by Xuan Nguyen
HANOI, Dec. 16 (Xinhua) -- Few days are left until the Vietnamese stock market rounds up a year full of new records set in terms of score highs, liquidity, and market participation.
The COVID-19 pandemic has negatively affected the global economy as well as Vietnam's economy, leading to stagnated production and paralyzed services at least from time to time. Due to the pandemic, Vietnam's gross domestic product (GDP) fell 6.17 percent in the third quarter of 2021, the biggest quarterly drop on record.
Contrary to the gloomy atmosphere of the manufacturing and business services sector, the Vietnamese stock market exploded with historic breakthroughs. On Nov. 25, VN-Index, the benchmark on the southern Ho Chi Minh Stock Exchange (HoSE), hit an all-time high of 1,500.81 points. The threshold was 33.9 percent higher than the level set at the beginning of 2021 and over 120 percent from its low in March 2020 when the country was hit by the first COVID-19 outbreak.
Since then, despite the concerns over COVID-19 developments and global fluctuations, VN-Index has only adjusted down at a moderate level.
As of Nov. 30, Vietnam's stock market capitalization surged 37.6 percent on-year to a record high of 9,193 trillion Vietnamese dong (around 400 billion U.S. dollars), equivalent to 148 percent of the country's GDP, according to the State Securities Commission of Vietnam.
DOMESTIC INVESTORS -- MAIN DRIVER OF BREAKOUT
The massive participation of domestic individual investors recently is fueling the stock market, analysts have pointed out.
In the context of low savings interest rates at financial institutions, the population's idle money has shifted to securities investment to seek higher profit. As a result, the number of new accounts opened by domestic individuals has been reported at above 100,000 accounts per month since March this year.
Remarkably in November, domestic investors opened some 220,600 new trading accounts, marking the first month in history with over 200,000 new ones opened, according to the Vietnam Securities Depository.
Accumulatively, in the first 11 months this year, more than 1.3 million new trading accounts of domestic investors were registered, much higher than the total number of over 1 million set up between 2017 and 2020.
Trading liquidity is also among the highlights this year on the Vietnamese stock market, where sessions with value of over 1 billion U.S. dollars has now become a regular practice. For the single session on Nov. 19, transaction value broke records on all three Vietnamese stock exchanges namely HoSE, HNX, and UPCoM, totalling more than 56.3 trillion Vietnamese dong (roughly 2.5 billion U.S. dollars), with nearly 2 billion U.S. dollars on HoSE alone.
Investors' great expectation over the government's effective pandemic control and potential economic stimulus package is another driving force of the Vietnamese stock market over the past few months. The economic recovery package, now under study by the country's Ministry of Investment and Planning with scale up to 35 billion U.S. dollars, is expected to support businesses, boosting employment and social security, developing infrastructure as well as unleashing social resources.
ECONOMIC RECOVERY -- SOLID FOUNDATION FOR FURTHER STOCK THRIVE
After losing momentum in the third quarter due to the impact of the COVID-19 epidemic, the Vietnamese economy is operating in a new normal state with a high rate of vaccine coverage and gradually opening up to the world.
Vietnam has official switched from the "zero-COVID" policy to flexibly adapt with the pandemic since early October, allowing socio-economic activities to be resumed after several months of shutdowns.
As a good sign, Vietnam's Purchasing Managers' Index (PMI), which measures the health of its manufacturing sector, returned to growth in October and November after five consecutive months of decline as output, new orders and purchasing activities all went up.
The new variant of COVID-19 variant Omicron and the increasing infections in Vietnam may slow the recovery of its economy. However, indicators reflecting economic prospect such as consumer price index, industrial production index, and foreign direct investment, are recovering encouragingly, signalling a positive result in the fourth quarter, local securities company Agriseco said in its latest report.
Vietnam's GDP growth in the fourth quarter may reach 4-5 percent, helping the Southeast Asian economy to expand between 2 and 2.5 percent this year, Agriseco forecast, noting that "the stock market is benefiting from the recovery and stabilization of the macro economy."
According to securities analysts, the momentum for the market's rally next year can be sustained thanks to the recovery of the economy and the increasing participation of domestic private capital flows. In addition, Vietnam's upgrade to Morgan Stanley Capital International (MSCI)'s emerging market earlier than expected also gives the market room to hit new highs. Enditem
