According to the State Securities Commission, in the short term, cash flow into the stock market is likely to continue to increase due to low deposit interest rates and high savings rates. However, when the vaccination program is deployed on a large scale and the economy shows signs of recovery, cash flow from stock investment and savings will shift more into production and business.
The stock market surged in the first half of 2021
Vietnam's stock market is considered to be the market with the second strongest increase in the world. As of June 30, 2021, the VN-Index reached 1408.55 points, an increase of 27.6% compared to the end of 2020. Along with the strong growth in the index, the stock market capitalization also increased. The stock market capitalization increased by 29.2%, reaching VND6,838 trillion, equivalent to 108.7% of GDP, exceeding the target set by the Government.
Liquidity in the stock market continued to explode. Generally from the beginning of the year until now, the average trading value has reached more than 22,770 billion VND/session, up 206.8 % compared to the average in 2020. The strong increase in liquidity mainly came from domestic investors in the period. When foreign investors were net sellers, it showed that the influence of foreign investors no longer dominated the Vietnamese stock market in recent times.
Besides, with the derivatives market, from the beginning of the year to now, the average trading volume has reached 188,865 contracts/session, up 20% over the previous year. Open volume (OI) as of June 30, 2021 reached 30,022 contracts, down 26% compared to the end of 2020. The derivatives market has added a new product, a 10-year government bond futures contract. This product was officially put into trading on June 28, 2021.
Many positive signals in the second half of the year
It can be said that, after a long rally, the stock market is suffering certain impacts from the fourth Covid-19 outbreak. From the beginning of July 2021 until now, the market has had a certain decline in the index as well as the trading volume compared to the previous period. However, domestic and international analyzes both show that market fluctuations in July 2021 are short-term.
According to La Giang Trung, General Director of Passion Investment, looking at the economic cycle, the US national economic research agency said that the economic recession caused by Covid-19 ended in April 2020. “The world's leading economy has recovered and the stock market has also recovered. Similarly, in Vietnam, the stock market bottom appeared at the end of March 2020, "said Trung.
According to this expert, when investing, Passion Investment often looks at the long-term rather than the short-term fluctuations. Meanwhile, corporate profits are still forecast to grow from now to 2022.
Trung assessed that in July 2021, Vietnam's stock market with a decline of 13% is basically creating a bottom and is in an uptrend.
Vietnam's stock market had a downward trend in July 2021, with a decrease of 13-14% from the peak
With Vietnam's economy continuing to recover, expecting to control Covid-19 soon, the stock market in the early stages of growth is still going up, with the forecast that after the peak, the market may increase 30-40 %. “With these assumptions, I think that by the end of this year, the VN-Index can reach 1,600-1,700 points, provided that Covid-19 is controlled in August-September," said Passion Investment CEO.
Identify some risks
However, according to the State Securities Commission, Vietnam's stock market in the near future will face risk factors including:
Firstly, the stock market has grown for quite a long time (from August 2020), having surpassed the 1,400 point mark. The price level of many securities codes is at quite high level after a period of strong increase. Therefore, at this stage, the stock market is relatively sensitive to information and investors' profit-taking psychology, so the market may have corrections with a fairly large frequency.
Second, the complicated and unpredictable developments of the Covid-19 pandemic in some countries around the world and in Vietnam. In case the epidemic continues to break out and last for a long time, it will affect the production and business process of enterprises and affect the psychology of investors in the market.
Thirdly, the recent increase in the proportion of individual investors on Vietnam's stock market from 79% in 2019 to 82% may increase the herd investment psychology, causing the market to have great fluctuations.
Fourthly, the price index of raw materials, fuel and materials used for production in recent months has increased compared to the previous month and increased compared to the same period last year, which may make manufacturing enterprises will face many challenges and difficulties in the coming time and it will be difficult to keep the profit growth as in the past time.
Fifth, in the world, many central banks have begun to give signals about the possibility of applying policies to deal with inflation, such as stopping economic stimulus policies or announcing plans to raise interest rates. If these policies are implemented soon in the world and if domestic inflation pressure increases, it will put more pressure on the stock market to correct down.
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