Investors to be keen on securities sector in 2018

Experts said that the securities market is likely to be the most attractive investment channel for investors in the Vietnamese economy in 2018.

They attribute this to the Government’s efforts to improve trading conditions, upcoming sales of large-cap State-owned enterprises and undervalued shares. The securities market has witnessed strong growth since the beginning of 2017, surpassing analysts’ expectations, and promises to break its old peak of 1,075 points made in November 2007. The benchmark VN Index on the HCM Stock Exchange has gained nearly 51 percent since the end of 2016 and the minor HNX Index on the Hanoi Stock Exchange has grown 48.7 percent in the same period.
 
Trading liquidity rose with an average value of 5 trillion VND (222.2 million USD) in each session, an increase of 63 percent year-on-year; and market capitalisation increased to 155 billion USD, equal to 74.6 percent of the nation’s total gross domestic product (GDP), according to the State Securities Commission. Foreign investors posted a net buy value of roughly 1.2 billion USD in stocks and 750 million USD in bonds, and raised the total value of invested assets to 31.4 billion USD, almost twice the figure recorded in 2016.

The number of newly listed shares on the local markets increased by 30 percent from the beginning of the year as a number of large-cap firms started trading their shares, like VPBank, brewer Sabeco and petrol dealer Petrolimex, providing high-quality stocks for investors. According to banking and financial expert Can Van Luc, local markets are set for a 15-20 percent growth this year – higher than average rates in the region and the world.

Chairman of Saigon Securities Inc, Nguyen Duy Hung, said that Vietnam’s macroeconomic factors were expected to further improve in 2018, supporting further development of the securities market. The economic outlook reports of some financial institutions like the Asian Development Bank, World Bank and HSBD have predicted that the Vietnamese economy would advance this year with inflation and lending rates under control, accompanied by rising foreign reserves and foreign direct investment (FDI).

Furthermore, the Vietnamese economy is set to benefit from the recovery of neighbouring markets like Japan and China. Hung said that expected changes in Government’s policies would also strongly boost the securities sector in 2018.

He said the industry must complete five tasks this year: the merger of the two local exchanges; introduction of new securities products; completion of the securities law; strengthening the Government bonds market; speed up equitisation of SOEs.
 
The securities market also expects to draw more foreign investment as the Government tries to make private sector the central factor in national socio-economic development and push more SOEs to list shares on the local exchanges, he said.

These factors are widely expected to increase the number of high-quality stocks, raise the percentage of free-floating shares, increase trading liquidity and help raise the Vietnam’s securities market from “frontier” to “emerging” status, drawing more attention from foreign investors.

Among other investment channels, gold and foreign currencies are forecast to slow down in 2018 as investors may be worried about market volatility and the Government’s efforts to minimise their impacts on economic development.

Nguyen Duc Hung Linh, head of market analysis and investment advisory at SSI, said that the gold market this year would be quite volatile on global political and economic changes. Also, domestic gold prices do not move in tandem with global changes, he said.

Global gold prices have moved up 12 percent on average since January 1, 2017, Bloomberg data shows. Meanwhile, the price chart of Bao Tin Minh Chau Gold Jewellery Company indicates that domestic gold prices have moved down nearly 0.5 percent.

Financial-banking specialist Nguyen Tri Hieu said that the domestic gold market has remained as global market volatility was not strong enough to push local gold prices strongly, and there were other investment channels that drew investors’ attention away from gold.

The stability was also caused by the Government’s efforts to reduce speculation on and collection of gold products as well as the policies to stabilise the macro-economy, inflation and foreign exchange rates, Hieu added. He said that these moves by the Government have made Vietnamese people and investors see that gold is not the only safe haven, thus reducing demand for the yellow metal.

Demand for gold in the domestic market could decline further, with the State Bank of Vietnam (SBV) collecting feedback on a decree on gold trading that would give the central bank a monopoly on accepting gold deposits. The new decree will replace Decree 24/2012/NĐ-CP and get rid of certain conditions for companies that make gold jewellery.

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