However, in 2022, investors have become more cautious, and cash flow is no longer as "reckless" as 2021.
The VN-Index set new historical peaks many times in 2021. In particular, the highest peak was on November 25 when it hit 1,500.81 points. This is also the peak in the history of Vietnam stock market. Previously, on the first day of the second quarter of 2021, VN-Index officially surpassed the 1,200 point mark - a record milestone set in 2018. As of December 28, 2021, VN-Index reached 1,494.39 points, an increase of 35.4% compared to the end of 2020. This made Vietnam’s stock market become one of the top markets with the highest profitability ratios in the world.
Along with the strong growth of the index, the stock market capitalization also increased strongly. As of December 28, the market capitalization reached VND 7,729,000 billion, up 46% compared to the end of 2020, equivalent to 122.8% of GDP.
As of the end of November, the size of the market's listing and trade registration reached VND 1,727,000 billion, up 14.1% compared to the end of 2020 with 761 stocks and funds listed on 2 HoSE and HNX, and 890 stocks registered on UPCoM.
Liquidity in the stock market in 2021 continuously exploded and increased strongly thanks to the cash flow of domestic investors. Stock market liquidity increased rapidly and continuously over the months and in November reached VND40,117 billion / session.
In 2021, the average transaction value reached more than VND 25,960 billion / session. Liquidity increased by 250% compared to 2020, witnessing a record trading session of USD 2.3 billion, ranking 2nd in Southeast Asia.
In the same period, the number of investors participating in the stock market increased sharply, contributing to pushing the market liquidity to billions of USD/session. In the first 11 months of 2021 alone, the total number of securities accounts in Vietnam reached 4.08 million, an increase of 47.3% compared to the end of 2020.
Commenting on the explosion of liquidity in the market, many economists believed that the Vietnamese stock market has developed to a new height, which helps to attract cash flows from different classes in society.
According to statistics from securities companies, in 2021, people transferred more tens of trillions of dong (equivalent to about USD 3 billion) into securities investment. This is a very huge figure, showing the interest of domestic investors in the stock market.
Dr. Quach Manh Hao, a lecturer at Lincoln University, UK, said that the Vietnamese stock market was having a long and relatively sustainable growth period. The sustainability is reflected in the fact that the cash flow into the market is quite strong, quite large and creates an attraction when investors are considering securities as a new investment channel instead of the traditional savings deposit channel.
Since the beginning of 2022, the VNIndex has recorded 19/45 green candles while red candles were quite popular. Although the number of securities accounts still increased to a record high, investors have become more cautious, and money flow is no longer so "reckless" as in 2021.
Over the first months of the year, Vietnam's stock market has fluctuated strongly mainly due to 3 factors.
Firstly, the Russia-Ukraine conflict is deepening inflation pressure and hindering economic growth. Disruption to the global supply chain is expected to continue until the end of 2022. Inflation continues to escalate in many countries as fuel prices rise.
Secondly, investors are waiting for interest rate movements. In the March monetary policy meeting, it is likely that the FED will proceed to raise interest rates at 25 basis points. Meanwhile, the European economy is facing many difficulties, making the ECB hesitate in the move to raise interest rates.
Finally, economic activities have almost been restored in economies with high vaccine coverage. According to statistics of the State Bank, since the beginning of the year, 79.46% of the capital flow of banks has been allocated to production and business activities, while that to securities only accounted for 0.54%.
This means that the momentum from new investors is waning because the cautious sentiment is high, and the pedestal supported by the flow of risky money gradually wears off.
SSI Securities saw quite a negative signal when the VNIndex penetrated the support level of 1,470 and then 1,450 points with an increase in trading volume. With the above developments, VNIndex is likely to continue adjusting to the support zone of 1,425 - 1,400 points.
According to VCBS Securities, the cash flow is still choosing to stay out of the game for observation. Investors can take advantage of the downward trend to disburse with a small proportion in order to gradually accumulate target stocks at discounted prices for the medium - long term portfolio. At the same time, it is also necessary to focus on strict risk management and avoid abusing leverage in times of strong market volatility.
Source: SSI, VCBS, SBV
Compiled by VietnamCredit