2022 is anticipated to be a difficult and complicated year for the world and Vietnam. Vietnam’s stock market will also face more difficulties than last year, especially with the unpredictable geopolitical fluctuations in the world.
Domestically, the pandemic will continue to adversely affect the recovery process of Vietnam's enterprises and economy. The increasing price of input materials will directly affect the operating costs of enterprises.
Companies have shown signs of recovery, and cash flow is gradually shifting back to the production and business sector. It is possible that the stock market will be affected, making it difficult to achieve impressive growth like in 2021.
As for geopolitical issues, the world economy is forecasted to have many potential risks, especially with the stock market, which is very sensitive to world market fluctuations. With the possibility of complicated market movements, it is forecasted that world economic growth will slow down.
According to the IMF, the world economic growth will reduce to 4.4% compared to 5.9% in 2021. The stock market is also forecast to decrease compared to 2021, especially when countries cut economic aid.
Rising interest rates will be a drag on the stock market. Besides, the prospect of rising interest rates will cause capital flows to shift from emerging markets to developed markets.
The market still shows positive signals for some groups of stocks, specifically:
The prospect of the banking sector is evaluated positively with the news of capital increase, foreign room opening, the move to change the floor of some banks, etc. That will be the driving force for banking stocks to rebound. Besides, the profit growth potential of the banking sector will also be positive thanks to the economic recovery and the Government's stimulus package.
However, the pressure to improve NIM is gradually weighing down, and the bank's bad debt pressure is likely to increase. In 2021, banks' bad debts tended to increase significantly at some banks, such as VPBank (up 60%), Vietinbank (49%), VIB (58%), HDB (43%), etc.
Securities will benefit greatly from the liquidity boom. That is still a potential investment channel because the yield on bonds is estimated at only 2%/year and stocks up to 6%/year. The pressure to withdraw capital from foreign investors is not much, and a shift of cash flow to emerging and frontier markets is possible due to the attractive correlation between growth and reasonable valuation.
In addition, the new securities trading system (KRX) expected to come into operation in 2022 will contribute to solving the bottleneck in cash transaction margin, thereby promoting foreign capital inflows to Vietnam.
However, the challenge for the securities industry in 2022 is that liquidity is likely to slow down or not grow further, putting pressure on the brokerage revenue of securities companies. Proprietary activity, the most profitable segment for securities companies, is assessed to be more difficult in 2022 because securities are no longer as attractive as in 2021.
Besides, there is margin lending. The average quarterly growth rate in 2020 and 2021 is 15% and 19%, respectively. As a result, the current margin balance is at the highest level in history, approximately 170 trillion dong, up 98.7%. Many securities companies continue to plan to issue shares to raise capital to improve their margin lending capacity.
In addition, a sharp increase in interest rates right from the beginning of 2022 to attract cash flow back to the bank will affect cash flow in the stock market.
Seafood is also an industry expected to bring profits to investors when benefiting from trade agreements such as EVFTA and UKVFTA.
In 2022, it is forecast that Vietnam's seafood exports will reach 9.2 billion USD, up about 3.5% over the same period last year.
However, the seafood industry will also face some challenges, such as high prices of shrimp and fish feeds, rising logistics costs, rising oil prices increasing transportation costs, and competitive pressure from other exporting countries such as India, Ecuador, Indonesia.
The outlook is also positive for construction and building materials, and seaports.
There is still room for growth in the Vietnamese stock market in the long term.
When Vietnam reopens, there will have a good impact on the industry groups most affected by the pandemic. The interest rate level has not changed sharply in the short term, and the cash flow is still retained in the market. In particular, the interest of investors will remain.
In 2022, the Ministry of Finance and the State Securities Commission will implement solutions to promote the sustainable development of the stock market.
Vietnam will actively improve the legal framework and complete the stock market development strategy for the 2021-2030 period. In addition, the country will enhance inspection and supervision of market activities; improve the management, supervision, and transaction mechanism for the privately-issued corporate bond market. Vietnam will also deploy solutions to ensure a smooth transaction system, minimizing transaction congestion.
Source: The Ministry of Industry and Trade
Compiled by VietnamCredit