Liquidity exceeds US$1 billion
 |
Vietnam’s stock market sees impressive growth |
Closing the session on August 7, Vietnam’s benchmark VN-Index shot up to 1,241.42 points - a new historic peak - fueled by investors' expectation of strongly implemented fiscal, financial and monetary policies, helping businesses' results increase again in the coming quarters.
Along with that, deposit interest rates have cooled down, making securities a more attractive investment channel because individual investors pour money into the stock market, looking for opportunities to earn higher profits. Therefore, market liquidity has improved significantly.
According to VNDirect Securities Company’s statistics, the average trading value of the whole market in July-2023 increased by about 7 percent compared to the previous month and increased by more than 55 percent compared to the same period last year to VND21,216 billion per transaction session. Currently, the cash flow continues to pour strongly into the market. The first trading sessions of August 2023 recorded many sessions of over US$ 1 billion including four sessions with the total market liquidity exceeding VND 30,000 billion (equivalent to nearly $1.3 billion).
According to experts, the loan cash flow of securities companies has significantly helped trigger the liquidity of the stock market to explode in recent years. Statistics show that by the end of the second quarter of 2023, the total debt of the 30 securities companies with the highest outstanding loans in the market reached VND142,364 billion, an increase of nearly 20 percent compared to the previous quarter.
In the coming time, amid the improved market outlook, while securities companies are implementing programs to reduce interest rates and transaction fees, the stock market is expected to continue to attract cash inflows.
Positive outlook
The good recovery of the Vietnamese stock market is assessed by experts as the country’s economy has gradually recovered. VN-Index is expected to enter a new growth cycle with a series of positive macro information such as signs of improvement in exports, stable disbursement of foreign direct investment (FDI) and controllable inflation. In addition, personal cash flow is also ready to return to the special market.
Data from the Vietnam Securities Depository Center has shown that in July 2023, the market welcomed 150,619 new accounts, the highest level in the previous 11 months, including 150,351 new domestic individual accounts.
Vietnam's stock market is considered to have a positive outlook with a significant recovery, so the market valuation of stocks is no longer cheap and potentially risky. According to experts at BVSC Securities, the price-to-earnings ratio (P/E) of the non-financial sector (except real estate) has also increased to a multi-year high.
Without useful information in August, large-cap stocks with low valuations may be favorites by buyers, said a representative of BVSC Securities. An expert of TPS Securities Company also assessed that, after the prolonged increase of the VN-Index over the past time, the market is likely to see ‘shaking’ sessions to re-test the demand around the 1,200 point mark. Therefore, the TPS Securities Company has outlined three hypothetical scenarios. The positive scenario is that with credit growth and GDP in the first 6 months being low, it cannot be ruled out that the State Bank will continue to lower interest rates.
Continued operating interest rate is hoped to increase investors’ excitement as well as attract new cash flows to return, prolonging the uptrend and VN-Index will rise around 1,300 points. The negative scenario is that the risk will come from the devaluation of VND in the context of the rising US dollar price (shown by the DXY index) plus overnight interest rates for USD in Vietnam have surpassed VND. However, according to experts from TPS Securities Company, although it is high compared to the beginning of the year, the valuation level of the market is not as high as in the 2017-2018 period or 2021, so VN-Index will be unlikely to exceed 1,150 points.
