Vietnam's stock market will rise higher in the second half of 2017 provided macro-economic conditions remain positive as they were in the first half. (Photo: laodong.com.vn)Hanoi (VNA) - Vietnam’s stock market will rise higher inthe second half of 2017 provided macro-economic conditions remain positive asthey were in the first half, experts have said.
In the first half of 2017, major sectors of the Vietnamese economyrecorded good growth rates, according to analyst Nguyen Duc Hung Linh of Sai GonSecurities Inc (SSI).
The gross domestic product (GDP) growth rate of Vietnam in thefirst two quarters of 2017 were 5.2 percent and 6.2 percent, respectively, Linhsaid at a conference last weekend.
Those growth rates were attributed to improvements inmanufacturing, retail and whole sale, construction, service supply andfinance-banking sectors.
The annual growth rates that those sectors had posted so far were10.5 percent, 7.1 percent, 8.5 percent, 8.9 percent and 7.7 percent,respectively.
Among sectors that had underperformed, Linh highlighted that thereal estate and mining-energy sectors still had room for improvement.
While the property sector benefited from low lending interestrates, high credit growth and strong market demand for real estate products, itwould be possible for Vietnam to record an annual GDP growth rate of 7 percentif the country managed to boost its energy and mining income, Linh said.
On the stock market, the benchmark VN Index on the HCM StockExchange has gained 15.6 percent since the beginning of the year and the HNXIndex on the Hanoi Stock Exchange has increased by 23 percent.
Market capitalisation reached 2.54 quadrillion VND (112.87 billionUSD) in the first six months, an increase of 25.7 percent from last year-endand equal to 56.4 percent of Vietnam’s total GDP value.
With such growth rates on both local exchanges, the real value ofthe Vietnamese stock market was below investor expectations and the marketrisks were low, Nguyen The Minh, another analyst at SSI said.
According to Minh, investors were attracted to Vietnam’s stockmarket as the profitability ratios during the first half of 2017 for the VNIndex and HNX Index were higher than other major indices in the region such as theRepublic of Korea’s Kospi, Hong Kong’s Hang Seng Index and Japan’s Nikkei 225Index.
The price-to-earnings (P/E) ratio in Vietnam’s stock market wasalso among the lowest compared to other regional indices, he said. The numberfor Vietnam was 16.5, only higher than Thailand (16.0) and lower than otherssuch as China (17.1), Japan (19.2) and Indonesia (24.9).
In addition, new Government policies were expected to boost localstock markets, including those to stabilise and improve macro-economicconditions, equitise and trade State-owned Enterprises (SOEs) on the securitiesmarket, increase foreign ownership in local companies and tighten investmentrequirements for the real estate market, he said.
Advantages for Vietnam’s stock market would include lower lendingrates to boost local businesses and production, declining inflation and stableforeign exchange rates, Le Xuan Nghia, former vice chairman of the NationalFinancial Supervisory Commission, told Dau tu Chung Khoan (SecuritiesInvestment) magazine.
He said that local businesses will also benefit from theGovernment’s determination and efforts to improve conditions for investment andbusinesses, and active participation in free trade agreements.
Those actions have helped draw more foreign capital than expecteddue to the withdrawal of the US from the Trans-Pacific Partnership (TPP) andthe volatility of the world’s political and economic conditions, Nghia said.
Foreign investors have considered Vietnam’s stock market one ofthe most attractive due to the potential growth of the country’s economy in thesecond half of 2017. The country has quite high competitiveness and goodcreditability, he added.
The active participation of the Government in free tradeagreements and its efforts to speed up the restructuring and equitisation ofSOEs were other elements drawing the attention of foreign investors, he said.
However, the local stock market will face competition from otherssuch as the recovery of the US and European markets on their improved economicconditions, Nghia said.
He added that stimulus packages in Europe and Japan may not beextended, which could increase their interest rates, drawing the return offoreign investments to those markets.
In addition, sources of foreign investment that can have a bigimpact on Vietnam’s stock market mainly come from China, Taiwan and Hong Kong.While the Chinese regulators are tightening their policies on indirect overseasinvestment, it would be harder for Vietnamese firms to draw investment fromthose investors at least until the end of this year, Nghia said.-VNA
VNA
