Illustrative image (Photo: VNA) Hanoi (VNS/VNA) - In its recent report, Dragon Capital said that themarket uptrend is still led by new individual investors. However, while marginloans were still at a record high and securities companies continued to raisecapital, new money deposited into accounts started to show signs of declining.
Meanwhile, foreign investors started to reduce their net selling, from nearly 12trillion VND (521.8 million USD) in May to 3.9 trillion VND in June. And sinceJuly, foreign investors started to buy strongly, over 4.3 trillion VND by theend of July 9. This is a very positive signal regarding institutionalinvestors’ trading trend, the fund said.
In the near term, corporations’ results will play a crucial role in the stockmarket, Dragon Capital added. It expects profits of TOP 60, which includes 60biggest companies tracked by the fund, to grow by 46 percent in 2021, mainlydepending on banking, real estate and steel sectors.
On the other hand, the correction factors will mainly come from the negativeimpact of the current fourth wave of COVID-19 on economy and businesses.
If the yearly growth is only 35 percent, 2021 price to earning ratio (PE) willreach 14.1 when the VN-Index is at 1,350 points. This is still an attractivelevel compared to other markets in the region.
Therefore, Dragon Capital believes that the market may need time to accumulate.If the global markets continue to rise and there are no negative factors, thecountry's stock market will keep its rallies in 2022 thanks to the strongrecovery of fundamentals after the pandemic.
GDP in 2021 may not be as expected because of the Delta virus strain. Althoughthe 4th wave of COVID was spreading strongly, Vietnam's GDP growth in the firstsix months of the year still reached 5.6 percent, significantly higher than 1.8percent of the same period in 2020. The economy continued to maintain itsrecovery momentum thanks to the growth of production activities, accounting for38 percent of total GDP, up 8.4 percent, leading to strong growth in tradeactivities.
GDP might slow down
Domestic economic activities showed signs of slowing down in June when Vietnam beganto apply social distancing in many provinces, reflected in a drop of 40 percentin travel compared to the same period last year. Service and retail sectorswere also hit hard as total passengers and retail sales fell 13 percent and 2 percent,respectively, in June.
For manufacturing, in June, the PMI decreased to 44 from 53 in May, as someindustrial zones halted production. However, the fall is not much compared tothe record low of 33 in March last year.
The fund expects production activities will not be affected as strongly as in2020 due to the priority of the COVID-19 vaccines for industrial zones, andpotential higher orders when US and Europe, accounting for 41 per of Vietnam'sexport market shares, reopen.
Credit growth from the beginning of the year to mid-June reached 5.5 percent,while the M2 money supply only increased by 3.5 percent.
On the other hand, the six-month average inflation only increased by 1.5 percentover the same period last year, which is a low increase amid rising globalinflation. This allows Vietnam to continue maintaining its loose monetarypolicy and aim at credit growth of 12 - 14 percent to support the economy toovercome the tough time.
Besides, credit growth since the beginning of the year is higher than depositgrowth, at 3.1 percent, putting pressure on banks to mobilise capital in thefuture.
However, Dragon Capital expects the State Bank of Vietnam to inject about 115 -140 trillion VND into the system in the third quarter through the acquisitionof USD. This move will help improve the liquidity of the banking system.
Due to the complexity of the Delta variant, Dragon Capital lowered its GDPgrowth forecast for 2021 from 6 percent to 5 percent to reflect existing risks.
Nevertheless, the Government will not change the given plan, but instead setout two growth scenarios of 6 percent and 6.5 percent.
At the same time, the Prime Minister approved a financial support package worth26 trillion VND, as well as moved to approve a tax exemption and reductionprogramme worth nearly 115 trillion VND.
Moreover, with nearly 10 percent fiscal space compared to 65 percent publicdebt ceiling, Dragon Capital expects the next economic support packages to beannounced soon and the Government will make efforts to accelerate investmentdisbursement mainly for infrastructure development projects in the second halfof this year./.
Meanwhile, foreign investors started to reduce their net selling, from nearly 12trillion VND (521.8 million USD) in May to 3.9 trillion VND in June. And sinceJuly, foreign investors started to buy strongly, over 4.3 trillion VND by theend of July 9. This is a very positive signal regarding institutionalinvestors’ trading trend, the fund said.
In the near term, corporations’ results will play a crucial role in the stockmarket, Dragon Capital added. It expects profits of TOP 60, which includes 60biggest companies tracked by the fund, to grow by 46 percent in 2021, mainlydepending on banking, real estate and steel sectors.
On the other hand, the correction factors will mainly come from the negativeimpact of the current fourth wave of COVID-19 on economy and businesses.
If the yearly growth is only 35 percent, 2021 price to earning ratio (PE) willreach 14.1 when the VN-Index is at 1,350 points. This is still an attractivelevel compared to other markets in the region.
Therefore, Dragon Capital believes that the market may need time to accumulate.If the global markets continue to rise and there are no negative factors, thecountry's stock market will keep its rallies in 2022 thanks to the strongrecovery of fundamentals after the pandemic.
GDP in 2021 may not be as expected because of the Delta virus strain. Althoughthe 4th wave of COVID was spreading strongly, Vietnam's GDP growth in the firstsix months of the year still reached 5.6 percent, significantly higher than 1.8percent of the same period in 2020. The economy continued to maintain itsrecovery momentum thanks to the growth of production activities, accounting for38 percent of total GDP, up 8.4 percent, leading to strong growth in tradeactivities.
GDP might slow down
Domestic economic activities showed signs of slowing down in June when Vietnam beganto apply social distancing in many provinces, reflected in a drop of 40 percentin travel compared to the same period last year. Service and retail sectorswere also hit hard as total passengers and retail sales fell 13 percent and 2 percent,respectively, in June.
For manufacturing, in June, the PMI decreased to 44 from 53 in May, as someindustrial zones halted production. However, the fall is not much compared tothe record low of 33 in March last year.
The fund expects production activities will not be affected as strongly as in2020 due to the priority of the COVID-19 vaccines for industrial zones, andpotential higher orders when US and Europe, accounting for 41 per of Vietnam'sexport market shares, reopen.
Credit growth from the beginning of the year to mid-June reached 5.5 percent,while the M2 money supply only increased by 3.5 percent.
On the other hand, the six-month average inflation only increased by 1.5 percentover the same period last year, which is a low increase amid rising globalinflation. This allows Vietnam to continue maintaining its loose monetarypolicy and aim at credit growth of 12 - 14 percent to support the economy toovercome the tough time.
Besides, credit growth since the beginning of the year is higher than depositgrowth, at 3.1 percent, putting pressure on banks to mobilise capital in thefuture.
However, Dragon Capital expects the State Bank of Vietnam to inject about 115 -140 trillion VND into the system in the third quarter through the acquisitionof USD. This move will help improve the liquidity of the banking system.
Due to the complexity of the Delta variant, Dragon Capital lowered its GDPgrowth forecast for 2021 from 6 percent to 5 percent to reflect existing risks.
Nevertheless, the Government will not change the given plan, but instead setout two growth scenarios of 6 percent and 6.5 percent.
At the same time, the Prime Minister approved a financial support package worth26 trillion VND, as well as moved to approve a tax exemption and reductionprogramme worth nearly 115 trillion VND.
Moreover, with nearly 10 percent fiscal space compared to 65 percent publicdebt ceiling, Dragon Capital expects the next economic support packages to beannounced soon and the Government will make efforts to accelerate investmentdisbursement mainly for infrastructure development projects in the second halfof this year./.
VNA
