The Vietnamese stock markets performed well last year and, and with the improving economic fundamentals, the trend is expected to continue this year, experts told a seminar in Ho Chi Minh City last week.

The benchmark VN-Index gained 22 percent last year, the highest annual increase since 2009, Ong Seng Yeow, research executive director at Maybank Kim Eng told the seminar on foreign capital flows and the Vietnamese stock market on March 8.

Last year the Government took many measures to combat inflation and stabilise the economy, impressing foreign investors, he said.

Though the investors pulled out between June and August following news about the US's tapering of its quantitative easing – referring to printing of dollars ostensibly to combat recession — foreign capital flows into the Vietnamese stock markets still went up by 54 percent last year, he said.

While many emerging economies' currencies fell sharply against the US dollar, which created a perception of instability around emerging markets, Vietnam's currency remained very stable, he said.

Vietnam has basically outshone other Asian emerging markets in terms of economic and political stability, and this has attracted a lot of investors to the country, he said.

The Government's economic initiatives to shore up investors' confidence, like increasing the foreign ownership limit in companies, equitisation of State firms, and restructuring of banks, have pushed up the stock markets strongly this year, he said.

Thanks to improving economic fundamentals, foreign investors have increased investments in Vietnam's stock markets, with ETFs (exchange-traded funds) in Vietnam surging in the first two months, he said.

"The potential for the Vietnamese stock market is very good at this moment," he said, adding that the VN-Index might reach 590-600 points by the end of this year.

The relatively low price-to-earnings ratios of Vietnamese firms compared with their regional counterparts and persistent profit growth at businesses would continue to attract foreign portfolio investors, he said.

However, the growth is not likely to match that of last year, especially in the first half of this year, he said. The VN-Index has gained around 15 percent so far. "All of the initiatives like SOE equitisation and banking restructure will take some time. It will not happen overnight but we are optimistic that in the medium- and long-run, the growth trend is unlikely to fall behind what we saw in 2013."-VNA