Foreign capital flows are expected to bounce back in 2022

Growth prospects

Last year was a boom year for the Vietnamese stock market in terms of points, size and market liquidity. According to the State Securities Commission of Vietnam, by December 28, 2021, the VN-Index reached 1,494.39 points, an increase of 35.4 percent compared to the end of 2020, while the HNX-Index ended at 458.05 points, up 125.5 percent. Vietnam’s stock market capitalization increased by 46 percent compared to the end of 2020, reaching VND7,729 trillion. The value was equivalent to 122.8 percent of the country’s gross domestic product (GDP) in 2020 and 92 percent in 2021.

The number of new trading accounts reached more than 1.5 million in 2021, higher than the total of the previous four years. Some Vietnamese stock market sessions reached several billion US dollars in 2021 and the VN-Index hit historic highs.

As many as 537 codes were traded on the Ho Chi Minh Stock Exchange (HoSE) by January 28, 2022, with a market capitalization value of more than VND5,700 trillion, equivalent to 68.67 percent of GDP in 2021 (GDP at current prices).

The first trading session of 2022 saw 110 stocks hitting the ceiling. Phan Van Mai, chairman of the Ho Chi Minh City People’s Committee, said on February 8 that the city will promote equitization and list reputable stocks on the stock market. The city will also strive to become a regional and international financial center, he said.

Businesses have mobilized capital to restore trade and production activities through the stock market

Foreign capital to bounce back

James Estaugh, head of securities services at HSBC Vietnam, said Vietnam’s stock market experienced a record high net selling by foreign investors in 2021 valued at VND62.358 trillion. However, foreign capital flows will bounce back in 2022. Although the Vietnamese stock market is considered small, its average daily trading value has grown continuously. In 2021, the average trading value reached VND25.96 trillion (equivalent to about US$1.13 billion) per session, an increase of 250 percent compared to the previous year, compared with US$2 billion, US$800 million, US$500 million and US$100 million per session, respectively, in Thailand, Indonesia, Singapore and the Philippines.

Michael Kokalari, chief economist of VinaCapital, said the Vietnamese stock market will thrive in 2022 as it continues to receive support from foreign capital flows and Vietnam’s economic recovery. VinaCapital’s investment strategy is to identify stocks and sectors that will benefit from Vietnam’s economic recovery, including non-essential consumer goods, finance and real estate, he said.

The newly issued regulations and policies of the Law on Securities and guiding documents are also expected to support businesses and protect the legitimate rights and interests of investors.

Thao Ngoc