Vietnam: one of fastest recovering stock markets
Vietnam: one of fastest recovering stock markets
The Vietnamese stock market has been reviving spectacularly in the first half of April, regaining nearly 100 points after the gloomy March and producing one of the best performances among stock markets around the globe.
The VN-Index regains 15 per cent in the first two weeks of April alone
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Accordingly, from the 659 points on March 30, Vietnam's benchmark VN-Index has rebounded sharply in the first two weeks of April to surpass 770 points on April 15, 2020. This signified a 15 per cent gain in value while other stock exchanges in the region such as that of Thailand and Indonesia all posted falls.
Many blue-chips and tickers across various sectors have gained significantly. Tickers of companies in the aviation sector have also begun turning the tides, after posting continual declines over many previous trading sessions.
The number of new accounts by security investors has also set a record. The Vietnam Securities Depository last week announced that investors have opened more than 32,000 accounts last month (March) alone, most coming from domestic investors, setting a record since the VN-Index hit its peak 1,200 points two years ago.
This is a substantial move towards the target of having 3 per cent of the Vietnamese population open accounts for stock trading by 2020, and 5 per cent by 2025, set out in the project on restructuring the Vietnamese stock and insurance market to 2020 with vision towards 2025 of the Vietnamese government.
Notably, the sharp rise in securities investors’ accounts came at a time when the coronavirus (COVID-19) outbreak is plaguing Vietnam and countries around the world, and local people are implementing the social distancing and isolation policies of the government.
This reflects improving investor sentiment, which is underlined by Vietnam being recently assessed as one of the fastest recovering stock markets on the globe.
| Besides, the convenience of online stock transactions has also contributed to the recent growth in investors’ accounts. |
Regarding the fight against COVID-19, by April 15, Vietnam has reported less than 300 cases of infection, with more than half of the patients cured successfully. Albeit having less than 300 cases, the country has quickly taken initiative in deploying social distancing policy from April 1, 2020.
The government has also launched economic stimuli packages and fee reduction for securities business.
Industry experts stated that compared to other stock exchanges, Vietnam’s stock market is quite appealing with an average price-per-earnings ratio of approximately 11x, while return-on-equity surpasses 17 per cent, making many tickers attractive for investors.
Besides, the convenience of online stock transactions has also contributed to the recent growth in investors’ accounts.
Experts have also delivered mixed assessments about the Vietnamesee stock market’s future movements.
Along with this, most share the common view that the stock market’s future (for better or worse) lies in the capacity for pandemic control of Vietnam and leading economies such as the US, Europe, and Japan.
The investors, albeit in high spirits, need to be cautious as this is a sensitive time in the fight against the COVID-19 pandemic. Bad news, if strong enough, could turn the market down abruptly.
Investors, therefore, should take to heart experts' advice to be cautious in margin trading, consider diverse scenarios for market movement, diversify their investment baskets, and cut costs.
