Good time to invest in Vietnam stock market: Dragon Capital chairman

With “worst difficulties” in the past, a recovery in corporate profits, stabilized macroeconomy and not too high valuations, investment opportunities abound in Vietnam’s stock market, says Dragon Capital chairman Dominic Scriven.

However, it is surprising that foreign investors have continuously been net sellers in the Vietnamese stock market and the causes need to be ascertained, he said.

Data shows that since the beginning of the year, foreign investors have net sold VND62.4 trillion ($2.53 billion), surpassing the net selling value for the entire year of 2021.

Scriven was speaking at a talk show organized last week by CafeF and VPBank Securities (VPBankS). Dragon Capital is a leading Vietnam-focused asset management company in Vietnam.

He said the net selling trend among foreign investors in Vietnam was a result of both objective and subjective factors.

Objectively, amid a global environment full of challenges and threats, foreign investors often act cautiously by selling and bringing their money back home for safety. Geopolitical tensions in the Middle East and Ukraine, along with financial bubbles, have created significant volatility.

Over the past decade, many developed countries have printed bank notes excessively, leading to rising public and private debt, asset values, land prices and living costs (inflation). These have caused unexpected changes in currency and stock values, Scriven added.

Subjectively, Vietnam has faced its own disadvantages. The 80 major companies that make up 80% of the market capitalization as analyzed by Dragon Capital have not increased their profits in the past two years. For a market that hasn't shown profit growth for two years, investors lack reasons to hold their investments.

Vietnam is just a small player on the foreign investors’ stage. Besides, some may not fully understand Vietnam's direction, Scriven said, suggesting that the country needed to convey its messages more clearly to international investors.

But, in the final analysis, the net selling trend of foreign investors was no reason to worry, as they are often the first to act and the last to recover. This can offer opportunities to domestic investors, Scriven said.

Looking ahead, the Dragon Capital chairman acknowledged that while challenges remain, most difficulties were in the past.

The Covid-19 pandemic has had profound consequences, destabilizing global systems and affecting Vietnam since 2021, with noticeable impacts in 2022. But, after two years of stagnation in profit growth among listed companies, recovery has begun, with quarter-on-quarter growth seen in the first two quarters of 2024.

Dragon Capital’s analysts have forecast an 18% year-on-year increase in 2024 profits for the 80 major companies.

Furthermore, the valuations of Vietnamese enterprises are not too high compared to peers in other financial markets, and the macroeconomic situation was gradually stabilizing, creating conditions for fruitful investments.

At Wednesday’s close, the VN-Index, which represents the Ho Chi Minh Stock Exchange, stood at 1,260.9 points, up nearly 6 points from the previous session.