Will Vietnam be Asia’s Top Stock Market in 2018?

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By: Dezan Shira & Associates
Editor: Koushan Das

In 2017, VN-Index, a capitalization-weighted index of all the companies listed on the Ho Chi Minh City Stock Exchange closed at 984.24, a 47 percent gain, which was the highest in 10 years, making Vietnam Asia’s best-performing stock market. For 2018, the outlook is positive, mostly driven by similar conditions which were prevalent in 2017 such as high GDP growth rate, increase in FDI, and easing of regulations.

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2017 performance

Last year, the 47 percent gain was fueled by divestments and listing of enterprises such as Sabeco, Habeco, Petrolimex, Vinamilk, and Vincom Retail. Foreign investors continued to invest in industries such as finance, oil, and food & beverage (F&B).

Vietnam’s stock market had doubled in size in 2017 to US$155 billion (VND 3.52 quadrillion), equal to 72 percent of the country’s total GDP. Besides the index growth, trading value also grew more than 60 percent compared to 2006 to US$220 million (VND 5 trillion) last year.

Major sectors

Food and beverage companies, banks, building contractors, construction material producers, and retailers witnessed the highest gains in 2017. Companies such as Vietnam Airlines, Vietjet, Petrolimex, VPBank, and Vincom Real were the best performers.

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2018 performance

In the first two months of 2018, the market grew by 14 percent, closing at 1,120, achieving the highest gain than any other global market during the same period, and almost three times more than NASDAQ. As Q1 ended, the growth rate stood at 19.33 percent for the first three months, with Vietnam again emerging as the best performing market in the world, followed by Egypt and Brazil at 15.52 percent and 11.73 percent respectively. It closed at 1,174.46.

By the second week of April, the market started to grow by 22 percent, but by April 26, it fell 11 percent, the worst monthly performance for the index in seven years. The drop wiped out market capitalization worth US$15 billion.

By the beginning of May, Singapore’s Strait Times moved higher, gaining 6.2 percent, while VN Index, dropped by 2 percent.

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Outlook

Investors believe that this positive momentum will continue in 2018, and the VN-Index can exceed or at least reach 1,300 points, driven by high economic growth and FDI. The markets will benefit in 2018 from the listing of shares by commercial banks and initial public offerings (IPOs) of companies such as PetroVietnam Power Corp (PV Power), PetroVietnam Oil Corporation (PV Oil), and Binh Son Refinery and Chemicals Corporation (BSR). In addition, the share sales of Petrolimex and PetroVietnam Gas Corporation (PV Gas) will benefit the market.

With the government reducing restrictions on foreign investments, improving the business environment, and divesting from State-owned enterprises (SOEs), foreign investors will continue to invest in IPOs and share sales in Vietnam. According to the National Financial Supervision Council, banking, retail, consumer goods, and aviation stocks will see the highest gains in 2018.


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Vietnam Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Eurasia, including ASEANChinaIndiaIndonesiaRussia & the Silk Road. For editorial matters please contact us here and for a complimentary subscription to our products, please click here.

Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout the Vietnam and the Asian region. We maintain offices in Hanoi and Ho Chi Minh City, as well as throughout China, South-East Asia, India, and Russia. For assistance with investments into Vietnam please contact us at vietnam@dezshira.com or visit us at www.dezshira.com

 

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