return icon Vietnamnet.vn

New money into stock market slows down, economy growth may miss expectations

In its recent report, Dragon Capital said that the market uptrend is still led by new individual investors.

However, while margin loans were still at a record high and securities companies continued to raise capital, new money deposited into accounts started to show signs of declining. 

{keywords}
A trader looking at a trading board inside the Ho Chi Minh Stock Exchange (HoSE)'s building. — VNA/VNS Photo

Meanwhile, foreign investors started to reduce their net selling, from nearly VND12 trillion (US$521.8 million) in May to VND3.9 trillion in June. And since July, foreign investors started to buy strongly, over VND4.3 trillion by the end of July 9. This is a very positive signal regarding institutional investors’ trading trend, the fund said.

In the near term, corporations’ results will play a crucial role in the stock market, Dragon Capital added. It expects profits of TOP 60, which includes 60 biggest companies tracked by the fund, to grow by 46 per cent in 2021, mainly depending on banking, real estate and steel sectors. 

On the other hand, the correction factors will mainly come from the negative impact of the current fourth wave of COVID-19 on economy and businesses. 

If the yearly growth is only 35 per cent, 2021 price to earning ratio (PE) will reach 14.1 when the VN-Index is at 1,350 points. This is still an attractive level 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, the country's stock market will keep its rallies in 2022 thanks to the strong recovery of fundamentals after the pandemic.

GDP in 2021 may not be as expected because of the Delta virus strain. Although the 4th wave of COVID was spreading strongly, Vietnam's GDP growth in the first six months of the year still reached 5.6 per cent, significantly higher than 1.8 per cent of the same period in 2020. The economy continued to maintain its recovery momentum thanks to the growth of production activities, accounting for 38 per cent of total GDP, up 8.4 per cent, leading to strong growth in trade activities.  

2021 GDP might miss expectations due to the Delta variant

Domestic economic activities showed signs of slowing down in June when Vietnam began to apply social distancing in many provinces, reflected in a drop of 40 per cent in travel compared to the same period last year. Service and retail sectors were also hit hard as total passengers and retail sales fell 13 per cent and 2 per cent, respectively, in June. 

For manufacturing, in June, the PMI decreased to 44 from 53 in May, as some industrial zones halted production. However, the fall is not much compared to the record low of 33 in March last year. 

The fund expects production activities will not be affected as strongly as in 2020 due to the priority of the COVID-19 vaccines for industrial zones, and potential higher orders when US and Europe, accounting for 41 per of Vietnam's export market shares, reopen.

Credit growth from the beginning of the year to mid-June reached 5.5 per cent, while the M2 money supply only increased by 3.5 per cent. 

On the other hand, the six-month average inflation only increased by 1.5 per cent over the same period last year, which is a low increase amid rising global inflation. This allows Vietnam to continue maintaining its loose monetary policy and aim at credit growth of 12 - 14 per cent to support the economy to overcome the tough time.

Besides, credit growth since the beginning of the year is higher than deposit growth, at 3.1 per cent, putting pressure on banks to mobilise capital in the future.

However, Dragon Capital expects the State Bank of Vietnam to inject about VND115 - 140 trillion into the system in the third quarter through the acquisition of USD. This move will help improve the liquidity of the banking system.

Due to the complexity of the Delta variant, Dragon Capital lowered its GDP growth forecast for 2021 from 6 per cent to 5 per cent to reflect existing risks. 

Nevertheless, the Government will not change the given plan, but instead set out two growth scenarios of 6 per cent and 6.5 per cent. 

At the same time, the Prime Minister approved a financial support package worth VND26 trillion, as well as moved to approve a tax exemption and reduction programme worth nearly VND115 trillion.

Moreover, with nearly 10 per cent fiscal space compared to 65 per cent public debt ceiling, Dragon Capital expects the next economic support packages to be announced soon and the Government will make efforts to accelerate investment disbursement mainly for infrastructure development projects in the second half of this year.

Source: Vietnam News

Stock market continues to draw new investors

Stock market continues to draw new investors

Cash flow from individuals and businesses deposited in banks at low interest rates has been increasing gradually, while capital mobilization in the securities sector has also been quite active.

MORE NEWS

Vietnam Airlines plans to restore its entire flight network by the end of 2023

The restoration of international flight routes is an important condition for Vietnam Airlines to reduce losses and become profitable in the near future.

Saigon Zoo elephant dung used to make paper

A Saigon Zoo member of staff and a group of students are transforming elephant dung into paper.

Future of Hanoi’s 120-year-old Long Bien Bridge unclear

Long Bien Bridge, the iconic bridge across Hanoi’s Red River, has degraded, but no major repair plan has been finalized and its future is unclear.

Information & Communications Ministry works to create modern digital infrastructure

The Ministry of Information and Communications will exert efforts to create a modern and safe national digital infrastructure, and a new space for digital economic growth, and developing e-government towards the building of a digital government.

Vietnamese NA Chairman begins official visit to UK

National Assembly (NA) Chairman Vuong Dinh Hue arrived at Heathrow Airport in London on June 28 (local time), beginning his three-day official visit to the UK.

Vietnam to establish industrial environmental index

The Ministry of Planning and Investment (MPI) has called for the implementation of an industrial environmental index in Vietnam, according to Le Thanh Quan, head of MPI's department of economic zone management.

Rising costs cast doubt on wood companies growth prospects

As wood export turnover is rebounding with rising demand in the domestic market, the revenues of wood enterprises are expected to advance.

Vietnam’s GDP expands 7.72% in second quarter of 2022

Vietnam’s Gross Domestic Product (GDP) in the second quarter of this year was estimated to increase 7.72% year-on-year, higher than the growth rates in the same quarters during the 2011-2021 period.

Danish Crown Prince Couple to visit Vietnam in November

Wind energy and energy efficiency will be in focus during the visit, which will take place on November 1-2.

Spanish university offers well-being courses

Lisa Bevill, Academic Director of the Center for Health, Well-being, and Happiness at IE University of Spain, talks with VietNamNet about the university’s “well-being courses” which set a foundation for students to find “the next best you”.

Health Ministry denies oversupply of Covid-19 vaccines

Duong Thi Hong, Deputy Director of the Central Institute of Hygiene and Epidemiology, has confirmed that the current Covid-19 vaccine supply is only enough to give booster shots.

Domestic air transport sees fast recovery, airlines suffer loss due to rising fuel prices

Vietnamese airlines are suffering losses amounting to hundreds of billions of VND each month due to a surge in fuel prices, according to director of the Civil Aviation Authority of Vietnam (CAAV) Dinh Viet Thang.

Finding a way to make money from Saigon River

Ho Chi Minh City has the shape of a river city. However, urbanization and arbitrary construction has encroached on and gradually obscured the river.

Vietnam attracts more than 14 billion USD of FDI in H1

Vietnam reached more than 14 billion USD in foreign direct investment (FDI) in the first six months of 2022, announced the Ministry of Planning and Investment (MPI).

Vietnam needs to develop fintech services for SMEs

Vietnam needs to develop financial technology (fintech) services for small- and medium-sized enterprises (SMEs), according to experts.
back_to_top