Outlook bright for Vietnam’s soaring stock market in 2018

By Ngan Anh   February 21, 2018 | 03:07 am PT
Outlook bright for Vietnam’s soaring stock market in 2018
Investors look at stock market screens at a securities company in Vietnam. Photo by Reuters/Kham
After hitting a decade-long high in 2017, the banking and energy sectors could drive the market to record levels.

Countries like Vietnam and Pakistan are coming off a low base in terms of economic development, so there’s the potential for a catch-up effect, like what has happened in places like Russia and Brazil over the past two to three decades, Bloomberg has quoted Jon Scheiber, CEO of Tundra Fonder AB, as saying.

The Tundra Sustainable Frontier Fund, run by the Swedish manager who oversees $400 million in assets, has returned 6.8 percent this year to beat 97 percent of its peers, Bloomberg data shows. Egyptian, Vietnamese and Pakistani equities make up almost 60 percent of its holdings.

Tundra Fonder, which has research offices in Karachi and Ho Chi Minh City, uses its local presence to look beyond the biggest stocks. The top five equities in particular markets can still “be good value but they’re well-researched and well-known”.

Vietnam has become “a bit pricey but that is tilted to the blue chips,” Scheiber said. Beyond the half a dozen top-valued companies, it looks a lot more attractive and the long-term story is still intact.

RongViet Securities Corporation in Saigon said in a report that the VN-Index will increase by at least 17 percent this year, and even 67 percent in its best scenario, meaning it could end the year somewhere between 1,170 and 1,640.

Nguyen The Minh, a senior analyst at Saigon Securities Incorporation, was more reserved.

“The VN-Index could reach 1,050 points in the short term, and 1,300 by year-end,” he said.

Minh said that stocks which were largely ignored in 2017 hold big potential for this year.

The local market was driven by consumer goods stocks, but banking and energy will take the lead this year, he said.

The market will be boosted by interest from the foreign sector. Foreign investors made more than $1 billion in net purchases last year, the highest figure in five years, and will continue to stick around for more privatization at public giants, Minh added.

Bloomberg called Vietnam a “frontier market” in Asia last year, as it was the biggest gainer in percentage terms with a 47 percent gain on the VN-Index. Market capitalization increased by almost double to nearly $150 billion, fueled by state-owned company sales and listings, it said.

Vietnam’s economy grew 6.8 percent in 2017, breaking its own 6.7 percent target which both government officials and economists had considered ambitious.

The country remains one of the fastest growing economies in the world, and has set a goal of expanding another 6.7 percent this year.

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