Positive outlook seen for Vietnam’s stock market amid global uncertainties: Deputy PM
Deputy Prime Minister Vuong Dinh Hue expected a positive outlook for Vietnam’s stock market in 2019 amid growing global uncertainties, Zing reported.
Deputy Prime Minister Vuong Dinh Hue. Source: VGP.
In 2018, Vietnam leapfrogged Singapore to be the most successful stock market in Southeast Asia in raising capital from initial public offerings (IPOs) and mergers & acquisitions (M&A) activities, Hue said.
Hue attributed the success of Vietnam’s stock market to stable macro-economic fundamentals and high profitability of listed companies.
The deputy PM, who is in charge of the government’s economic affairs, affirmed the government intention to push forward with the privatization scheme of state-owned enterprises in 2019, offering more opportunities for investors in the stock market.
More importantly, the stock market would offer new financial products, including covered warrant and bond futures in 2019, while the Hanoi and Ho Chi Minh City stock exchanges would be merged to form the Vietnam Stock Exchange for greater efficiency and operation.
Hue predicted more uncertainties surrounding the US-China trade friction and a potential rate hike by the US’s Fed, however, the pressure would not be as high as last year.
Thanks to favorable conditions, the stock market is predicted to develop sustainably in 2019, mainly due to internal strengths, Hue said.
Spotlight in attracting capital
The benchmark VN-Index ended 2018 at 892.54 points, lower than the ending note in 2017 but the market capitalization reached VND3,900 trillion (US$164.88 billion), up 10.6% year-on-year and equivalent to 70% of the GDP.
This result has exceeded the target of 70% of the GDP set for the stock market in the 2011 – 2020 period.
The average stock transaction value in each trading session stood at VND6.5 trillion (US$278.44 million), up 29% year-on-year.
As of the third quarter of 2018, public companies posted an increase of 20.5% year-on-year in revenue and 25% in profit, while profit of securities companies saw a 40% increase against 2017.
According to Hue, while investors were pulling money out of regional markets, Vietnam remained a spotlight in attracting capital. In 2018, foreign investors posted net purchase of VND43 trillion (US$1.85 billion) and net sell of VND1.2 trillion (US$51.64 million).
A total of US$2.8 billion in foreign capital was poured into Vietnam’s stock market in 2018, equivalent to that of in 2017, Hue continued.
Currently, the VN-Index has settled at 900 points with the price/earnings (P/E) ratio around 16 – 17 from the 23 – 24, recorded at the peak of VN-Index of 1,240 points, higher than the P/E of developed markets such as Canada or France.