The stock market in 2020 was predicted to have positive changes with foreign investment capital coming in through stock market investment channels and the expected increase in privatization and divestment of state-owned enterprises to "pump" more capital into the economy.
Securities - an important capital channel for the economy - had good growth in 2019. According to the State Securities Commission's report, the VN-Index in 2019 reached 960.99 points, up 7.7% compared to the end of 2018, higher than other countries in the region. The scale of the stock market maintained a strong growth momentum. With a total of 1,622 stocks and fund certificates listed/registered for trading on two stock exchanges, the market scale reached nearly 1,402 trillion VND, up 16% compared to the end of 2018. The market capitalization increased sharply and reached 4,384 trillion VND, up 10.7% compared to the end of 2018, equivalent to 79.2% of GDP in 2018 and 72.6% of GDP in 2019.
Securities - an important capital channel of the economy
An important point to note is that foreign investors continued to play a significant catalyst role, contributing to the growth of the market. They purchased nearly VND 7.516 trillion of stocks and fund certificates and net purchased over VND 13.738 trillion of bonds in 2019, bringing the total value of their investment portfolio to approximately USD 36.4 billion, up 11.6% from the end of 2018.
According to the 2020 Investment Strategy Report recently released by Rong Viet Securities Joint Stock Company, the expected increase in the VN-Index in 2020 will be moderate and closely follow fundamental factors rather than inflated prices. The VN-Index may fluctuate in the range of 950-1120, and foreign trading activities on the exchange may be more positive due to several key reasons: the Vietnamese stock market will have its weight lifted in the MSCI Frontier 100 (an international stock market ranking index) to 30%; divestment and equitization activities may become more vibrant in 2020, and the market may also attract more money from foreign investors.
Sharing a positive view on the stock market in 2020, Vina Capital Investment Fund expects the VN-Index to grow by 15-20% this year. JPMorgan Chase Global Investment Bank believes that Vietnam may be included in the watch list for upgrading to the emerging market category in 2021, and the VN-Index may reach 1,200 points.
Regarding capital flow from equitization and divestment, according to Rong Viet Securities, divestment activities may become more vibrant in 2020. In fact, among the list of state-owned enterprises (SOEs) requiring divestment under the government's direction, there are some large corporations and conglomerates. In particular, the State Capital Investment Corporation proposed to divest 15% of its stake in HVN during the 2019-2020 period, while also increasing its capital during the 2019-2025 period to reduce the state ownership ratio to 51%. Additionally, some major companies that were equitized in previous years, such as BSR, PVOIL, and POW, may continue to divest in 2020 after completing settlements following the equitization process. With these favorable factors, the stock market can help increase the supply of capital for the economy.
According to the Vietnam Investment and Development Securities Company, the stock market is facing many legal and policy reforms aimed at upgrading the market's prospects, with attractive stock prices and the potential for increased foreign buying. It is forecasted that the post-tax profit growth rate of companies in 2020 will reach about 10%.