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Stock market expected to cross current threshold

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During the last trading sessions of 2021, the stock market was not particularly active. The effect was being felt of unfavorable news on the macro, the most notable of which was the GDP growth of the whole year at only 2.58%.

Stock market expected to cross current threshold

The news of a new variant of the Covid-19 called Omicron was also detected in a few people in Vietnam. However, despite this turbulent news, the stock market did not react in shock. The VN Index is still moving sideways between 1,480 points to 1,500 points.

Optimistic scenario

The GDP growth rate of 2.58% in 2021 was not a surprise. Even if viewed from a future perspective, this is a positive result, because there have been many poorer growth forecasts before. For example, at the end of October 2021, the World Bank estimated the GDP growth in 2021 in the range of 2% to 2.5%. There are also a few organizations such as UOB Bank that gave 3%, and the optimistic scenario of the General Statistics Office also giving 3%. Therefore, the actual growth rate of 2.58% is still a better result than many organizations predicted, although it is still at a very low level.

However, just when there are no longer any more surprises, the stock market reacts indifferently. In the last trading sessions of 2021, the VN Index went up and down mainly due to the influence of some large-cap stocks. Statistics in the past show that the last week of the market usually grows quite positively due to the impact of maintaining a portfolio value. This year the situation is very different, especially after the growth spread of the second year of Covid-19, where the VN Index increased by about 35%, and it is no longer urgent to support the portfolio, and even profit-taking transactions determine the annual bonus. Therefore, the threshold attained of 1,500 points will still be the historic peak of the market and of 2021.

In fact, indifference to bad news is an important psychological indicator in the market. The sentiment factor and the emotional action of the crowd has always been a part of the market. So when bad news appears, the level of emotional action shows that investor sentiment is not easily swayed, because the more indifferent the market reacts, the stronger the sentiment is. Looking at it from this perspective, the volatile days at the end of 2021 of the stock market ended a wobbly economic year, with a record low growth rate, which is a good sign.

Worst maybe over

There have been many forecasts about a positive recovery of Vietnam’s economy in 2022 along with an initial forecast of a weak growth in 2021. Of course, forecasts will still be affected by many variables, such as whether the Omicron mutation can trigger a more dangerous pandemic wave, but basically the stock market still hopes that the worst is over.

Not only Vietnam’s stock market, but securities around the world are also feeling the same. The more the Omicron mutation spreads in the US, the S&P 500 set a new historic high in the last week of 2021. French, German, and British stocks are all at historic high, although the number of cases of the new strain called Omicron has also increased rapidly. The fact that the VN Index is sticking to the historical threshold of 1,500 points these days is actually an opportunity. The market has a golden opportunity now to hit a new historic high, but what is missing is an expectation to lead.

In the first week of 2022, that expectation may arise when the Extraordinary Session of the National Assembly will take place from 4 January to 11 January 2022, the important content being the consideration of the draft resolution on fiscal and monetary policies to support the implementation of the program on socio-economic recovery and development. This resolution will pave the way for the implementation of the economic stimulus package that the stock market has been waiting for since October 2021.

The market has bet in advance on this stimulus package with a growth of nearly 13% in October and November, which is the time when the VN Index made its historic peak of 1,500 points for the first time. The whole December market stopped accumulating to wait for a confirmation.

Growth forecasts of the stock market in 2022 all consider this economic stimulus package to be a push to create a boom. According to the Vietcombank Securities 2022 outlook report, growth in public spending can have a positive effect on consumer spending and private investment as consumer demand has gradually recovered and a reasonably sized economic stimulus package targeting the right sectors before the Lunar New Year will help Vietnam keep up with world recovery. GDP growth in 2022 may also reach 6.8% to 7.2%.

VNDS also expects that the Government will issue a large-scale economic support package and maintain an easy monetary policy until at least the end of the second quarter of 2022 to promote economic recovery, while GDP is expected to grow by 7.5% in 2022.

Although forecasts are regularly updated and changed based on new variables appearing over time, the above scenarios show that the stock market expectations are well-founded. The market cycle is more closely associated with the cycle of expectations, starting with a response to receive information, followed by a pause to assess the future impact and build expectations then continue an uptrend based on expectations and finally waiting time, even adjusting to confirm expectations. This cycle is often phased out compared to actual figures due to going faster. So it wouldn’t be surprising if the stock market hits a new historic high before the effects of the stimulus policies are actually seen.

The market has a golden opportunity now to hit a new historic high, but what is missing is an expectation to lead. It is expected that the Extraordinary Session of the National Assembly which will take place from 4 January to11 January 2022, will have the main focus on decision to implement the program on socio-economic recovery and development.

Source: SGGP

Source: https://vietnamnet.vn/en/business/stock-market-expected-to-cross-current-threshold-809268.html

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Upgrading the market for the sake of all participants

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An employee passes electronic boards showing share prices inside Hồ Chí Minh Stock Exchange in HCM City. — VNA/ Photo Hữu Khoa

HÀ NỘI — An upgrade to emerging status will not only help the stock market develop quickly, transparently and sustainably, but also attract huge foreign capital inflows, said experts. 

Recently, the Government has directed to purge the market and improve the trading system’s capacity, showing its determination to enhance the quality of the stock market.

The refinement is to protect investors and open a door for the Vietnamese stock market to be upgraded from a frontier to an emerging market.

Prime Minister Phạm Minh Chính has taken an interest in the development of the capital market and the stock market, including the matter of upgrading the market. 

During a trip to attend the ASEAN-US Special Summit, on May 16, the PM visited the New York Stock Exchange (NYSE) – the largest stock exchange in the world – hoping it supports and shares experience to develop an effective and sustainable stock market in Việt Nam, and successfully build a regional financial centre. 

PM Chính also expected the NYSE and its Vietnamese partners to foster a sustainable, mutually beneficial partnership, contributing to making the Việt Nam-US comprehensive partnership more substantive and effective.

On the occasion, PM Chính witnessed the awarding ceremony of two cooperation documents in the fields of finance, banking and investment funds between Vietnamese and US partners, including a cooperation document between the Vietnamese State Securities Commission (SSC) and the NYSE regarding support to upgrade the country’s stock market and build a mechanism for investors to participate in both stock markets.

Previously, the PM chaired a conference on developing a safe, transparent, efficient and sustainable capital market to stabilise the macro-economy and ensure major balances of the economy.

At the conference, PM Chính also asked the Ministry of Finance to immediately solve the order congestion situation and invest in technological innovation and digital technology application, while urgently implementing measures to upgrade the market from frontier to emerging status to attract investment capital, especially foreign investment.

Dominic Scriven, head of the Việt Nam Business Forum’s (VBF) Capital Markets Working Group, said that the move to purify the market is a great effort and determination from the Government.

As the goal is to build and develop a safe, transparent and sustainable securities market, cleansing the market will ensure the interests of businesses and genuine investors, increase the stock market’s appeal, and attract more investment capital flows both at home and abroad.

Meanwhile, Phạm Lưu Hưng, chief economist of SSI Securities Company (SSI), said that the move to purge the market in recent years raised expectations that the upgrade process will be easier. Hưng hoped that in the next assessment, the Market Rating Organization (MSCI) will note some positive comments about what Việt Nam has done.

According to Minister of Finance Hồ Đức Phớc, the ministry is currently working with international organisations to deploy solutions to upgrade the stock market by 2025 as per the set roadmap.

Huge foreign capital inflows

Analysts believe that the upgrade from frontier to emerging status will be an important driving force for the market.

Zafer Mustafaoglu, World Bank (WB) Practice Manager for Finance, Competitiveness and Innovation (FCI) for East Asia and Pacific, said that the capital market development is a long-term effort, and there is still much work to be done in Việt Nam.

Upgrading to emerging market status is not only an improvement in position, but also signals strong enhancement in quality with a solid market foundation.

Upgrading to an emerging market also attracts the attention of high-ranking international investors to Việt Nam. In the stock market, upgrading to an emerging market could result in an additional US$10 billion in new investment for the country. The first year alone can receive an additional $2-5 billion.

According to Nguyễn Minh Tuần, General Director of AFA Capital Investment JSC, the criteria for upgrading from frontier to emerging status focus on two main factors – size and liquidity of the market (quantitative) and market access (qualitative).

In terms of size and liquidity, there are four criteria which are the number of companies included in the Standard Index, total market capitalisation, floating capitalisation and market liquidity. Việt Nam has almost met three standards, he said. 

The main issue is qualitative standards. In the latest ranking in June 2021, there are nine criteria that the country has not yet met, including the ownership rate, ownership restrictions and equal rights of foreign investors.

Source: https://vietnamnews.vn/economy/1194077/upgrading-the-market-for-the-sake-of-all-participants.html

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EVN accelerating projects to gear up for hot season

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EVN workers checks electricity equipment. — VNA/  Photo

HÀ NỘI — Vietnam Electricity (EVN) said it is accelerating power generation and grid projects, especially urgent infrastructure, to ensure supplies in the hot season.

The State-owned group said in the first four months of 2022, the firm and its subsidiaries had started work on 30 projects and put into use 31 grid facilities between 110kV – 500kV.

It cited meteorological forecasting centres as saying that heatwaves this year are likely to appear in the northern and central regions later than usual, but won’t be too severe.

Power demand in the north is unlikely to rise sharply in May, and daily consumption will be around 805 million kWh.

EVN noted that this month, it is working to guarantee supply for production and business activities as well as daily life, especially the 31st Southeast Asian Games (SEA Games 31) and the 15th National Assembly’s third session.

It is maintaining high water levels at multi-purpose hydropower plants in the north, operating thermal power plants in the region, and importing about 540MW of electricity in May.

Its subsidiaries were also requested to ensure power supply in the dry season, ready manpower and equipment for any possible incidents due to natural disasters, and recommend people, agencies and factories use electricity in a safe and economical manner.

In April, the entire EVN system produced 22.62 billion kWh of electricity, up 1.9 per cent year-on-year. That added up to a four-month figure of 85.65 billion kWh, increasing 6.2 per cent. —

Source: https://vietnamnews.vn/economy/1194045/evn-accelerating-projects-to-gear-up-for-hot-season.html

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Deputy Finance Minister Nguyễn Đức Chi takes charge of the State Securities Commission

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Deputy Finance Minister Nguyễn Đức Chi. — Photo vtv.vn

HÀ NỘI — Minister of Finance Hồ Đức Phớc had assigned Deputy Finance Minister Nguyễn Đức Chi to take charge of the State Securities Commission (SSC) from May 19.

In a dispatch to the SSC, Minister Phớc stated that Deputy Minister Chi will manage the commission during the consideration and completion of personnel for the commission.

Earlier on May 18, the Party Central Committee’s Inspection Commission announced the inspection conclusions and Party disciplinary measures on the SSC Party Committee in the 2015-20 tenure and relevant individuals. Right after that, the Ministry of Finance directed the SSC, stock exchanges, the Việt Nam Securities Depository and relevant agencies to review and implement measures to remedy the violations and shortcomings.

Specifically, the ministry dismissed Trần Văn Dũng from the position of the Chairman of the SSC, while giving a warning to Vũ Bằng, former secretary of the SSC Party Committee in the 2015-20 tenure and former SSC Chairman.

Warnings were given to Nguyễn Thành Long, secretary of the Hà Nội Stock Exchange Party Committee; and Nguyễn Sơn, chairman of the management board of the Việt Nam Securities Depository for their wrongdoings during their tenures. —

Source: https://vietnamnews.vn/economy/1194041/deputy-finance-minister-nguyen-duc-chi-takes-charge-of-the-state-securities-commission.html

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