At the gong-beating ceremony at the Hồ Chí Minh Stock Exchange on February 8 to mark its reopening after the Lunar New Year holidays. — Photo courtesy of HOSE

HCM CITY — HCM City will continue to speed up equitisation of State-owned enterprises to enable more reputed companies to list on the stock exchange, and create the most favourable conditions for investors, its chairman has said.

Phan Văn Mãi was speaking at the gong-beating ceremony at the Hồ Chí Minh Stock Exchange on February 8 to mark its reopening after the Lunar New Year holidays.

He also hailed the exchange as contributing to the steady development of the country’s stock market, the city’s financial market and the equitisation of State-owned enterprises.

It has grown rapidly in scale to become an important source of capital for enterprises and an attractive asset class, he said.

The city is striving to become a regional and international financial centre, he said.

Deputy Minister of Finance Nguyễn Đức Chi said HOSE should focus on installing the trading system provided by the Korea Exchange (KRX) on schedule to ensure safe and smooth operation, strengthen oversight and improve the quality of listed companies in terms of governance and information disclosure to achieve transparency in the market.

Bright prospects

In its investment outlook for 2022, investment fund VinaCapital said the very strong outlook for Việt Nam’s GDP growth would propel the stock market higher this year. 

Michael Kokalari, chief economist at VinaCapital, said: “We expect investor participation in the stock market to continue growing vigorously in the years ahead. Despite the large number of stock market accounts opened over the last 18 months, the proportion of Vietnamese people who invest in the stock market is still fairly small. 

“If Việt Nam follows a similar trajectory as Taiwan (which we believe is likely), the number of stock market investors is likely to increase three-fold over the next 10 years.

“Next, despite last year’s remarkable rise in corporate earnings, we expect a further 26 per cent increase in earnings this year. We observe that bull markets that are driven by earnings growth are healthier and more sustainable than those that are driven mainly by P/E multiple expansion.”

The banking sector (which has around 30 per cent weight in the VN-Index), property (23 per cent) and consumer discretionary stocks (3 per cent) should benefit from both cyclical and secular tailwinds this year.

“Banks’ earnings are likely to grow by about 30 per cent this year, driven by 14 per cent credit growth, and the fact that Việt Nam’s banks are less likely to be impacted by COVID in 2022.

“Specifically, asset quality issues should have less of an impact on banks’ earnings, and we do not expect banks to sacrifice profitability to help support the economy again in 2022.”

Despite being optimistic about the overall prospects of the banking sector, he expected earnings growth of individual banks to vary from 6 per cent to 50 per cent, partly because the State Bank of Vietnam will allocate credit growth quotas based on asset quality, which varied widely.

Besides, there were other factors that could impact both earnings and share prices, like bancassurance deals with foreign insurance companies (which typically entailed generous upfront payments) and turn-around/restructuring stories.

The earnings of property development companies were expected to grow by around 25 per cent in 2022, driven by a near doubling of sales/pre-sales of new housing units following a drop of more than 50 per cent in 2021 because of the COVID lockdowns and legal/regulatory issues that were now starting to be addressed and resolved.

The earnings of real estate firms that had recurring revenues were also set to rise this year.

“Finally, consumer spending should continue to rebound in 2022. We believe the pandemic has accelerated the trend of consumers shopping in modern retail channels as well as online.”

Though Việt Nam’s stock market was up 36 per cent in 2021, dispersion among sectors and stocks was quite high.

“We expect there will continue to be winners and losers in 2022, which is a compelling reason for investors to trust a professional investment manager with their equity investments.” — VNS