The price to earnings (P/E) of the benchmark VN-Index is not quite cheap to attract new inflows as it is 15.1x (as of 30 September) versus 14.5x – 15x in the pre-Covid time.
A possible delay in the Vietnamese stock market’s status upgrade until next year will result in the country losing a significant catalyst to reverse the trend of foreign selling.
The average liquidity for a trading session in the first half of 2020 rose 24% year-on-year to VND5.8 trillion (US$250 million).
The recent uptick of the market, however, is not sustainable, when the margin outstanding may have increased sharply along with the rise.
The VN-Index ranked above Russell 3000, Nasdaq, or S&P 500, among others, in terms of growth in August.
State firms that have completed the privatization process are expected to float shares on local bourses and create space for more foreign investors to invest in the local stock market.
Foreign investors are returning to the market with its net outflow narrowing from VND12 trillion (US$520 million) since its March bottom to VND1.8 trillion (US$78 million) as of mid-August.
The stock market still proves to be quite attractive in the context of redundant liquidity and other investment channels having not fully recovered.
The reducing and waiver of securities services fees would last until June 30, 2021.
How wisely governments cope with current and long-term economic challenges caused by Covid-19 will be an important defining factor for the prosperity of our and future generations.