The prospect of the Vietnamese stock market this year will be brighter, with profits of listed firms in 2020 likely to increase by 18% against 2019 while the VN-Index may rise by 20.7%.
The robust growth of the Vietnamese stock market has continued to help it become more attractive to foreign investors, who poured US$36.4 billion into the market by the end of last year, a year-on-year rise of 11.6%.
According to the State Securities Commission (SSC), foreign investors net bought over VND7.51 trillion (US$323 million) worth of stocks and fund certificates in the domestic stock exchanges during the year, and more than VND13.73 trillion (US$591.5 million) worth of bonds.
The positive foreign participation in the Vietnamese stock market in 2019 was thanks to the high growth of the market. The benchmark VN-Index of the Ho Chi Minh Stock Exchange (HoSE) finished the year at 960.99 points, up 7.7% from the previous year, the highest growth recorded in the Southeast Asian region.
With 1,622 listed shares and fund certificates on the HoSE and the Hanoi Stock Exchange, the scale of the Vietnamese stock market reached nearly VND1,402 trillion (US$60.36 billion), picking up 16% as compared to the end of 2018.
The stock market capitalization increased 10.7% against 2018 to reach over VND4.38 quadrillion (US$188.73 billion), which was equivalent to 79.2% of the country’s gross domestic product (GDP) in 2018, and 72.6% of the GDP in 2019.
Foreign investors have been net buyers over the past two years, with most of the net buying activities taking place through put-through transactions.
Experts forecast that the Vietnamese stock market would lure more foreign capital in 2020, supported by many supporting factors, especially exchange-traded funds (ETFs).
According to Viet Dragon Securities Company (VDSC), after being one of the two main capital-attracting ETFs of the Vietnamese stock market in the past two years, it is likely that E1VFVN30 will continue to attract cash flow from its two key investors, Thailand and South Korea, because the interest rates in these two countries are at low levels after the two local central banks made rate cuts last year.
Vietnam’s benchmark VN-Index increased by 7.7% in 2019, higher than South Korea’s KOSPI, which only increased by 6.3%, and Thailand’s SET which rose by only 0.6%.
Besides, the Vietnamese stock market is also forecast to be more positive as it is expected that Kuwait will be upgraded from frontier market status to emerging market by Morgan Stanley Capital International (MSCI) in May 2020. Accordingly, the weight of Vietnamese shares in the MSCI Frontier 100 Index would increase to 30%, instead of only about 12.3% as currently. If so, the passive fund Ishares MSCI Frontier 100 ETF could buy in US$86.5 million worth of Vietnamese shares, VDSC said.
Sharing the same view, analysts from VNDirect Securities Corporation said that besides the expected upgrade of MSCI to emerging market, the initial public offering (IPO) possibility of some notable names such as Bamboo Airways, Maritime Commercial Joint Stock Bank and An Cuong Wood JSC will also help the Vietnamese stock market attract more capital flows.
The analysts said that the prospect of the Vietnamese stock market this year will be brighter, forecasting that profits of firms listed in the market in 2020 will increase by 18% against 2019 while the VN-Index may rise by 20.7% to 1,160 points by the end of the year.