Experts who participating in Topic 1 discussion “Securities and numbers” in the Talkshow series “Stock market and forecast” shows optimistic viewpoints that opportunities outshining challenges for Vietnam’s stock market.
Unexpected though not unusual
This afternoon (June 28th), Topic 1’s theme: “Stocks and numbers” took place in Hanoi, opening the talkshow series “Stock market and forecast”, hosted by Business Magazine. Economic and Forecasting, the mouthpiece of the Ministry of Planning and Investment organization. This series of talk shows continuously be hold from June 28th to June 30th, 2021.
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Experts present at the talkshow. Photo: Anh Quyen |
Speaking at the opening of the discussion, Editor-in-Chief of Economic and Forecast Magazine Nguyen Le Thuy said that the talkshow series “Stock market and forecast” was held at a time when the Vietnamese economy and Vietnam’s stock market were going through the second half of 2021 with many challenges and pressures when the Covid-19 pandemic broke out for the 4th time in Vietnam.
During this context, the positive progression is that the Vietnam stock market has recorded unprecedented records, such as attracting over 500,000 newly opened accounts, multi-session liquidity reaching over 1 billion USD, total market capitalization reaching over 105% of GDP then notably the VN-Index increased by 24% compared to the beginning of the year…
According to Ms. Nguyen Le Thuy, besides the positive results, the Vietnamese stock market still face numerous puzzles that need to be identified and handled on the upcoming journey. We expect experts and managers to evaluate the development of Vietnam’s stock market in relation to macroeconomic movements, market policies and directions, business performance productivity and digital transformation.In particular, public investors awaits view sharing from experts and managers on the future of Vietnam’s stock market, solutions for the market to expand opportunities, and support investors stay sustainable in the market.
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Faced with the fact that the stock market set a record in terms of scores, liquidity, and attracted a large number of new investors to join… in the context of the pandemic outbreak, is it unusual for Ms. Ta Thi Thanh Binh, Director of the Market Development Department , State Securities Commission (SSC) analizes that the context of stock market development during the pandemic is an anomaly. However, the growth not only occurred on the Vietnam stock market, but most of the major markets in the world had even grown spectacularly. As of June 15th, the US stock market rises about 12.4%, the UK increased 10%, France gained 19%, Asian stock markets such as Korea, Thailand, and Japan all boosted up by more than 12% compared to the beginning of 2021. Up to now, VN-Index has ramped up by more than 23%, market capitalization has increased by over 21% compared to the end of 2020. Thus, this growth of Vietnam stock market is standard.
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An the other hand, the cash flows into investment channels that investors have long considered attractive such as real estate and virtual currencies have slowed down recently due to the control measures taken by the regulator leads to the cash flow into securities increased. Therefore, it is clear to see the market’s liquidity has increased sharply recently. “Remarkably, the business results of enterprises on the stock exchange in the first quarter of 2021 showed quite a good ability in pandemic handling. The recent strong expansion of the stock market also shows the great expectations of investors after the pandemic…”, Ms.Binh stated
As said by Ms. Ta Thi Thanh Binh, in May/2021, foreign investors are net sellers about 497 million USD on Vietnam stock market, significantly lower than many markets in Asia namely: in the Thai stock market, investors Foreigners net sold 1 billion USD, meanwhile in Taiwan’s stock market this number has reached to 2.1 billion USD. Markedly, the cash balance on the house’s account Foreign investment on the Vietnamese stock market counting on disbursement remains major. We are closely follow the movements of foreign capital flows…
In the first 6 months of this year, the Vietnamese stock market rallied in the mean time foreign investors proceeded to be net sellers on the stock market, with a value of VND 32,000 billion, while net buying on the bond market was about VND 2,500 billion. Explaining this situation, Ms. Binh answered that this development has not had a negative impact on the market.It is important to distinguish between net selling and net withdrawal. In fact, foreign investors are net sellers in the stock market, yet net buyers in the bond market. It can be seen that the stock market is speedily escalated and the portfolio has reached the expected profit, so they take profits to look for new opportunities, not net sell to withdraw capital.From the researcher’s perspective, Mr. Phan Duc Hieu, Deputy Director of the Central Institute for Economic Management, said that the growth of the stock market over the past time was thanks to the robust growth of listed companies business results in the quarter I/2021.In the first wave of the Covid-19 epidemic, causing a disruption in the supply and demand chain of production relations, though in the 4th wave of the epidemic, it’s a dissimilar story, whereas multiple businesses still had loads of orders. Typically enterprises in the textile industry. Recently, countries around the world have had early vaccination strategies, accordingly some countries have begun to open their markets and resume normal business activities.
“Investor confidence is further strengthened by the control of the Covid-19 epidemic. Recent figures show that individual investors have strongly participated in the stock market, benefiting the market liquidity to be vibrant…”, Mr. Hieu said.
Drc. Vo Tri Thanh, Director of the Institute for Brand Strategy and Competition, mentioned that the sublimation of the stock market in the first 6 months of this year was phenomenal rather than bizarre. Since 2021 is considered the year of economic recovery.Recent forecasts all raise the growth rate of 2021, which means the world economy will recover robustly thanks to the certitude in vaccines. The loosening monetary policy of countries, leading to low interest rates, pressing on. Especially, the middle class and young people with relative income are investing a lot of money in the stock market recently…
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| Dr. Vo Tri Thanh said that the sublimation ofThe stock market in the first 6 months of this year owns the nature of phenomenon rather than bizarrement.Photo: Anh QuyenUpgrading the stock market |
Regarding solutions to carry on enhancing the stock market’s attractiveness to both retain investors and new cash flows, Ms. Nguyen Thi Thu Ha, Director of Derivatives Market Department, Hanoi Stock Exchange (HNX), proclaimed that, along with testing the system for trading derivatives products based on the new VNX200 index, HNX is studying the pre-feasibility of options products.“Today, HNX officially launched the 10-year government bond futures product on the derivatives market. This product is aimed at a variety of investors, so as of noon on June 28th, there were 210 contracts traded…”, Ms. Ha said.
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Sharing more about this new derivative product, Ms. Ta Thi Thanh Binh said, this product is aimed at professional securities investors who has financial potential and higher risk tolerance. This product is more attractive than bond futures based on 5-year Government bonds, because of better liquidity. Therefore, it’s expected to be more appealing to investors.
Ms. Ta Thi Thanh Binh envisages the KRX system will be put into operation at the beginning of the year 2022, thereby paving the way for transaction deployment of selling pending stocks, stocks trading in a day.
Regarding foreign ownership, we expect that ministries and sectors will actively coordinate with the Ministry of Planning and Investment to soon update the conditions for accessing the stock market for foreign investors in a clearer and more transparent manner.The positive point is that managers are updating these conditions in the direction of opting out, meaning that outside of this list, foreign investors have unlimited access to the industries and fields they want to invest in. This will contribute to increasing convenience for foreign investors to access the Vietnamese stock market…”, Ms. Binh said.According to a representative of the Securities and Exchange Commission, the effort to upgrade from the frontier market to the emerging market has recently made some progress, yet because foreign investors are not satisfied with the ease of opening a trading account on the Vietnam stock market, as well as facing difficulties in accessing business information in English, Vietnam does not allow short selling, requires pre-transaction margin, and foreign exchange freedom is still limited. Thus, upgrading market attempt still faces many problems and challenges.Also related to the endeavour to detect solutions to attract foreign capital flows, Mr. Hieu acknowledged that the implementation of the mechanism to issue No Voting Depository Rights Certificates (NVDR) has been stipulated in Enterprises Law, though no results yet. This requires regulatory authorities to take action.
Opportunities surpassing challenges
Sharing her stock market forecast in the coming time, Ms. Binh acknowledged: “opportunities will prevail over challenges, as the factors supporting the growth of the stock market are still there: the macro-economy will continue to be stable, the listed enterprises’ internal strength will remain steady, monetary policy has not changed in the short term. The attractiveness of the stock market remains whilst other investment channels, such as real estate, have not regained their appeal. Although the stock market will have growth prospects in the near future, some hot stocks will be revised…”.“There are concerns about the risks arising from the sharp increase in the number of F0 investors participating in the market; however, recently I have received the opinion of many experts that the quality of this new class of investors is non-identical as before. One of the reasons is that there are many middle-class people who have experience and knowledge to transfer money to invest in the stock market…”, Ms. Binh shared.
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| Intermediaries should be more concerned in training investors, so as to contribute the development of a professional stock market |
Also seeing the positive about the stock market, Mr. Hieu said: “In both present and future, I am optimistic about the expansion of the stock market. However, the point to keep in mind is that currently F0 investors participate in the market accounting for a very large number, while it is difficult to predict their psychology. On their own, investors need to improve their professionalism. Intermediaries should pay more attention to investor training, contribute to a more professional & developed stock market…”. Along with the forecast that the coming stock market will face many advantages, but also many challenges, Dr. Vo Tri Thanh raised two notable issues. First and foremost, once the stock market develops in association with a clear recovery of the economy, more attention should be paid to the fundamental factors of the market such as: continuing to stabilize the macro-economy, restructuring the stock market, improving the quality of corporate governance… rather than developments associated with speculation, although it is true that speculation is not bad.Secondly, the world is still facing many risks, which exist are many uncertain factors due to the still complicated pandemic in addition to risks of inflation, as well as other shocks that cannot be predicted. Accordingly, investors and market members need to equip themselves with an overview and multi-dimensional view of the issue, at the same time it’s necessary to cultivate knowledge about risk management in investment, in business development to stable even in situations where objective movements are unfavorable.
As also stated by Ms. Binh, in terms of internal strength, the gain of Vietnam stock market is due to the positive macroeconomic in the first 5 months of the year.
