Capital inflows into Vietnam stock market surges 20% to over US$16 billion in 2020

The amount of capital poured into Vietnam stock market surged 20% in 2020 to VND383.6 trillion (US$16.64 billion), according to the General Statistics Office (GSO).

Stock market is an attractive option for local investors. Photo: Viet Dung.

The average transaction value in the stock market is estimated at VND7.05 trillion (US$304.8 million) per session, up 51.5% year-on-year.

On the bond market, the average transaction value climbed 11.3% year-on-year to VND10.24 trillion (US$444.32 million) per session and VND157.31 trillion (US$6.8 billion) per session in the derivatives market, up 77%.

At a time when the Vietnamese government has initially contained the Covid-19 pandemic and is now focusing on economic recovery efforts, the stock market, given its characteristic as one of the most flexible investment channels, has emerged as attractive option for investors amid the current low interest rate trend at the moment.

Since the benchmark Vn-Index plunged to its rock-bottom in March with a 25% slump, it has been on the steady rise and stood at 1,091.33 points at market close yesterday [December 28], an increase of 6.91 points (0.64%) against the previous day, which is around 9% below its all-time high of 1,204 in April 2018.

Vietnamese investors have opened 270,400 new accounts to invest in equities during the past 11 months, bringing the total to 2.7 million, with more than 300,000 accounts set to be opened this year.

The 41,200 new accounts opened in November was the highest monthly figure ever. Of this total, 123 accounts were opened for local institutions and the rest for retail investors.

Pyn Elite Fund, an independent Finish fund manager, expected the Vn-Index to reach the 1,800 points, taking into account the companies’ earnings growth forecasts, the strong outlook of the Vietnamese economy and the opportunities presented by the modernization of the stock market.

“The index target would be achieved with a gain of 80%,” stated the fund in its latest report.

If the earnings grow as expected, the stock market’s P/E ratio would be in the range of 15–16 to equal index level of 1,800 points. Even thereafter, Vietnam’s economic growth will surely support even higher valuations and index levels, it added.

As of December 21, the growth rate of M2, which measures money supply that covers cash in circulation and all deposits, increased 12.56% against the end of 2019, while the capital mobilization rate of credit institutions expanded 12.87%, leading to a credit growth of 10.14% year-to-date.