Finance & Banking
Last updated: Wednesday, February 22, 2017
Three Scenarios of Vietnam Stock Market in 2017Posted: Thursday, February 09, 2017
The average territory of VN-Index in 2017 will likely range between 670 and 690 points, up from an average of 630 points in 2016, according to research by Bao Viet Securities Company (BVSC).
According to a moderate scenario, the weighted P/E ratio of VN-index is forecast at 15.5 in 2017. This forecast is based on E/P econometric analysis results based on macroeconomic variables of Vietnam in the past such as interest rates, GDP growth and exchange rate movements.
However, to better demonstrate the complicated intertwined impacts of favourable factors and risks mentioned above, forecasts will be qualitatively adjusted to match reality. From this method, BVSC expects the average territory of VN-Index will be in the region of 680 points 2017.
Qualitatively, the above outlook is consistent with the economic growth cycle and earnings prospects of listed companies plus the government’s orientation of stock market development. However, the growth will not be very strong due to inheriting risk factors such as interest rate, exchange rate fluctuations and risks arising from China and the United States.
2016 marked a year of tremendous growth of VN-Index when it broke through the price channel formed in 2014 and 2015 (the range of 510-640 points) and was steady in the 650-680 point territory in the second half of the year. That growth was driven by domestic macro policy stability, positive impacts from international markets and price recovery of basic commodities.
In 2016, the stock market also witnessed many important events, for example, the State divestment from Vinamilk (VNM), the listing of big companies like Sabeco (SAB) and Habeco (BHN) and the launch of VNX-AllShare Index, or influential international events such as Brexit, US presidential election and OPEC agreement on output reduction. In 2016, VN-Index increased strongly in both index value and trading value. Meanwhile, HNX-Index fluctuations were negligible.
Specifically, in 2016, VN-Index climbed 14.8 per cent and the trading value expanded 25.7 per cent. Meanwhile, HNX-Index edged up 0.2 per cent while the trading value shrank 4 per cent.
In particular, the market performance was divided into three main phases. In Phase 1, VN-Index slid from 580 points to 522 points, lasting from the start of the year to end-January. Global stock markets plunged in this phase because of the Fed’s decision on rate hike in December and crude oil price slumps.
In Phase 2, VN-Index advanced from 522 points to 690 points, starting from late January to the end of September. The market grew robustly in both index value and the trading value. The rally was triggered by the bounce of oil and gas stocks on growing confidence in the recovery of crude oil prices from the bottom. The market was further boosted by the loosened credit policy from the State Bank of Vietnam (SBV) and rising prices of global commodities.
In Phase 3, VN-Index ranged from 650 points to 690 points in the fourth quarter. After the strong rise, domestic and foreign investors actively locked in profits. The support of new listings like ROS, SAB and BHN helped the gauge to trim losses.