VinaCapital has just released a positive assessment report with the prospect of Vietnam's stock market in 2020.
Looking back in 2019, VinaCapital assessed that Vietnam still maintains high GDP growth and relatively stable inflation. Vietnam's consumption growth remains high. While the US-China trade war brought a new wave of FDI investment into Vietnam, as well as contributed to speeding up the expansion of the already well-developed manufacturing sector before the war. Vietnam's stock market, despite volatility, is still a good year of growth.
VinaCapital believes that the economy, as well as Vietnam's stock market, will continue to grow well in 2020 and overcome external "storms". VinaCapital forecasts that Vietnam's GDP growth will be almost certain at 6.7 - 6.9% next year, while the figure is only around 3%. Manufacturing and consumption will support economic growth.
VinaCapital assesses the environment of high GDP growth and low inflation, together with a favorable global context for stock market prices of emerging markets (EM) and margins (FM), combined with a reasonable valuation of Vietnamese stocks. VinaCapital assesses the environment of high GDP growth and low inflation, together with a favorable global context for stock market prices of emerging markets (EM) and margins (FM), combined with a reasonable valuation of Vietnamese stocks.
Prospects of EM and FM markets promise to be positive in 2020 for 4 reasons:
The US and EU central banks continue to relax quantitatively;
USD depreciated next year, this is a positive signal for FM and EM stocks;
FM and EM markets have not increased much compared to developed markets, especially the US market;
Central banks of FM and EM countries (including Vietnam) have acted in the same direction with the FED when cutting interest rates in 2019.
VinaCapital forecasts that the VN-Index will grow by 10-15% in 2020. In addition, the index may increase even better if the Non-Voting Depository Certificate (NVDR) is released, which helps foreign investors access the stocks that are out of the room. The introduction of NVDR will help Vietnam strengthen its ability to upgrade from FM to EM, although this is unlikely to happen even in 2020.
Forecasts of industry groups, VinaCapital estimates that listed banks' profits will grow by 23% in 2020, driven by the expected system-wide credit growth of 13-14% next year (equivalent to 2019). Mortgage loans could grow by 30% and account for ¼ of the total loans of banks in 2020. Favorite stocks of VinaCapital include MBB, VCB, VPB.
For the retail sector, profit growth in 2020 continues to be driven by the emergence of the middle class in Vietnam and the shift of small retail stores (mom and pop) to large-scale chains. Two recommended stocks are MWG and PNJ. The technology sector is led by FPT. More than half of FPT's income comes from software outsourcing, which is expected to grow more than 25% next year with demand from foreign customers, especially Japan. In addition, more than 1/3 of FPT's revenue comes from the telecom segment, expected to grow 15% per year.
VinaCapital also emphasized the attractiveness of Vietnam's leading steel producer, Hoa Phat Group (HPG) when doubling production output by 2020.
For the real estate industry, VinaCapital has a neutral assessment in 2020 due to a review of new projects in Ho Chi Minh City. However, low-cost housing developers such as NLG, KDH continue to benefit from the needs of the middle-income class in Vietnam. Meanwhile, VIC continued to benefit from ETF capital flows due to the high proportion of index baskets. While VHM continues to benefit when large-scale projects are launched for sale.
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