Securities firms forecast rosy 2020 for stock market

Vietnam-based VinaCapital fund says that VN-Index could surge 10-15 percent next year. Petri Deryng, portfolio manager of Finland-based PYN Elite Fund, predicts VN-Index would reach 1,800 points in the next two or three years from 961 points at the end of 2019.

Meanwhile, the latest strategic report of Rong Viet Securities Company (VDSC) forecasts VN-Index to fluctuate between 950 to 1,120 points. Vietcombank Securities (VCBS) says VN-Index could hit up to 10 percent higher than its 2019 close, to 1,076 - 1,127 points.

According to most reports, index growth will be underpinned by stable macro-indicators, with GDP growth of 7.02 percent in 2019, inflation controlled below the government’s 4 percent target, and rising household consumption. The U.S-China trade war has also brought a new wave of foreign direct investment, accelerating the pace of manufacturing sector expansion.

"We expect this stability to continue in 2020," VinaCapital said in its report. Although geopolitical risks would continue to be present, Vietnam is in position to "weather most external storms," it said.

According to VDSC, Vietnam’s stock market will remain attractive in 2020 with positive foreign investor cashflow, more attractive stock valuations, and the prospect of being upgraded by American finance company MSCI from frontier market to "emerging market" status to be factors supporting market growth, balanced by external risks related to the U.S.-China trade war.

However, VDSC cautioned Vietnam may not see large cashflow from both foreign and domestic investors this year to help VN-Index surge. "Growth will likely not occur across the board but would be focused on individual groups of stocks," it says.

Liquidity, the key driver behind movements on any stock market index, is also expected to rise 10 percent in value compared to 2019, and would affect both order-matching and put-through transactions on HoSE, home to large-caps, and Hanoi Stock Exchange (HNX), Vietnam’s market for small and medium-caps, VDSC notes.

2020’s rising stars

VinaCapital holds high expectations for stocks in banking, retail and technology this year.

Profit of listed banks is forecast to increase by 23 percent in 2020, led by credit growth of 13-14 percent and mortgage loan growth of about 30 percent, VinaCapital says, adding investors should pay close attention to mid-sized lenders like MBB of state-owned Military Bank, VPB of private VPBank, or VCB of Vietcombank, one of Vietnam’s three biggest state-lenders by assets.

Notable blue chips in the retail sector include MWG of electronics retail chain Mobile World and PNJ of leading jewellery chain Phu Nhuan Jewellery. Profits of these two businesses are likely to grow in 2020, underpinned by a widening middle class and Vietnam’s trend of shifting from small retail stores to large chains, the fund states.

In the tech sector, FPT of IT services giant FPT is also worth watching. More than half of the corporation’s revenue comes from software outsourcing, the figure expected to rise 25 percent next year, while its telecommunication services revenue is forecast to add 15 percent, VinaCapital says.

HPG of leading steelmaker Hoa Phat Group also shows potential, given the group revealed plans to double production in 2020, it adds.

VinaCapital also notes that many urban housing projects in Ho Chi Minh City are experiencing delayed approval over regulatory issues.