Vietnam’s stock market movement from July

At the end of the trading week from July 26 to July 30, 2021, the VN-Index increased by +41.22 points – equivalent to +3.25%, to 1,310,05 points. The index maintained its gaining momentum in all 5 sessions of the week with 270 gainers and only 98 losers. MSN, VIC, and GVR are the three most active support codes for VN-Index this week, contributing +4.79, +2.93, and +2.92 points, respectively. VNM, SSB, and HNG were the three codes with the most negative impact on the index, removing - 0.85, -0.31, and -0.15 points. The average trading value reached 16,807.09 billion VND/session. Foreign investors net bought +658.53 billion VND on the HSX in the last week of July 2021.

On the HNX, the HNX-Index ended the week at 314.85 points, up +13.08 points. The index also maintained its gaining momentum in 5 out of 5 trading sessions of the week with 153 gainers and 118 losers. NVB, SHB, and VND were the three most active support codes for the index's gain, contributing +3.03, +2.96, and +1.99 points. Meanwhile, DXS, KHG, and TVC were the three codes that had the most negative impact on Hnx-Index, removing -0.40, -0.23, and -0.09 points. The average trading value reached 2,175.63 billion VND/session.

In July 2021, foreign investors' transactions on HNX were quite active, buying value reached more than 959 billion VND, selling value reached more than 656 billion VND. Within July, foreign investors net bought more than 303 billion VND. In which, the stocks bought the most by foreign investors were PVI with approximately 9.5 million shares, followed by PCG with buying volume of more than 6.6 million shares, VND with buying volume of 3.81 million shares, BSI with KL bought more than 2.5 million shares.

In the first week of August, Vietnam’s stock market continued to flourish. The COVID-19 is quite under control and vaccination in major cities is getting done rapidly. Those will be supportive factors for the current movement of the market.

At the end of the session on August 4, 2021, the VN-Index recorded the 8th consecutive gaining session, reaching 1,334.74 points. HNX-Index gained 0.28% and stopped at 320.02 points; UpCOM-Index dropped slightly below reference. Matching transaction value on all 3 exchanges remained high at 23,210 billion VND.

Demand in blue-chips slowed down, causing the VN30-Index to increase by 0.16%. STB (+2.9%), BVH (+2.1%), PLX (+2.1%), TPB (+1.9%) were outstanding gainers. On the contrary, losers also recorded a slight decrease reflecting technical profit-taking such as MSN, VRE which fell by less than 2%.

Vietnam's stock market rallied on news that the International Monetary Fund (IMF) had approved a financial support package worth up to $650 billion, of which Vietnam could receive about 1.56 billion USD. President Joe Biden of the United States is planning to upgrade the infrastructure. That can increase steel demand by about 5 million tons/year within the first five years, helping the share price of the steel industry to rise in HPG (+0.5 %), NKG (+4.6%).

The World Trade Organization (WTO) announced that Vietnam holds the second position as a global textile and apparel supplier after China, helping the textile and garment stocks increase in MSH (+1.6%), STK (+2.0%). According to the Ministry of Agriculture and Rural Development, in the first seven months of the year, total rubber export turnover increased sharply by 73.6% over the same period in 2020, helping the stock price of rubber rise in TRC (+1.8%), DPR (+1.2%). Foreign investors were net buyers in VHM (-0.4%), STB (+2.9%), SSI (+0.5%).

It is forecasted that the VN-Index will maintain its upward momentum and challenge around the 50-day moving average. At the same time, the market is still in the accumulation phase, so the market may still see corrections. The positive point is that the VNMidcaps and VNSmallcaps indexes are still in a period of strong fluctuations in a positive direction. The cash flow will continue to focus on these two groups of stocks in the short term. In addition, the short-term sentiment index continued to improve, showing that new disbursement opportunities continue to increase.

The short-term trend of the general market is still up. Therefore, it is recommended that short-term investors continue to take advantage of the corrections to increase the proportion of stocks and buy new shares.

The potential of Vietnam’s stock market in the long term

Vietnam's stock market has had remarkable growth. The VN Index increased more than 14 times, achieving an average return of 15.88% (including cash dividends). The trading value on the three exchanges reached an average of 1 billion USD/session in the first 6 months of 2021, quadrupling compared to the same period last year thanks to the capital inflow of domestic individual investors strongly pouring into the stock market. Vietnam's stock market has matured with liquidity surpassing some major markets in the region such as Malaysia, Indonesia, etc.

In the long term, the growth potential of Vietnam's stock market is still very large. The above assessment is based on the following factors:

• The ratio of securities investment accounts per capita in Vietnam is currently only about 3.2%. If compared with the developed markets that went ahead, such as Thailand with 6% - 7% of the population, Taiwan with over 40%, the US with over 50%, etc., the market potential is still very wide open.
• The tendency of savings interest rates to remain low will cause more capital to move through the securities channel.
• During the period of golden population and rapid growth of the middle class, Vietnam's economy is forecasted to maintain a high growth rate for at least the next ten years. That is the basis for the profits of businesses to continue to grow strongly, and when the profits of enterprises continue to grow, the stock market will also develop accordingly.

Source: The Ministry of Industry and Trade