Việt Nam's stock market is forecast to come out of the pandemic quite well with VN-Index expected to top 1,700 points in 2022. VNA/VNS Photo

HÀ NỘI—Việt Nam’s stock market will experience ups and downs, but the overall trend is still estimated to be up next year thanks to expectations of economic recovery after the pandemic.

This optimistic forecast is widely shared by securities companies.

A report from VNDirect Securities Corporation estimated that earnings per share (EPS) of companies listed on Hồ Chí Minh Stock Exchange (HOSE) would grow at 39 per cent in 2021, higher than the previous forecast of 26 per cent.

This upward trend has been boosted by the rising profits of some sectors, which made a strong recovery in Q4 of 2021, including retail, food and beverage, and banking. Meanwhile, the earnings prospect of petroleum and real estate sectors remains positive.

Given these good signs, EPS growth of HOSE companies are forecast to maintain momentum in 2022, staying at 23 per cent. In the year following, they will continue to fare well with a growth rate of 19 per cent, exceeding the average of 12 per cent for the 2017-2020 period.

Average daily trading value could increase by 10-15 per cent year-on-year in 2022. This upturn will be spurred by the strong flow of domestic retail investors and the listing of several noble companies including Bamboo Airways and Bach Hoa Xanh.

Việt Nam’s stock market has a chance to be upgraded to the FTSE Secondary Emerging Market Index next year, once the new securities trading system (KRX) comes into operation in the first half of 2022.

KRX is expected to solve pre-funding issues, which could further boost foreign inflows.

VNDirect expects the VN-Index to reach 1,700-1,750 points by 2022.

Việt Nam Mirae Asset Ltd. Company also reports an optimistic outlook as they believe that high EPS growth expectations will propel the stock market.

According to Mirae Asset’s estimation, the market is riding high on economic recovery with an EPS growth of 34 per cent in 2021. Materials, utilities, insurance and energy are among sectors that are expected to grow by more than 20 per cent compared to 2020.     

The economy will be better placed to benefit from post-pandemic shifts through wide-ranging structural reforms, supported by both fiscal and monetary policy.

In 2022, EPS growth is projected to stand at 24 per cent, equivalent to a compound growth rate of 29 per cent for the 2020-2022 period.

The VN-Index is set to conquer 1,700 points in the same year.

Diversified financials, real estate, banks and software & services are among sectors that will continue to stay on an upward trend. Meanwhile, materials, energy, insurance and utilities will keep growing but at a lower pace.

Some sectors will continue to lie dormant until the economy fully reopens, which include transportation, healthcare, and automobiles and components.

In Mirae Asset’s forecast for 2022, exporters will reap benefits from global-value-chain participation and free trade agreements.

Consumption will recover as the country has a growing middle class and a fast pace of urbanisation.

Building materials and construction firms will make headway next year thanks to accelerated public investment disbursement. Likewise, industrial zones also look promising with robust direct foreign investment inflows boosted by global supply chain rellocation.

Regarding Việt Nam’s economy, HSBC Bank has an optimistic outlook for future.

The bank says Việt Nam’s economy is likely to get back to a growth rate of 6.8 per cent next year.

Such an economic recovery is driven by the return of strong FDI, notably FDI in manufacturing.

Meanwhile, FTAs that were signed over the past two years have begun to bear fruit.

The uplift in investments, coupled with favourable conditions created by FTAs, will provide fresh impetus to Việt Nam’s exports.

As Vietnamese people start to spend more on travel and entertainment, the expansion of middle class and the rich will change consumption for the better.

At the same time, infrastructure roll-out will also fuel economic activity, especially in renewable energy industries, according to Tim Evans, general director of HSBC Việt Nam. — VNS