Stock market hits records in COVID-19 year on rising optimism

Stock market hits records in COVID-19 year on rising optimism (Illustrative photo: VNA)

Hanoi - Vietnam’s stock market has posted record highs as the Government’s stimulus measures and good control of the coronavirus outbreak are turbo-charging the country’s economic recovery from the pandemic, according to insiders.

Chairman of the State Securities Commission (SSC) Tran Van Dung said the stock market has weathered COVID-19 in a spectacular fashion, despite foreign investors losing confidence and withdrawing capital, which saw many stocks fall sharply amid volatile trading.

Some suggested halting transactions to stabilise the market, but the Ministry of Finance and the SSC maintained their view of reducing market intervention, and it has been operating smoothly since and seeing a remarkable recovery, Dung stressed.

The stock market posted strong growth for the year as optimism rose regarding the Government’s policies, Vietnam’s economic development prospects, and the resilience of local enterprises to the pandemic.

Record liquidity

As of November 30, capitalisation had hit over 6.11 quadrillion VND (264.24 billion USD) - the highest level ever and accounting for 101.33 percent of GDP and surpassing the target of 70 percent set in the stock market development strategy by 2020.

Strong recovery coupled with record-low interest rates drove capital flows into securities, and the market saw the largest number of players in its history. A total of 332,886 trading accounts had been registered as of the end of November; 329,452 of which were opened by Vietnamese.

Trading value smashed records on both bourses by exceeding 23.56 trillion VND on June 15.

Stock market maintains bullish momentum in various sessions (Illustrative photo: VNA)

Meanwhile, liquidity in the derivatives market reached a record high, with 356,033 transactions on July 29.

Transactions of VN30 futures contracts averaged over 163,000 per session during the year, up 84.27 percent against 2019.

As of the end of November, the market had 161,992 derivatives accounts, more than 70,000 of which were opened this year.

2020 was also a great year for the local bond market, with the number of corporate bonds issued in the first 11 months up 25 percent compared to 2019 as a whole.

According to Chairman of the Ho Chi Minh Stock Exchange (HoSE) Le Hai Tra, the top 20 securities firms saw transactions rise between three and 12 folds.

Analysts bullish

Hoang Cong Tuan, an analyst from the MB Securities Joint Stock Company, said the stock market has developed in line with the macro-economic situation.

As Vietnam has stabilised its macro-economy, Tuan said he is upbeat about the stock market in 2021 and believes it will become more attractive to foreign investors.

Meanwhile, Tran Xuan Bach from the Bao Viet Securities Joint Stock Company said the Government’s stimulus measures and low interest rates have supported local enterprises a great deal, with prospects looking good for next year.

Regarding the stock market recovery this year, Deputy CEO and Chief Investment Officer at PVI Holdings Nguyen Duc Hung Linh said the VN-Index crossing the 1,000-point threshold stemmed from investment by inpidual players with ever-changing tastes.

Low interest rates are said to be the most important element propping up the stock market, he said, adding that a market upgrade is necessary, as investors still find investing in a frontier market to be risky.

Investors at a VNDirect Securities Company trading floor (Illustrative photo: VNA)

Dung said that with a better IT system at HoSE, which facilitates several types of stock transactions, Vietnam has made significant progress in upgrading its status before 2025, as set by the Government.

Morgan Stanley Capital International (MSCI) last month upgraded the Kuwaiti market to emerging market status from frontier market. The re-classification is said to boost foreign capital flows into other frontier markets, including Vietnam, Dung said.

Early last month, Vietnam officially accounted for the largest proportion on the MSCI frontier markets index. Its stock market is projected to account for 15.76 percent of the index by the end of last year and 28.76 percent by the end of 2021, he added.