He said the stock market grew strongly in the first quarter of 2018 when the benchmark VN-Index on the Ho Chi Minh Stock Exchange broke the record set in 2007 to hit 1,204.33 points on April 9, up 22.4 percent from the end of 2017. However, from mid-May to May 23, the market recorded trading sessions mixed with strong gains and falls.
Vietnamese shares are forecast to recover in June.
|
Dung attributed the nosedive in May partly to a fall in the global stock market due to the world economic and political situation. Though trade tension between the US and China eased, investors still feared a trade war between these two biggest economies of the world. Another negative impact is the possibility of the US Federal Reserve and the European Central Bank raising interest rates.
Foreign investors began to withdraw money from emerging markets, including those in Southeast Asia. Stock markets around the world, from the US, Europe to Asia, have posted declines since January 2018, mostly down between 7 and 10 percent.
Meanwhile, the Vietnamese stock market grew strongly for a long period of time and has entered a fluctuation period, he said, elaborating that the VN-Index surged 48 percent in 2017 and continued to rise by 17 percent in Q1, so investors tended to sell shares to guarantee profits and wait for suitable opportunities to continue investing.
That trend coincided with the decrease of the global market, thus leading to a bigger impact on the domestic market, he noted.
"Although the VN-Index dropped, market cap still soared dramatically because in the first half of 2018, many big businesses were listed in the market, especially Vinhomes JSC," Dung said.
He added total market cap reached VND3.846 quadrillion (US$168 billion), up 9.4 percent from the end of 2017 and equivalent to 76.8 percent of the country's GDP.
Prospect for expansion
As of May 23, foreign investors sold VND4.229 trillion worth of shares on both Ho Chi Minh Stock Exchange and the Hanoi Stock Exchange. However, they still poured $615 million and $450 million into the market in April and the first half of May, respectively.
This shows foreign investors still have high hopes for the market and are ready to disburse money when appropriate, Dung said.
He added with good macro-economic growth, stable financial-monetary and foreign exchange markets, decreasing lending interest rates, positive performance of listed companies and no signs of foreign investors' withdrawal, the stock market of Vietnam can still expand in the future.
Experts have so far also forecast that second-quarter and half-year earnings reports, as well as annual shareholder meetings, may be driving factors for a recovery of Vietnamese shares in June, starting from June 4.
"The recovery of the market, the improvement of liquidity and the balance of foreign trade are good news for the overall market's outlook," Bao Viet Securities Co (BVSC) said in its weekly report.
"The rise of liquidity is a positive signal for the market's uptrend" and with positive market breadth, "investors are optimistic about the market's uptrend in the short term," BVSC wrote.
The VN Index gained 2.23 percent, or 21.62 points, last Friday to close at 992.87 points, while HNX Index advanced 0.73 percent to end last week at 115.75 points, up 3.62 percent.
