binh, Director of the Securities Market Development Department (State Securities Commission), said 2020 was a turbulent year for the stock market. Under the impact of the Covid-19 pandemic, the local market fell deeply in the second quarter of 2020 with a decline of 33%. However, the market had recovered quite well and was better than other countries in the region and around the world.

Notably, the market's climb was receiving a positive push from domestic cash flow, especially from new investors entering the market. In September, 31,418 new securities accounts were opened by individual investors, accumulated in the first nine months of 2020 reaching 252,026 accounts, 34% higher than the number of new accounts opened in 2019. The number of accounts increased and the transaction increased, making the market more and more exciting. The average trading volume on the HOSE and HNX in the second and third quarters jumped nearly 40% over the same period last year.

“We have almost regained what we lost from the beginning of the year. Market capitalisation reached 71.3% of GDP. This showed a recovery in index, scale and internal force,” Binh said.

Analysing more closely, Binh said in the past, the movement of foreign capital inflows always strongly influenced Vietnam and market movements could even be predicted according to the trend of the stock market. But now was different, internal force factors have shown clearly and did not depend on the movements of foreign investors or foreign capital flows. The Vietnamese stock market has shown a strong vitality, especially before the Covid-19 pandemic.

However, in the opposite direction, Bui Hoang Hai, Director of the Securities Offering Management Department (State Securities Commission) said that, currently, across the world, the Covid-19 pandemic was still developing and it had not been determined when the pandemic would end. Therefore, we should use the "new normal" for this period, moving from one equilibrium phase to another.

According to Hai, the State Securities Commission's statistics showed the liquidity on the underlying market increased by 2.7% and also jumped by 90% of transactions on the derivative market in the past period. Market liquidity was above expectations. However, an important market factor is the decline in capital mobilisation and certain difficulties.

“Raising capital from international bond issues has decreased significantly. This was due to the Covid-19 pandemic making it impossible for foreign investors to come to Vietnam to do research. Currently, some major transactions were planned to subtract first because of Covid-19 pandemic," Hai analysed.

Note the fundamental stocks

Speaking at the talkshow, Le Duc Khanh, Director of Investment Capacity Development Department of VPS Securities Company, said that according to statistics, individual investors newly opened from the second quarter to now have increased quite strongly. However, compared with the population size, it was still very modest at about 300,000 new accounts opened in the recent period. Compared to many countries around the world, the number of new investors investing in the Vietnamese stock market was much lower.

“With the economic outlook, interest rates were very low due to the large amount of money available in the banking system, which made investors look to other investment channels like stocks. The growth space of the Vietnamese stock market was still very large, creating many investment opportunities,” Khanh said.

According to this expert, with a large amount of disbursement and circulation in the market, the VN-Index might continue to rise in the near future. Especially in the fourth quarter, industry groups were forecast to have good growth and the State Bank was maintaining low interest rates, which would help cash flow into the market.

“Investors should pay attention to choosing basic industry groups with good growth to minimise investment risks. Personally, I think that the market would return to the 990 - 1000 point mark in the end of 2020 soon," Khanh said.