Early positive signs for Vietnam stock market in 2021
It is not a coincidence that a strong economic growth period happened when the local stock market was setting new records.
While setting up multiple records in 2020, Vietnam’s stock market is further destined to have a bright outlook with some early positive signs right from the early year.
| Vietnam stock market set multiple records in 2020. Photo: Tran Viet. |
Vietnam’s GDP in the fourth quarter of 2020 increased by 4.48% year-on-year, the highest quarterly growth of the year, and ultimately led to an overall economic expansion of 2.91%. This was the lowest in a decade but among the world’s highest.
It is not a coincidence that a strong economic growth period happened when the local stock market was setting new records.
Since the benchmark Vn-Index fell to its rock-bottom in March 2020 with a 25% slump, the stock market has been on the steady rise and ended the last trading session of the year at 1,103.87, representing an increase of 14.9% against early 2020 and 67% compared to its lowest point. This was around 9% below its all-time high at 1,204 reached in April 2018.
The impact of stock market does not limit to economic growth with a high amount of capital mobilization pumped into the economy, but the most important point is a positive sentiment that the stock market builds among investors, producers and businesses.
Since the first trading session of the year on January 4, the stock market continues to pick up the momentum and is on track to reach 1,200 points this week.
The market has reason to stay positive given the Vietnamese Government setting sight on a GDP growth target of 6.5% for this year, a 0.5 percentage points higher than the target set by the National Assembly.
In the Government’s Resolution No.01/NQ-CP released on the first working day of 2021, the Government gives priority to accelerating the privatization of State-owned enterprises and urges firms to list shares on the stock market after having completed the process, a key move to diversify investment products and further attract investment capital into the stock market.
New records
Vietnamese investors have opened 270,400 new accounts to invest in equities during the first 11 months of 2020, bringing the total to 2.7 million, and about 300,000 more accounts are expected 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.
In 2020, the amount of capital poured into Vietnam stock market surged 20% to VND383.6 trillion (US$16.64 billion). 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.
Such strong growth led to the total market capitalization on Vietnam’s stock market accounting for an all-time high of 84.3% of the GDP, while nearly 84% of public firms have generated profit, which is a high rate amid the Covid-19 pandemic.
“Vietnam’s stock market could be included among the world’s best performing in terms of resilience and recovery capability,” said Minister of Finance Dinh Tien Dung at the opening of the first trading session on January 4.
