Two investors watching the market's movements on a computer. (Photo: tinnhanhchungkhoan.vn)Last month, the benchmark even witnessed an outstandingbreakthrough with a gain of more than 74 points, or 6.2%, over the previousmonth.
The strong recovery helped the VN-Index become one of the world'stop performing stock markets in August, said the financial website cafef.vn, citing statistics fromStockq.
The index's performance surpassed most markets in the region, suchas Malaysia, Singapore, Indonesia, and Thailand, with these markets' growth ina range of 0.5-4.3%, but it just lagged behind the Philippines' benchmark,which was up 6.9% in August.
Market capitalisation of the Ho Chi Minh Stock Exchange (HoSE)also advanced by 300 trillion VND (12.74 billion USD) last month, with anaverage trading value on three exchanges reaching 18.5 trillion VND, up 34%month-on-month.
As the benchmark VN-Index ended last month at 1,280.51 points, itsprice to earnings ratio (P/E) was 13.67x, 12.95 times higher than that at theend of July, according to data from Algo Platform. The attractive valuation wasone of the factors luring bottom-fishing cash flows to the market.
Last month's capital flows were circulated in many industries likeretail, securities, chemicals, oil and gas, and construction materials,supporting the market's rallies.
According to VNDirect Securities Corporation, the index's reboundwas driven by some events, including the easing inflation in the US and Vietnam,the improvement of the domestic market's sentiment with expectations that theUS Federal Reserve would slow down its rate hike in the last quarter of theyear, and speculative cash flows.
Liquidity also recovered significantly, with the average tradingvalue on HoSE of nearly 15.8 trillion VND per session in August, an increase of36% over the previous month. Liquidity bounced back in all sectors.
However, the liquidity's recovery was not in line with a gain innew investors. In July, the number of new accounts was only 198,988, a decreaseof 57% from the record set in June. This was also the lowest since lastNovember.
Activities of foreign investors were also more positive after netselling in July. Their trading value totalled 45.46 trillion VND last month, ofwhich they purchased nearly 23.3 trillion VND and sold 22.29 trillion VND.Therefore, foreign investors net bought a value of 980 billion VND, the monthlylowest value since the beginning of 2022.
In its latest update, VNDirect said that the current market'svaluation is appealing to long-term investors, who are looking for enterpriseswith high profit growth.
With the strong growth of earning per share (EPS) during2022-2024, the securities firm said that the Vietnamese stock market is stillmore attractive than in the past and other markets in the region.
Vietnam is a bright spot among emerging markets with the forwardP/E of 12.2x in 2022 and the predicted 10.4x in 2023, much lower than theaverage P/E in the last five years. The market's background is improving, andthe correction is creating opportunities for disbursement for investors tobuild portfolios in the fourth quarter and 2023.
Meanwhile, according to Vietnam Maritime Commercial Join StockBank (MBS), the market is likely to be affected by the correction of the globalmarket, but may quickly rebound thanks to the diversified cash flows.Therefore, the declines will be chances to restructure portfolios.
Data from the last ten years showed that September is always themonth posting positive growth rate. Thereby, the domestic stock market may movein a different direction to global negative trends.
In its bullish scenario, if the VN-Index returns to 1,300 points,the cash inflows will rise to break over July's peak of 1,315 points and headtoward 1,350 point-level. However, in the basic scenario, the index will tradesideways and hover around 1,280-1,305 points./.
VNA
