VN-Index among top 12 best performers globally: IndexQ

By Hoa Khoa, Huong Dung
Mon, September 4, 2023 | 2:09 pm GMT+7

Vietnam’s benchmark VN-Index has been one of the 12 best performers in the world so far this year, according to global market data provider IndexQ.

Recent developments on the VN-Index, which represents the Ho Chi Minh Stock Exchange (HoSE), have far exceeded many investors' forecasts. As of August 31, the main index had reached 1,224.05 points, up 0.95% from the previous session and 21.54% compared to the beginning of the year.

Experts attributed the positive performance to strong cash flow from domestic individual investors. Data from the Vietnam Securities Depository (VSD) shows that in July alone, they opened 151,000 new securities accounts, up over 3% from the previous month (146,000 accounts), marking the highest monthly number in the past year.

The VN-Index reached 1,224.05 points on August 31, 2023, up 21.54% from the beginning of the year. Photo by The Investor/Hoa Khoa.

The VN-Index reached 1,224.05 points on August 31, 2023, up 21.54% from the beginning of the year. Photo by The Investor/Hoa Khoa.

Experts said that the attractiveness of the stock market to individual investors stems from the State Bank of Vietnam’s (SBV) four policy interest rate cuts so far this year. Accordingly, the refinancing interest rate has dropped 150 basic points to 4.5%.

The 12-month deposit interest rates at major banks in Vietnam, domestic and foreign, have fallen below 6% this month. The six-month deposit interest rates, barring some outliers, fell to a maximum of 7% starting mid August.

As deposit interest rates are expected to fall further, many experts predicted that idle money will continue to shift to the stock market, especially when high-interest deposits from the end of last year will mature in the second half of this year. The increasing number of new investor accounts and skyrocketing market liquidity have partly proved this forecast.

In parallel with the massive cash flow into the stock market by individual investors, transactions by foreign investors have also tended to be positive as their net selling momentum has shrunk. In July, they net sold VND24 billion ($996,500), marking the fourth consecutive month of net selling, but much lower than the figure of VND269 billion ($11.17 million) recorded in June.

Other support came from the business recoveries of listed companies. According to leading broker VnDirect, the Q2/2023 net profit of companies listed on the Vietnamese stock market decreased by 12.9% year-on-year, compared to a sharp fall of 19.3% in Q1.

More importantly, the positive performance of the VN-Index was also based on expectations of a recovery in Vietnam's macro economy. VnDirect forecast that the country’s GDP in the second half of 2023 will grow by 7.1% over the same period last year, thereby pushing the whole-year figure to 5.5%. Vietnam's economy will maintain its recovery momentum in 2024 with GDP growth forecast at 6.9%.

Narrowing investment opportunities based on "cheap" valuations

In 2023, the VN-Index is expected to continue to be supported by information on rapid disbursement of public investment packages, further interest rate reductions, and the testing of a new trading system provided by the Korea Exchange (KRX).

On the contrary, challenges to the index include recession risks in the U.S. and the EU; a slower recovery of Vietnam's economy or weakening business profits; the market overheating due to speculative activities of individual investors, and others.

However, in general, analysts have given a positive assessment of the Vietnamese stock market for the rest of 2023.

Bao Viet Securities Company (BVSC) believed that improved business results in the second half of 2023 and 2024 will help bring the VN-Index back to a more attractive level. In the medium term, the broker expected the main index to target 1,300-1,350 points.

Similarly, Viet Dragon Securities Company (VDSC) held that the VN-Index will hover around the territory of 1,180-1,320 points. When short-term risks are temporarily pushed back, investors can consider using financial leverage at a reasonable level to increase the efficiency of their investment portfolios.

From a more cautious perspective, DSC Securities Corporation (DSC) assessed that with the Q2 business picture, the main index's upward momentum is still largely based on expectations, pushing the valuation into the "overbought" zone. Therefore, it held that investment opportunities based on "cheap" valuations have narrowed.

According to DSC, macroeconomic recovery and business growth are not clear in the third quarter of 2023, so the market needs a "rest" before entering a cycle of looking for new investment opportunities. Therefore, the broker recommended a defensive trading strategy that does not use large leverage, adding investors need to be careful when investing in midcaps.

DSC also put forth two scenarios for the VN-Index. Firstly, the benchmark index will keep rising towards the target of 1,270 points. Secondly, it will fall to the 1,200-point threshold and find a new balance point.

Sharing DSC's view, Nguyen Hoai Phuong, investment director at VinaCapital Fund Management JSC, believed that the price to earning (P/E) ratio of the entire market in 2023, excluding the banking group, will reach about 21, equivalent to the levels seen during the cash flow boom in the first quarter of 2018 and the second quarter of 2021.

With the current new investment environment, Phuong said that investors need to have flexible strategies in line with market fluctuations and events. Not only investors but also production businesses should stop applying "just in time" strategies and switch to "just in case" strategies, targeting flexibility to deal with market fluctuations.

Comments (0)
  • Read More
Major Vietnamese developer Novaland appoints new CEO

Major Vietnamese developer Novaland appoints new CEO

Duong Van Bac, who joined Novaland as chief financial officer in August 2023, has been appointed general director, starting Friday.

Companies - Sat, November 2, 2024 | 10:24 am GMT+7

Vietnamese conglomerate Bamboo Capital posts 36-fold profit growth in Q3

Vietnamese conglomerate Bamboo Capital posts 36-fold profit growth in Q3

Ho Chi Minh City-based Bamboo Capital Group recorded an after-tax profit of VND331.2 billion ($13.1 million) in the third quarter of 2024, an astounding 36-fold expansion year-on-year.

Bamboo Capital - Sat, November 2, 2024 | 9:41 am GMT+7

ThaiBev to bag $54 mln from Sabeco’s upcoming dividend payout

ThaiBev to bag $54 mln from Sabeco’s upcoming dividend payout

Vietnam Beverage, wholly owned by Thai Beverage (ThaiBev) will rake in VND1,374 billion ($54.26 million) worth of dividend from Ho Chi Minh City-based top brewer Sabeco.

Companies - Sat, November 2, 2024 | 9:13 am GMT+7

Steel heavyweight Hoa Phat pours over $2 bln into central Vietnam complex

Steel heavyweight Hoa Phat pours over $2 bln into central Vietnam complex

Leading Vietnamese steelmaker Hoa Phat had invested more than VND52.5 trillion ($2.08 billion) in its Dung Quat Iron and Steel Integrated Complex (Dung Quat 2) in the central province of Quang Ngai as of Q3/2024.

Industries - Sat, November 2, 2024 | 8:00 am GMT+7

Vietnam becomes Australia’s fastest-growing inbound market

Vietnam becomes Australia’s fastest-growing inbound market

The number of Vietnamese tourists to Australia has grown significantly after the Covid-19 pandemic, with nearly 178,000 reported in the 12 months to August 2024, according to a Friday press release by the Australian Minister for Trade and Tourism’s Office.

Southeast Asia - Fri, November 1, 2024 | 10:02 pm GMT+7

Study finds shift in Thai consumers’ spending patterns

Study finds shift in Thai consumers’ spending patterns

Consumers in Thailand are shifting their spending focus to experiences and investments, according to the latest ASEAN Consumer Sentiment Study (ACSS) by United Overseas Bank (UOB).

Southeast Asia - Fri, November 1, 2024 | 10:00 pm GMT+7

Energy security, digitalization key to Indonesia's economic growth

Energy security, digitalization key to Indonesia's economic growth

The Indonesian government is prioritizing long-term economic growth through energy security, digitalization, and natural resource industrialization, according to Deputy Minister of Finance Thomas Djiwandono.

Southeast Asia - Fri, November 1, 2024 | 9:58 pm GMT+7

Vietnam PM's Middle East tour creates breakthroughs in economic, trade, investment cooperation: FM

Vietnam PM's Middle East tour creates breakthroughs in economic, trade, investment cooperation: FM

Prime Minister Pham Minh Chinh’s freshly ended six-day trip to the UAE, Saudi Arabia and Qatar has produced important outcomes, demonstrating the growing relations between Vietnam and the three Middle-East countries, Deputy Prime Minister and Foreign Minister Bui Thanh Son told the Vietnam News Agency.

Politics - Fri, November 1, 2024 | 9:25 pm GMT+7

Vietnam, Qatar look to tap potential for energy, oil & gas collaboration

Vietnam, Qatar look to tap potential for energy, oil & gas collaboration

Vietnam and Qatar have recognized the significant potential for further collaboration in multiple sectors such as energy, oil and gas, especially LNG, agriculture, Halal industry, and banking.

Politics - Fri, November 1, 2024 | 9:02 pm GMT+7

Thailand bans export of raw palm oil until December

Thailand bans export of raw palm oil until December

Thailand's Department of Internal Trade has temporarily banned the export of raw palm oil due to reduced production caused by drought and plant diseases.

Southeast Asia - Fri, November 1, 2024 | 8:31 pm GMT+7

Envision Energy to build $420 mln wind power plant in Vietnam from June 2025

Envision Energy to build $420 mln wind power plant in Vietnam from June 2025

Envision Energy Singapore Pte Ltd, under China-based Envision Energy, aims to kick off construction of the 300-MW Envision Nam Po wind power plant in Vietnam’s northern mountainous province of Dien Bien in June 2025.

Energy - Fri, November 1, 2024 | 8:30 pm GMT+7

Indonesia to ban plastic waste imports from 2025

Indonesia to ban plastic waste imports from 2025

The Indonesian government will start imposing a ban on the import of plastic waste from the beginning of next year, according to Minister of Environment Hanif Faisol Nurrofiq.

Southeast Asia - Fri, November 1, 2024 | 8:29 pm GMT+7

Islamic economy makes up 48% of Indonesia’s GDP

Islamic economy makes up 48% of Indonesia’s GDP

The contribution of Islamic business activities to Indonesia’s GDP has been estimated at 48%, local authorities reported at the 11th Indonesia Sharia Economic Festival (ISEF).

Southeast Asia - Fri, November 1, 2024 | 8:28 pm GMT+7

Restructured construction giant Tracodi gets set to execute ambitious plans

Restructured construction giant Tracodi gets set to execute ambitious plans

After changing its name and restructuring as a group, Tracodi Construction Holdings JSC (HoSE: TCD), a member of Bamboo Capital Group (HoSE: BCG), has completed a leadership shake-up and is poised to achieve rapid growth.

Bamboo Capital - Fri, November 1, 2024 | 4:43 pm GMT+7

Philippines requests companies to pay for plastic waste treatment

Philippines requests companies to pay for plastic waste treatment

The Philippines expects its "Extended Producer Responsibility" (EPR) that came into force last year will help it curb plastic waste

Southeast Asia - Fri, November 1, 2024 | 4:30 pm GMT+7

Indonesia warns of rising online terrorism

Indonesia warns of rising online terrorism

Indonesia's National Counter-Terrorism Agency (BNPT) has warned of a shift in terrorism tactics, moving from public attacks to online platforms that target vulnerable groups, particularly women and children.

Southeast Asia - Fri, November 1, 2024 | 4:29 pm GMT+7