Despite uncertainty over coronavirus variants, the Vietnamese stock market is expected to inch higher next year and hit 1,700 - 1,760 points. 

 

The benchmark VN-Index ended last week with a loss of 38.73 points or 2.61 per cent, dragging the index back to around 1,443 points. 

 

The correction erased all gaining efforts of the market last month after breaching the historical high of 1,500 points on November 25, causing doubts over the market’s outlook.

 

However, experts believe the market still has more room to grow sustainably. 

 

At the “Looking for growth momentum in 2022” conference launched by VNDirect Securities Corporation last Friday, Trần Khánh Hiền, Research Director at VNDirect, said that because the country’s market is still relatively new, investors have been through a lot of ups and downs, so they feel unsure of whether the market is capable of growing steadily over many years. 

 

“If we look at the US market, even though the US economy struggles sometimes, over the long term, most indices like the Dow Jones or SP500 record stable annual increases,” Hiền said.

 

“I believe when the country’s market reaches a level of maturity and investors accumulate enough experience, our stock market will also increase steadily.”

 

A recent report from VNDirect showed that the stock market’s valuation is at a reasonable level, which is cheaper than others in the region. In addition, the growth of listed businesses’ profit will continue to support the VN-Index, therefore, the Vietnamese stock market can grow higher next year.

 

The report also forecast that the market’s benchmark may hit new peaks at around 1,700 - 1,760 points in 2022, on the basis that price-per-earning (P/E) valuation is at 16-16.5 times and the profit growth of all enterprise is 21 per cent.

 

Logically, the market may rise, said Cao Minh Hoàng, Investment Director of IPA Asset Management. 

 

“Even though the 2022 stock market is still a riddle due to the unclear impacts of coronavirus variants on the economy, the stock market still may edge higher backed by listed enterprises’ potential profit growth of 21 per cent and the country’s GDP may reach US$400 billion,” Hoàng said. 

 

The market also may receive support from positive macro-economic factors as the economy recovers after the “nightmare third quarter”.

 

At the conference, economist Nguyễn Xuân Thành said that given good credit growth with some banks receiving credit room extensions, businesses will have funds for recovery.

 

Nevertheless, the economy's biggest challenge is that during social distancing, a series of new administrative procedures for businesses have been applied, and recently to adapt to the 'new normal', companies also have to create plans and pay for extra costs.

 

Promising and risky stocks in 2022

 

Next year, besides industries that benefit from public investment, energy and banking sectors are expected to be bullish, Hoàng said. 

 

Although banks’ profit may fall in 2022 and it will be difficult to report growth of 30 per cent in profit like this year, Hiền said it is reasonable that banks are sharing a part of their profits to support businesses and also need to balance profit growth and asset quality.

 

Some food and beverage, and retail stocks may rebound next year if demand recovers.

 

Meanwhile, groups with less room for growth are commodities due to strong fluctuations in prices, Hiền added. 

 

“Unlike last year, when most commodities prices rose sharply, there definitely will be division next year,” Hiền said. 

 

Accordingly, steel, fertiliser and coal stock groups maybe at risk of declining. — VNS