The future of the Vietnamese capital market

Market and investors have more confidence

Speaking at the April 2022 regular government meeting, Prime Minister Pham Minh Chinh reiterated: There is a need to deal vigorously with violations to protect those doing business with integrity, publicity, transparency and compliance with the law. ; take all necessary measures with appropriate steps and roadmap so that the market develops safely, transparently, effectively and sustainably.

The Prime Minister’s speech again underscored the government’s strong message about decisions made in spirit to make the market healthy and not allow the mistakes of a minority to influence the majority of active investors. fair, do not criminalize civil-economic relations, whoever commits wrongdoing will deal with that person, “treat one person to save many people”.

This is news much welcomed by the business community and investors. At the same time, when they have confidence, they feel safe to continue doing business and investing. This view is also supported by the world’s major financial institutions.

According to Mr. Zafer Mustafaeglu, World Bank Director for Finance, Competitiveness and Innovation, East Asia-Pacific, the current turmoil is due to the relatively small Vietnamese market. immature. “There shouldn’t be an overreaction that limits long-term growth just because we have a few bad members.”he said.

The fact shows that despite the disruptions and individual mistakes, it is undeniable that the important role of the stock market and the corporate bond market in the development of the business world and the economy is not denied. Business.

dr Can Van Luc, a member of the National Monetary and Financial Policy Advisory Council, believes capital is extremely important. He cited that an economy with three factors: capital, labor and TFP (Total Factor Productivity) creating growth, over the last 11 years (from 2011 to present) capital has accounted for about 50% of growth. economic chief. Capital mobilized through the stock market, including stocks and bonds, represents 26% of the total capital injected into the economy each year.

“Resolving the recent cases in the market is necessary to both overcome the fallout for investors and boost confidence in the market.” Mr Luc said.

Trust goes hand in hand with sustainable development

After the government’s drastic messages and actions, although the stock market entered some correction phase compared to the all-time highs of the VN index, the cash flow signals showed the positive for those with a long-term vision.

Due to the US Federal Reserve’s “horrific” rate hike policy, US dollar and US Treasury interest rates have risen higher, leading to net selling of foreign capital around the world. In April, foreign investors net-purchased thousands of billions of dongs in shares, focusing on the sessions when the VN index had plummeted. This reversal is considered to be of great significance for Vietnamese stocks.

The Vietnamese stock market adjusted sharply, causing the valuation of stocks in basic sectors and large-cap groups such as banks, energy, real estate, construction, retail and consumer staples to return to lower, attractive levels. for the time of market entry.

Andy Ho, CEO of VinaCapital, said that the Vietnamese stock market is at a very reasonable price for long-term investments with a P/E (market price per share) in 2022 of 11.5 times, much lower than the average of the last 5 years (December 14, 2022). ,5 times). Therefore, he believes that the market can overcome the negative events in the short-term and turn more positive as 2022 progresses.

In the long term, the stock and bond markets not only have a lot of leeway, but also a larger launch pad on which investors can place their expectations.

dr Can Van Luc analyzed. “The medium and long-term capital requirements of the economy are very large. It is estimated that from 2022 to 2025, the economy will need 3.15 billion VND/year to invest in the whole society. The state capital accounts for 25% of the capital. -26%, corporate bonds account for about 22.7%, while capital mobilized through equity issuance accounts for only 3.5% of the total capital invested in the economy, leaving enormous scope for development.”

According to a World Bank official, Vietnam’s market size has become too big to remain in the marginal market group. The Vietnamese equity market has a weight of over 30% in the MSCI Global Marginal Market Index. For example, Vietnam is like a middleweight boxer but still competes in the lightweight group.

On the other hand, the steps taken by the current government are necessary efforts to be promoted to Emerging Market, the ranking so that Vietnam’s stock market can both improve its quality and attract large international capital flows. Accordingly, emerging markets can bring in an additional USD 10 billion in new indirect investments for Vietnam, of which USD 2-5 billion can be received in the first year alone.

Of course, once Vietnam enters the emerging market “pigeonhole” the position and attractiveness of the stock market will be very different. According to the government’s steps and roadmap accompanying investors like now, this good future is getting very close.

May Trang

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