Most experts believe that instead of growing evenly across all sectors and industries like in 2021, Vietnam’s stock market in 2022 will see a large division.
Vietnam’s stock market in 2021
There were a lot of fluctuations in the stock market of Vietnam in 2021. The VN-Index, despite many strong declines, was still in an upward trend to reach historic peaks. The bull market helped many investors win and made securities an attractive investment channel during the pandemic.
Along with the market’s growth momentum and strong cash flow from new investors, the stock market also recorded a breakthrough of small and medium-sized stocks. There were times when small and mid-cap stocks were the focus of the market, while large-cap ones were in quiet trading.
Assessing the market in 2022, Dragon Capital investment fund believes that when the economy returns to normal growth (6-7%) in 2022, quality large-cap stocks, which best reflect growth drivers of the macro economy, will return to the leading role of the market.
According to Dragon Capital, the fundamentals show that 2022 continues to be a positive year even though the market in 2021 recorded impressive gains. With nearly 80% of the population already vaccinated with 2 doses of the vaccine and a fiscal support package to be launched, the economic recovery process is only in the early stages. Dragon Captial forecasts overall market EPS to increase by 22.6% and expects the stock price to follow suit as the 2022 forecast P/E is only 11.8. This is an attractive valuation compared to the internal market and other countries in the region.
Although by the end of 2021, Vietnam had not yet returned to the normal state as before the epidemic, what Vietnam achieved in 2021 is believed be a solid foundation for a promising 2022.
Suggestions on investment
Sharing the same view with Dragon Capital, Vietnam Bank for Foreign Trade Securities (VCBS) emphasized that the divergence among stock groups began in the fourth quarter and is expected to continue to widen. Investment opportunities in 2022 will need to be more selective and go deeper into each company.
According to VCBS, stocks of private joint stock commercial banks will maintain a high growth rate. With real estate stocks – which rose sharply and suddenly fell deeply at the end of 2021, VCBS also made some investment suggestions such as paying attention to real estate businesses with advantages in land fund and financial resources, and has a clear growth target in 2022.
In addition, investors can consider businesses in the value chain of industries associated with domestic resource extraction activities such as oil and gas, cement, mining and non-ferrous metal processing.
VNDirect Securities Company also offers four investment arguments for 2022. The first trend is that commodity prices are expected to remain high, which means companies with a high degree of dependence on commodity prices will benefit from this trend (such as oil and gas companies and commodity exporters).
Second, the infrastructure development is still promising. Accordingly, the real estate industry, industrial zone, port infrastructure or energy infrastructure has the potential to expand rapidly.
The third trend is the rise of the digital economy with an average growth potential of 29% per year in the period 2020-2025. Companies that are positioned to embrace the opportunities from the rise of the digital economy and have the ability to change their business models to adapt to consumers’ “digital” needs will stand out.
Finally, the service sector can regain its footing thanks to the recovery of domestic demand. Industries including aviation, retail, food and beverage manufacturing will be the main beneficiaries of the consumption resilience.
Alice Hoang Thao – VietnamCredit