Stock market hits records in COVID-19 year on rising optimism (Illustrative photo: VNA)Hanoi (VNA) - Vietnam’s stock market has posted record highs as theGovernment’s stimulus measures and good control of the coronavirus outbreak areturbo-charging the country’s economic recovery from the pandemic, according toinsiders.
Chairman of the State Securities Commission (SSC) Tran Van Dung said the stockmarket has weathered COVID-19 in a spectacular fashion, despite foreigninvestors losing confidence and withdrawing capital, which saw many stocks fallsharply amid volatile trading.
Some suggested halting transactions to stabilise the market, but the Ministryof Finance and the SSC maintained their view of reducing market intervention, andit has been operating smoothly since and seeing a remarkable recovery, Dungstressed.
The stock market posted strong growth for the year as optimism rose regarding theGovernment’s policies, Vietnam’s economic development prospects, and the resilienceof local enterprises to the pandemic.
Record liquidity
As of November 30, capitalisation had hit over 6.11 quadrillion VND (264.24 billion USD) - the highest level ever and accountingfor 101.33 percent of GDP and surpassing the target of 70 percent set in thestock market development strategy by 2020.
Strong recovery coupled with record-low interest rates drove capital flows intosecurities, and the market saw the largest number of players in its history. Atotal of 332,886 trading accounts had been registered as of the end of November;329,452 of which were opened by Vietnamese.
Trading value smashed records on both bourses by exceeding 23.56 trillion VNDon June 15.
Stock market maintains bullish momentum in various sessions (Illustrative photo: VNA)Meanwhile, liquidity in the derivatives market reached a record high, with356,033 transactions on July 29.
Transactions of VN30 futures contracts averaged over 163,000 per session duringthe year, up 84.27 percent against 2019.
As of the end of November, the market had 161,992 derivatives accounts, morethan 70,000 of which were opened this year.
2020 was also a great year for the local bond market, with the number ofcorporate bonds issued in the first 11 months up 25 percent compared to 2019 asa whole.
According to Chairman of the Ho Chi Minh Stock Exchange (HoSE) Le Hai Tra, the top20 securities firms saw transactions rise between three and 12 folds.
Analysts bullish
Hoang Cong Tuan, an analyst from the MB Securities Joint Stock Company, saidthe stock market has developed in line with the macro-economic situation.
As Vietnam has stabilised its macro-economy, Tuan said he is upbeat about thestock market in 2021 and believes it will become more attractive to foreigninvestors.
Meanwhile, Tran Xuan Bach from the Bao Viet Securities Joint Stock Company saidthe Government’s stimulus measures and low interest rates have supported local enterprisesa great deal, with prospects looking good for next year.
Regarding the stock market recovery this year, Deputy CEO and Chief InvestmentOfficer at PVI Holdings Nguyen Duc Hung Linh said the VN-Index crossing the1,000-point threshold stemmed from investment by individual players withever-changing tastes.
Low interest rates are said to be the most important element propping up thestock market, he said, adding that a market upgrade is necessary, as investors stillfind investing in a frontier market to be risky.
Investors at a VNDirect Securities Company trading floor (Illustrative photo: VNA)
Dung said that with a better IT system at HoSE, which facilitates several typesof stock transactions, Vietnam has made significant progress in upgrading itsstatus before 2025, as set by the Government.
Morgan Stanley Capital International (MSCI) last month upgraded the Kuwaitimarket to emerging market status from frontier market. The re-classification issaid to boost foreign capital flows into other frontier markets, includingVietnam, Dung said.
Early last month, Vietnam officially accounted for the largest proportion on theMSCI frontier markets index. Its stock market is projected to account for 15.76percent of the index by the end of last year and 28.76 percent by the end of2021, he added./.
