Viet Nam’s benchmark stock index, VN-Index, could exceed 1,300 points in 2018 due to the positive outlook for the country’s economic growth and a strong inflow of foreign investment.
The benchmark index on the HCM Stock Exchange ended 2017 at 984.24 points, setting a new 10-year high after having rallied a total of 4 per cent in six sessions. The benchmark index has risen 48 per cent since the end of 2016.
The benchmark VN-Index was also among the top three stock indices with the best growth rates worldwide, along with Argentina and Mongolia’s markets.
The minor HNX Index on the Ha Noi Stock Exchange also finished last year on a positive note at 116.86 points. The northern market index made up a five-straight-day increase of 3.4 per cent and totaled annual growth of nearly 46 per cent.
Viet Nam’s stock market has doubled in size in the past year to reach VND3.52 quadrillion (US$155 billion), equal to 72 per cent of the country’s total gross domestic product (GDP).
The strong development of the Vietnamese market was fueled by the sale and listing of large-cap enterprises—including brewers Sabeco and Habeco, petrol dealer Petrolimex, dairy producer Vinamilk and retail giant Vincom Retail—and by a net purchase value of VND27 trillion ($1.2 billion) recorded by foreign investors for the whole year.
The country also gained some achievements in its macro-economic conditions, such as the higher-than-expected GDP growth rate of 6.81 per cent published by the General Statistics Office on Wednesday, some 120,000 new businesses formed in 2017 and the reduction of administrative procedures by ministries and sectors.
Analysts expect all of these factors to provide a further boost to both the country’s economy and stock market in 2018, with strong growth expected in banks and energy firms.
“The VN Index in 2018 could outstrip the 2007 record high of 1,180 points, made with strong market trading liquidity,” said Nguyen The Minh, deputy head of capital market analysis and individual investors at Saigon Securities Inc (SSI). “The VN Index can rise up to 1,340 points this year.”
In 2018, the stock market will receive a strong boost from many companies that sell shares in initial public offerings (IPOs) and from commercial banks that are beginning to list shares on the stock exchanges, Minh said.
The HCM City Development Bank (HDBank) will become the first commercial bank to go public in 2018, listing 981 million shares on the HCM Stock Exchange under the code HDB on January 5.
Bac A Joint Stock Commercial Bank (Bac A Bank) wass the latest commercial bank to go public last year. The Ha Noi-based bank started trading 500 million shares on the Unlisted Public Company Market (UPCoM) on Thursday.
Bac A Bank was the fifth commercial bank to trade shares on the stock market after VPBank, Kien Long Bank, Lienvietpost Bank and Vietnam International Bank. The total number of traded banks has reached 14.
According to Minh, banks are expected to post high profits for 2017, and their performance will be kept steady in 2018 thanks to the restructuring of non-performing loans and the improvement of the banking structure to meet the standards of Basel II.
The energy sector is also expected to boost the market as it has underperformed in the last two years as a result of low oil prices. Duong Van Chung, head of the northern market division at MB Securities Company (MBSC), told tinnhanhchungkhoan.vn that energy shares will see strong growth and drive the market up.
Chung said energy firms had barely advanced in 2017 when crude prices reached the expected breakeven price point of $60 per barrel in December 2017, set by those energy firms.
US crude West Texas Intermediate finished 2017 at $60.42 per barrel, having recovered from its 13-year-low range of $33.62 per barrel in late January 2016. Brent crude ended last year at $66.87 per barrel, up from the low level of $34.74 per barrel in late January 2016.
Oil prices are expected to advance further this year on the extension of an output curb deal between the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC exporters.
Meanwhile, IPOs and share sales of large-cap energy companies will also attract investors, Chung said. These large-scale deals include the IPOs of energy firms, such as PetroVietnam Power Corp (PV Power), PetroVietnam Oil Corporation (PV Oil) and Binh Son Refinery and Chemicals Corporation (BSR) and the share sales of Petrolimex and PetroVietnam Gas Corporation (PV Gas).
In addition, brokerage firms also hope to have a robust year in 2018 with the growth of the securities market and the introduction of new securities products to meet investors’ demand and international practices, analysts said.
According to SSI analyst Minh, the strong improvement of the Vietnamese market will attract more attention from foreign investors.
The over-$1-billion foreign investment that flew into Vietnamese securities market in 2017 will increase this year, and foreign capital will be the main source driving the growth of the market, Minh said.
Foreign investors are expected to participate in the IPOs and share sales of the large State-owned enterprises, while the efforts of the Government to improve the business environment and increase the limit of foreign ownership in local companies is also expected to motivate foreign investors to strengthen their presence in the local stock market, Minh said.