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Dinh Vu

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Last updated: Tuesday, July 17, 2018


Stock Market Getting New Investment Wave

Posted: Monday, June 12, 2017

In May 2017, the repeated breaking of old records in the index value and the surge in liquidity in the last days of May strongly motivated investors. Not only did the VN-Index continuously set new score records but the market also receive a robust cash inflow from foreign investors. According to expert forecasts, the Vietnam stock market is expected to continue to stage a solid growth on many new supporting factors in the time to come.

Market Liquidity Surges
The VN-Index, the primary gauge of the Vietnamese stock market, continuously set new records in the year to the end of May. The measure jumped to 744.1 points, the highest in nine years. The market liquidity increased with the average daily trading value of VND7,000 billion. In addition to the active participation of foreign investors, the market also witnessed the enthusiasm of domestic investors.

May also witnessed high trading volumes and values on both Hochiminh Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX), with a record liquidity of VND7,000 billion on May 22. On the day, the VN-Index climbed over 10 points to 744.1 points, the highest close in nine years. The trading volume reached 272.75 million shares valued VND5,851 billion. 146 stocks advanced and 120 stocks declined. The HNX-Index however slid from the peak of 93 points to end the day at 92.71 points. The market volume amounted 92.86 million shares valued VND1,011.97 billion. Thus, in combination, the two exchanges had VND7,000 billion worth of stocks changed hands. The market liquidity remained high in other days of May although it was below the peak. For example, the market closed with a trading value of VND5,414 billion on May 29.

According to stock analysts, a big cash flow is being channelled into the market, resulting in continuous trading bonanzas. The supports for the stock market are credit growth and real estate market performances. Credit growth has been very high in the past time while the real estate market has very good liquidity. This made many believe that money will be shifted from the property market to the stock market in the coming time.

Record foreign funds
The investor optimism was reflected in the VN-Index and trading value in May and this showed the active participation of foreign investors. According to statistics from stock exchanges, foreign fund inflows reached a record of VND6,430 billion on HOSE. Many stocks strongly attracted foreign investors such as ROS, VNM and VGC. For example, ROS received VND667 billion in the year to date, accounting for 10.3 per cent of foreign portfolio funds. On May 28 and 29 alone, foreign investors spent VND222 billion buying this stock.

Like ROS, VNM continued to fall into the spotlight of foreign investors as usual. At the public auction that Viglacera offered 120 million shares on May 29, thousands of investors placed bids to buy the offered shares, according to a representative from HNX, the bid volume reached 314.33 million shares, 2.62 times higher than the offered volume. In particular, more than 109 million shares, or 91.65 per cent of total shares, were sold to foreign investors with an average winning bid price 31.5 per cent higher than the starting price. This showed that the value of Vietnamese businesses is growing and attractive to foreign investors.
Mr Nguyen The Minh, Deputy General Director of Personal Customers at SSI Securities Inc (SSI), said that, with the participation of foreign investors, the stock market is receiving great supports, not only in cash flow but also in mentality. In addition, the recovery of oil prices and commodity prices from the second quarter to the third quarter will support global stock markets, including Vietnam.

Macro factors, e.g. credit growth climbed 5.76 per cent as of the end of April - the highest in the eight years, also made him confident in the stock market growth in the coming time. A big amount of capital is expected to be pumped into the market at the back of loosened credit policy. “The reform of nonperforming loans in 2017 plus directions on private sector development and support, accelerated equitisation of State-owned enterprises (SOEs) and new stock market policies like the launch of derivatives markets will be main driving forces for the market uptrend in the coming time,” Minh concluded.

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