A man watching stock market's movements on screens. — VNA/VNS Photo

HÀ NỘI — In the last three months of 2021, Việt Dragon Securities Company (VDSC) believes that the US central bank’s tapering may affect the global stock market, the securities firm said in its new strategic report.

Emerging markets recorded a strong correction in 2013 after the US Federal Reserve announced it would reduce monthly asset purchases from US$85 billion to $65 billion. 

Countries with large foreign currency debt and low foreign exchange reserves will suffer the most from currency devaluation along with the reversal of foreign capital flows.

However there is not much concern as Việt Nam’s foreign exchange reserves are quite abundant at $100 billion, making the ability to adjust the exchange rate more flexible, said VDSC. Therefore, the impact on the market benchmark VN-Index will not be too great from a macro perspective.

But given the volatility risk of the global stock market as the Fed may begin to withdraw pandemic-era support for the economy in November, the short-term movements are unpredictable. 

The market will turn to the third-quarter business results, which are scheduled to be released in October, to measure how the pandemic impacts enterprises’ activities, VDSC added.

The securities firm believed that the third-quarter business results will be differentiated among industries. However, in large-cap stocks that influence the market’s trend like real estate and bank stocks, the business outlook during the period is not really positive. Real estate and bank stocks account for nearly 54 per cent of market capitalisation.

The third quarter traditionally records the lowest business results for the real estate industry, while the prolonged social distancing orders in HCM City and neighbouring provinces have caused stagnation in sales activities and construction progress in key areas, including HCM City, Đồng Nai, and Long An. The delay could affect the contraction progress and profit records in the future.

For the banking sector, VDSC estimates that profit growth in the third quarter may slow down significantly compared to the second quarter of 2021. After a quarter of implementing distancing orders in HCM City, the picture of bad debt of the banking industry is in focus.

VDSC expects bad debts and restructured debts in the banking sector to rise sharply by year-end, affecting the speed and size of provisioning. However, there will be a lag in the formation of bad debts and a phase difference between the increasing speed of bad debt among banks. 

The company forecasted that the VN-Index will fluctuate around 1,240 - 1,380 points. The benchmark closed yesterday at 1,365.99 points, up 0.23 per cent. — VNS