June 15, 2021

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The transaction value of Vietnamese securities is close to that of Singapore’s

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The transaction value of the Vietnamese stock market in April increased to 725 million USD, nearly equal to Singapore’s, according to HSBC.

The report “The numbers behind the growth story” of HSBC said that Vietnam is a frontier stock market that is being interested and liked.

In March 2021, 113,000 domestic trading accounts were newly opened, a record number, bringing the total number of accounts to 3.02 million. As a result, the market transaction value increased from 596 million USD in March to 725 million USD in April. A year ago, this figure was only 130 million USD.

According to this figure, HSBC believes that the current transaction value of the Vietnamese market is almost equal to that of Singapore and better than Malaysia and Indonesia. The VN-Index has risen 12.4% year-to-date, surpassed all major indices in the region and has surpassed the psychological resistance of 1,200 points for the first time, a level that has never been broken even in previous market price increases in 2007 and 2018.

The bank said that effective control of Covid-19 led to a strong recovery in economic growth as well as cash flow, which has been fueled by new individual investors.

Stock exchange at Yuanta floor in District 1, Ho Chi Minh City in March 2021. Photo: Quynh Tran.

With this picture, HSBC believes that it will be difficult for foreign investors to ignore the Vietnamese market for much longer, for 5 reasons. first, Vietnam offers an opportunity to balance risk and a favorable risk-reward in one of the most resilient growth economies. Monday, the market has higher liquidity.

TuesdayForeign ownership ratios (FOLs), which are a problem for foreign investors, are not currently a deterrent to trading. In the VN30 Index, 24 companies still have room for foreign investors.

Wednesday, shares that have reached the limit of foreign ownership can be purchased by paying a price difference. As these stocks generated strong profit growth but traded at cheaper valuations compared to other companies in Asia, the spread became not too large. Furthermore, policy reforms are underway, albeit slowly, but positively towards the market.

And finally is an attractive pricing. The 12-month VN-Index futures are trading at a PE of 15.1x, 5.3% less than the 5-year average, and the 12-month term at a PB of 2.5x, less 2.9% compared with the five-year average.

The VN Index increased 4.1% in April and 12.4% higher than the same period last year, surpassing the growth of global emerging markets (GEMs) (5.6%), Europe respectively. Asia except Japan (5.5%) and frontier markets (6.6%).

According to HSBC, this growth is being supported by internal and external factors, including inflows of foreign direct investment – strong FDI, improved production and consumption growth, in addition to more New investments enter the market. By the end of March, the number of stock investors accounted for 2.8% of Vietnam’s population.

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