Stock forecasts a reason for confidence

February 16, 2021 - 07:54
Brokerages forecast Vietnamese stock market will prosper in 2021 and greatly influenced by the speed of economic recovery and the developments of the COVID-19 globally.


POSITIVES IN PLACE: Confidence in the Government’s anti-pandemic measures and expectations of a stronger economic recovery will boost the stock market. Photo

Brokerages have forecast Việt Nam’s stock market to prosper in 2021 while being influenced by the speed of economic recovery and the development of COVID-19 pandemic globally.

According to the Vietcombank Securities Company (VCBS), the VN-Index could increase between 8 and 15 per cent compared to the end of 2020 but be greatly affected by events. It also predicts GDP growth of 6.5 to 7 per cent.

“This growth will come from consumer demand, which is expected to increase significantly compared to the relatively low level in 2020,” the company said.

“Retail sales of goods will continue to recover after disease control efforts have shown effectiveness. As a result, the process of adapting to the ‘new normal’ will help boost consumer demand even in non-essential goods.”

The successful maintenance of macroeconomic stability and the Government’s consistent policy in attracting investment flows shifting away from China will contribute to boosting investment from both the public and private sectors. FDI inflows are expected to be an important source to promote economic growth in the years to come, according to VCBS.

Inflation in 2021 is estimated to remain at around 3-3.5 per cent, while exchange rates will be stable and fluctuate by no more than 2 per cent.

2021’s credit growth is to be lower than in the 2016-2017 period and close to 2018-2019 levels.

“Credit institutions with good asset quality will witness credit growth and those that have not finished handling outstanding debts will anticipate less or none,” it said.

VNDirect Securities Corporation, meanwhile, has also released a new scenario for the market.

It forecasts that the VN-Index will climb to 1,180-1,230 points this year; slightly higher than the previous forecast of 1,180 points it made in its December report.

Record low interest rates will stimulate domestic cash flow into the stock market, it believes. 2020 saw a wave of monetary policy easing globally, to support economies overcome the recession caused by the COVID-19 pandemic.

The State Bank of Việt Nam made three executive rate cuts in 2020, of 1.5-2-per cent each; among the highest in the region.

Relatively low interest rates had seen some cash flow in the population shift to other investment channels, most notably securities. This was an important factor behind cash flow and liquidity on the stock market increasing strongly in recent times, VNDirect said.

Domestic cash flow has continued to pour into the stock market. The number of newly opened securities accounts reached 64,183 in December, of which individual investors opened 63,629, an increase of about 54 per cent compared to November and a record number.

The number of new accounts opened by domestic individual investors was already high in October and November, at 36,346 and 41,080, respectively.

In 2020 as a whole, the total number of new accounts opened by domestic individual investors reached 392,527, an increase of 108 per cent compared to 2019.

Confidence in the Government’s anti-pandemic measures and expectations of a stronger economic recovery will also give a boost to the market, according to VNDirect.

The Government’s drastic and timely solutions helped control the first wave of COVID-19 infections in early 2020 and then a second wave in August, pushing the economy towards a “new normal”.

Fiscal stimulus packages were also launched by the Government, totalling 4.3 per cent of GDP, VNDirect said.

With effective solutions adopted, Việt Nam’s economy made a spectacular comeback in the second half of 2020. GDP for the year as a whole reached 2.91 per cent; one of the highest rates in the world.

Elsewhere, MB Securities Co (MBS) forecast that the VN-Index will fluctuate within a range of 965-1,165 points this year. In its more optimistic scenario, the fluctuation will be in the 995-1,230-point range.

Việt Nam’s economy, it believes, will grow by 6.5 per cent and be among the best performers in Southeast Asia.

It forecasts a low level of inflation, fluctuating around 3.5 per cent due to weak demand, while money and credit supply remaining at a harmonious level in both 2019 and 2020 will not create monetary pressure in 2021.

As a result, the central bank can continue to expand monetary loosening policies to support economic growth.

MBS also predicts demand for essential consumer goods, fresh food, and pharmaceuticals and healthcare products will increase, so investors should consider accumulating these stocks when stock prices return to the low range.

In the context of a healthy macro-economic environment and stable politics and public investment and infrastructure investment being promoted by the Government, the outlook for the real estate industry is positive, with COVID-19 not overly affecting major projects and the general needs of the industry, except for resort real estate, hotels and condotels.

Industrial, apartment, and office real estate have all recovered slightly and received a lot of market interest, according to MBS.   VNS