VN-Index to reach 1,400 in June

The VN-Index could be heading towards 1,400 points

In the online seminar on macro market assessment for June, BIDV Securities Company (BSC) has proposed two scenarios for the market.

In the first scenario the VN-Index would maintain its upward momentum and move towards the threshold of 1,400 points. Cash flow from foreign funds would return, new domestic investors would continue to participate in the market, and the fourth wave of the COVID-19 pandemic would be pushed back.

Under the second scenario, the VN-Index would fluctuate in the range of 1,270-1,350 points. This scenario is based on the world market remaining unchanged and the domestic pandemic situation remaining uncontrolled, and foreign investors continuing to withdraw capital.

According to BSC, the market saw a strong surge in the first sessions of June. In particular, the market surpassed the threshold of 1,370 points in the session on June 5, revealing that the market could lean towards a positive scenario. Thereby 1,400 points would be the target area for VN-Index.

Regarding the price-to-earnings ratio (P/E) of the VN-Index, although the index increased in May, its P/E remained at 18.1x, unchanged from the previous month, but still 10.16 per cent higher than the average P/E of the past years (16.43x).

BSC forecast the uptrend to continue in the near future. With a positive scenario of the VN-Index touching 1,400, the P/E was forecast to increase to 18.4.

According to BSC, this uptrend would be supported by the fact that foreign investors could reduce their net withdrawals to turn to net buyers in the second half of June. At the same time, the fourth wave of the COVID-19 pandemic in Vietnam will likely be pushed back.

In addition, if the VN-Index reaches 1,350 points by the end of this month, the total market capitalisation would also increase by 1.5 per cent.

In early June, the liquidity of the VN-Index also reached a historical high. Specifically, during the trading session on June 4, the total trading value of the Ho Chi Minh City Stock Exchange surpassed the VND30trillion ($1.3 billion) threshold. The fact that the liquidity remained stable in May and continued to increase in June is reason for optimism.

BSC stated that the factors affecting the market sentiment in June will be the geopolitical tensions between China, Taiwan, and the United States, as well as the unpredictable COVID-19 pandemic in the world and in Vietnam. However, the continued disbursement of public investment capital and loosened monetary policies limit negative impacts and support growth.

Another factor that positively influenced the market is the new leadership that accelerated the planning and issuance of new policies.