Positive 2023 securities market forecasts

Sharp fall in share prices

With stocks plummeting throughout 2022, most investor accounts registered a negative balance.

As of mid-December 2022, the VN-Index was trading at a price to earnings ratio P/E of 10.91 times, almost near the lowest level in a decade (10.34 times) on November 5, 2012. This valuation is also close to the valuation that VN-Index recorded during the first wave of COVID-19 on March 31, 2020.

Vietnam’s securities market is expected to recover in 2023

The State Securities Commission (SSC) attributes the sharp decline both to domestic and international developments. Government economic support measures after the COVID-19 pandemic generated high inflation in many parts of the world, prompting rapid tightening of monetary policies. Domestically, cash flows on the securities market were affected by interest rate changes. After the Fed's continuous interest rate adjustments, the State Bank of Vietnam also increased the operating interest rate twice to cope with inflation and reduce external impacts.

In addition, deposit interest rates at commercial banks also increased, attracting cash flows back to the banking system and reducing the attractiveness of short-term securities investments.

The government’s crackdown on real estate enterprises suspected of violations in issuing corporate bonds also increased investor caution and affected securities market cash flow.

Basis for optimism in 2023

The breakthrough recovery of the VN-Index from its 900-point low to over 1,000 points during the final month of 2022 was mainly supported by foreign capital inflows. In November 2022, foreign investors net bought VND16 trillion on Vietnam’s securities market. The recent massive disbursement of foreign funds also matched foreign investors’ evaluation of Vietnam's securities market outlooks in 2023.

According to Craig Martin, Chair of Dynam Capital that manages Vietnam Holding Limited (VNH), the market recovered strongly at the end of November and is currently witnessing steady growth, pushing up prices of large-caps and luring back more local investors.

Tran Thang Long, analysis director of BIDV Securities Company (BSC) has reported that the BSC successfully issued shares to Hana Securities from the Republic of Korea for investment in long-term development opportunities of the Vietnamese securities market.

Tough government measures, including strengthened inspections and handlings of violations, are also expected to improve the stability, sustainability and transparency of the Vietnamese securities market.

The management agencies will also review the Law on Securities and guiding documents to resolve inadequacies and obstacles, thereby restoring investors’ confidence in the market.