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Dec 09, 2020 / 05:25

Large-cap stocks to boost Vietnam’s stock market by year-end

Investment funds unexpectedly divested capital from Vietnam’s stock market in October. However, the local securities market is still expected to rally in November and the last quarter, driven by strong growth of large-cap stocks.

According to Saigon Securities Inc (SSI), Vietnam’s stock market performed well in October with the support of the information it could become the market with the highest proportion in the MSCI Frontier Market 100 Index, up from current 12.53% to 28.76%.

 Large caps drove the market up. Photo: Tran Quynh. 

October is also the time the positive business results of the third quarter would be reflected in the share prices.

The benchmark VN-Index closed October up 2.24% at 925.47 points, marking the third consecutive month of gains. The HCM City’s index was 3.7% lower than the 2019 year-end but has recovered 40.3% from the low level of 659.21 points seen on March 24 2020.

Large caps drove the market up. The VN30 increased 3.96% while VNMidcap and VNSmallcap dropped respectively 1.77% and 2.35% in October.

Across industries, construction materials, real estate, essential and non-essential consumption and information technology increased between 2.4-9.6%. These were only five groups that maintained positive growth in the month.

Biggest contributors to the VN-Index included VIC up 16.39%, MSN up 53.85%, HPG up 15.72% and PNJ up 14%.

On the other side, financial stocks decreased slightly by 0.4% due to slumps of some banks such as BID down 5.64%, TCB down 5.53%, and VCB down 1.31%.

Two big petrol stocks also dropped such as GAS down 1.26% and POW down 8.29%.

In October, the market liquidity continued rising despite strong sells by foreign traders. Trading value of all three exchanges increased 22.3%, averaging VND9.8 trillion per day, up 22.3% over September and up 111% year-on-year.

The 10-month trading value also climbed 27% year-on-year.

Foreign investors extended selling in October with net value of VND7.23 trillion, lifting total net sell value in the last 10 months to VND34.1 trillion.

Investment funds were the main sellers. They withdrew net US$23.7 million in October, the first net selling month after a five-month buying streak.

10 potential stocks for investment 

Industrial production is still on the good track. The Index of Industrial Production (IIP) in October increased by 5.4% year-on-year, double the rate of the first 10 months of the year of 2.7%.

Other important indicators including foreign direct investment, the disbursement of public investment, foreign trade and retail also maintained impressive rises.

The third-quarter business results of listed companies also recovered remarkably. Net revenues of the VN30 group increased 4.5%.

SSI Research estimated the average profit of listed companies (representing 87% of the market capitalization) in 2020 could fall 18.8% compared to 2019. However, the situation will improve in 2021 with projected profit growth rate of 22.4% - close to the 2019’s level.

In the global scope, positive responses of the financial markets showed weakening impact of the US presidential election while the biggest risk remained the complicated development of the Covid-19. However, positive trial results of vaccine developers Pfizer/BioNTech is a good signal for the stock market.

According to SSI, low interest rates and quick recovery of Vietnam's economy will continue to have positive impact on the stock market in the medium and long term.

Taking into account factors such as pricing, dividend payment, exchange shifting and positive business prospects, it suggested 10 potential stocks including HPG, ACB, CTG, ACV, FPT, MWG, VHC, SZC, DXG and VHM.