Finance & Banking
Last updated: Monday, April 24, 2017
Stock Market: Vibrant with Return of Foreign Net BuyersPosted: Tuesday, April 11, 2017
KIS Vietnam Securities Corporation recently held a workshop on prospects for the stock market in 2017: Promising Future. At the conference, the majority of experts expressed confidence that the opportunities for foreign investors returning as net buyers in 2017 are great.
According to the experts at the workshop, the economy of Vietnam is growing impressively, with its gradually stable macro-economy, open capital markets and a growing number of listed large enterprises on the stock exchange. This creates a wave of new investment and less volatile exchange rate.
Besides, the derivatives market, which is also expected to operate in May, will provide investors with more new tools, helping to diversify investment channels for foreign investors.
According to Mr Bach An Vien, Head of KIS Vietnam Securities Corporation’s Analysis Department, in 2016 the economy of Vietnam faced many difficulties causing the growth to reduce compared with that of 2015. According to the business report by the end of 2016, the majority of listed companies enjoyed growth, but the growth did not meet their targeted plan. However, the growth in 2016 was still relatively high compared to the average growth of the previous five years.
According to economic experts, in the coming period, the FDI "inflow" in Vietnam may be slower due to the influence of external factors; for example, problems occurring with Samsung Group in Korea or the US withdrawing from the Trans-Pacific Partnership Agreement (TPP).
For the stock market, Mr Vien said that the capital inflows will be poured into this market and foreign investors will continue to be net buyers this year, as happened before 2016.
In 2016, despite the difficulties of the stock market, foreign investors performed the net sale volume up to US$270 million, causing anxiety and fears for investors in the country. But in fact, foreign capital flows are still moving through other channels such as M&A, IPO and government bonds. According to the preliminary statistics, in the first 2 months of 2017, foreign investors made net purchases worth more than US$44 million. This figure is quite large in the context of that the investors in the country are still afraid of the durability and the sustainability of the market.
The growth of the stock market reflects not only the net purchasing volume of foreign investors, but also the VN-Index that has increased 7 per cent in February and continues to maintain this growth rate. The VN-Index can fully reach the highest peak within recent 10 years. The VN-Index index growth is reflecting the overall performance of listed companies. Accordingly, the revenue and profits of these enterprises have increased by 5 per cent and 1 per cent respectively in 2016, and are expected to continue to increase at 9 per cent in 2017 thanks to domestic and international demand, keeping the interest rates stable and the production costs under control.
As predicted by the expert, the P/E of the whole market will reduce the level of 14x. This is still quite attractive, compared with other countries in the region.
Thus, with the strong recovery of the economy, the stock market is also taking steps back vigorously and investor confidence is back, which will be the basis for the stock market to continue to grow rapidly in the future.