Vietnam stock market boasts outstanding growth potential: HSBC

Vietnam's stock market has grown at a remarkable rate compared to all major markets in the region over the last decade, with market size nearly quadrupling since its start in 2012, according to HSBC.

The average daily trading value of the Ho Chi Minh City Stock Exchange recently surpassed $1 billion, 10 times higher than 2020's figure, making Vietnam the second most liquid market in ASEAN, trailing only Thailand.

The Vietnamese stock market’s capitalization exceeded $350 billion in 2021, equivalent to over 120% of national GDP, with earnings per share jumping by 35%.

Its structure has shifted from the dominance of consumer goods stocks in 2015 to finance and real estate stocks, as well as lower-cap companies.

Previously, the top five blue chips accounted for 52% of the entire market capitalization, but now the top 10 represent less than 20%.

Domestic investors account for 87% of total transactions, mainly driving the stock market’s development, while the signs of foreign investor recovery have emerged in recent weeks, following their consistent net selling in 2021 and early 2022, HSBC noted in a report.

Securities accounts in Vietnam have exceeded five million, with over 230,000 new accounts opened in April, despite the VN-Index’s downturn. This is the second-highest monthly figure, trailing only March’s number of 270,000 accounts.

The positive outlook of the Vietnamese stock market is also based on macro-economic advancements. Vietnam's position in the global supply chain has risen in recent years, with a new wave of foreign direct investment to take advantage of lower-cost land and labor.

The country has emerged as a leading contender in the race for global export market share, the bank stated.

Three-quarters of Vietnam’s export value comes from sectors with strong foreign investment. The country has facilitated the establishment of companies and simplified land registration and loan processes in recent years, making it an ideal place to build a new factory.

Education has provided a qualified and skilled workforce, helping the country gain more market share in export markets. Investment in infrastructure and logistics also supports a wide range of activities in the industrial, commercial and residential real estate sectors.

Vietnam has the potential to become the world's tenth-largest consumer market by 2030. When customers shop online, digital banking and services must be reinforced, making Vietnam one of the region's most appealing markets for financial inclusion and financial technology, according to HSBC.

Many investors are also enthused about Vietnam's potential inclusion in the emerging markets. Capital inflows will amount $8-9 billion if the country accounts for a 2% share in emerging Asian economies. This equates to 1.4 times the allocated value of foreign investment funds and nearly eight trading days.

HBSC said foreign investment funds have accessed a lot of Vietnamese stocks. Vietnam has a stable currency and foreign exchange reserves, a strong position in the global supply chain, growing infrastructure, and rising domestic consumption. These will serve as a long-term growth engine for the Vietnamese stock market, it added.