VietNamNet Bridge - Analysts believe that the upward trend of the stock market will continue in the last months of the year, with the VN Index soaring to 820-850 points by the end of 2017.

The VN Index on October 6 reached 807.8 points, a 10-year peak. This represents a 21.6 percent increase this year, the fastest growth rate in South East Asia and the 10th fastest in the world.

By the end of 2006, the total capitalization value of the Vietnamese stock market had been reported at $14 billion, but the figure soared to $120 billion, up by 67 percent compared to the end of 2016, equal to 60 percent of GDP.

"Stable macroeconomic policies open up bright prospects for the economy. According to economic laws, the stock market is always ahead of economic growth, so the strong rise of the stock market is quite reasonable," said Duong Anh Vu, a financial expert.

In the first nine months of the year, the investors bought more than sold by $625 million on the Hanoi and HCMC bourses. Meanwhile, net sales were seen in Indonesia ($800 million) and Pakistan, which has been upgraded into an Emerging Market ($427 million).

Though VN Index has increased sharply in three-quarters of the time of 2017, the indicators in Vietnam are not high. The P/E ratio is around 16, lower than Thailand’s (Set Index) 17.1, Indonesia’s (JCI Index) 23 and the Philippines’ (PCOMP Index) 22.7. Regarding the P/B, the indicator is 2.3 in Vietnam, while it is 2.5 in Indonesia and the Philippines.

In its latest report, BIDV Securities gave optimistic predictions about the performance of the market in the fourth quarter of the year, commenting that the stock index would thrive on a series of positive factors. These include a high GDP growth rate of 7.46 percent in Q3, an increase of 30 percent and 13.4 percent in registered and disbursed FDI capital, respectively, a 9.6 percent increase in total money supply and 11 percent credit growth rate. 

Economists all agree that the 6.7 percent GDP growth rate for 2017 is within reach, while BIDV Securities believe that the VN Index may reach 820-850 points by the end of the year. 

In an optimistic scenario, VN Index will climb to a new high with the support of bluechips. The policy on loosening monetary policy will facilitate liquidity. The shares of banks and corporations which the state would divest from would still be the key shares in the market.

In a pessimistic scenario, the VN Index would drop to below the 780 point threshold, if there is bad news which prompts foreign investors to sell shares.

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