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A positive outlook for Vietnam’s stock market

A positive outlook for Vietnam’s stock market

Thursday 08, 10 2020
Vietnam’s stock market has witnessed several positive changes recently. The market is among the best in the world. Moreover, capital mobilization in the market experienced slight increase in the first 9 months of 2020.

At the end of the session on September 30, 2020, the VN-Index was 905.21 points, which was an increase of 1.23 points compared to the session on September 29, 2020. The liquidity of this stock exchange continued to remain at a high level, reaching nearly 6,400 billion VND, in which the put-through value was nearly 834 billion VND. The HNX-Index increased by 1.2 points to 132.93 points, while its liquidity was 696 billion VND. Large-cap stocks, especially VSC, which hit the ceiling prices after the information about its profit in Q3 had been revealed, were the main cause of gaining momentum of the stock market.

Banking stocks played a leading role in the market, while value of most stocks of this type witnessed a dramatic rise. Specifically, prices of VCB, CTG, TCB, MBB, and HDB all increased, contributing to the overall growth of the market. In addition, food and drink stocks such as VNM, MSN, BHN, SBT, and KDC also saw a positive growth.
A positive outlook for Vietnam’s stock market
In September 2020, the VN-Index increased by 2.42%, making Vietnam become one of the world's fastestgrowing stock markets. Data on StockQ (as of September 29, 2020) shows that the 1-month growth rate of Vietnam stock market ranked 5th globally, following Mongolia, Denmark, Sweden, and Japan.

For the third quarter of 2020, the VN-Index increased by 9.4% to an average of 827.6 points. This ratio almost put Vietnam on the list of the best growing stock markets in the world by quarter.

The recovery of the Vietnamese stock market was the result of good control of the Covid-19 pandemic, which helped business and production activities gradually return to the normal state. Accordingly, the total capital mobilization for the economy made by the stock market in the first 9 months of the year was estimated at 228,800 billion VND, an increase of 1.43% over the same period in 2019.

Vietnam's stock market is expected to be upgraded to an emerging market
The amended Securities Law, Enterprise Law and Investment Law were passed by the National Assembly, and are expected to take effect from January 1, 2021. VNDIRECT said that the changes in the above laws will contribute to eliminating some challenges that foreign investors has always faced. Specifically, the current Law stipulates that the FOL (foreign investors’ holding) rate in public companies operating in unconditional business is 49% maximum, however, this rate can be 100% after the AGM approves and submits to management agencies for approval.

In addition, that many new ETFs were established in the first half of 2020, especially the VFMVN Diamond ETF, which focuses on investing in stocks without “foreign room”, has opened an attractive investment channel for foreign investors who want to invest in stocks that they can no longer purchase directly, thereby making way for the inflow of foreign investors' capital to the Vietnamese stock market.
Vietnam's stock market is expected to be upgraded to an emerging market
In terms of meeting the clearing and settlement criteria, Vietnam is working with Korean partners to implement a new securities trading system that is expected to be completed in 2021. Vietnam also plans to establish a clearing house under the model of Central counter Party (CCP).With the application of this new clearing and settlement model, Vietnam hopes to solve the problems that hinder it from becoming an emerging market.

The new securities trading system is also expected to contribute to the successful implementation of new products such as day trading, sale of pending securities, and new derivatives, thereby attracting more cash flow into Vietnam's stock market in the coming time.
If all of the above come into reality, Vietnam's stock market may be upgraded to the secondary emerging market in the next annual equity country classification by FTSE in September 2021.

If Vietnam completes the implementation of a new stock exchange system in the first half of 2021, it may be listed on the watch list for an MSCI upgrade to the emerging stock market during the annual market review in May 2021. 

Source: Ministry of Industry and Trade

Stock Market

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