Finance & Banking
Last updated: Monday, April 24, 2017
Vietnam Stock Market Climbs to Nine-year HighPosted: Tuesday, February 28, 2017
The Vietnamese stock market has actively rallied in the first months of 2017, driven by returned foreign net buying after a long period of net selling. The VN-Index, the gauge of the Vietnamese stock market, jumped to a new high.
The stock market saw a strong comeback in 2017 when the VN-Index closed at 707.83 points February 17. This was considered a great stride to a nine-year high since the outbreak of the global economic recession in 2008. So, after two months of net selling which caused a sharp decline of local stocks and panicked retail traders, foreign investors returned when major economic indicators were optimistic.
Banks and construction firms staged long winning runs and these industries caught high interests of investors. According to securities companies, foreign buying was not affected by some correction sessions. Their buying value rose nearly 70 per cent to VND167.6 billion a day. Big-cap stocks like CTG, CTD, VCB, HPG and VNM were top picks of foreign investors.
Mr Nguyen Hai Hien, an analyst at Viet Capital Securities Company, said, foreign net buying valued US$31.9 million in January, highest in six months. Their buying force showed no signs of retreat in February and surprised many investors and analysts.
In January, Vietnamese dong gained 0.8 per cent against US dollars, signalling that new economic policies in the United States did not have much impact on Vietnam as worried by analysts earlier. The dong appreciation also inspired the State Bank of Vietnam (SBV) to buy US$1.2 billion in January to boost foreign exchange reserves. That was attributed to the outperformance of bank stocks in January, which rose 14.4 per cent.
Strengthened investor confidence
In addition, optimistic macroeconomic indicators also heartened investors. For example, foreign direct investment (FDI) flows continued to be channelled into Vietnam. Samsung Electronics, the largest South Korean investor in Vietnam, planned to raise its investment value in display business to US$2.5 billion for production expansion. This was a good support for the local market after the United States withdrew from the Trans-Pacific Partnership (TPP).
Given good supporting information, the Vietnamese stock market is forecast to stage a further rally in the coming time. Investors are recommended to keep a high stock portfolio to take gains from this trend.
According to a stock expert, the market will still have a lot of opportunities for investors in the medium and long terms. The VN-Index is projected to reach 740- 750 points in the coming months. However, profit-taking pressures from retail investors will still come up, especially if they hold speculative stocks which have surged sharply.