The Viet Nam Stock Index (VN) is expected to surpass 1,300 points next year on the back of rising corporate profitability, according to analysts at investment firm Dragon Capital.
Companies listed on Viet Nam's stock market are expected to post a 34% year-on-year increase in combined profits in the second half of this year, mainly due to a low starting base. The forecast for overall growth this year is around 4%, said Le Anh Tuan, head of Dragon Capital's equity department.
On another occasion, however, he said that growth could reach 25% by 2024. He added that as the economic recovery progresses gradually, the stock market will also follow the pattern.
Therefore, it is likely that the VN Index will exceed many people's expectations. While most expect the index to reach 1,300 points, the actual level could be much higher.
For your information, Viet Nam's benchmark VN-Index reached an all-time high of around 1,500 points in April last year, then dropped to around 900 points in November, and is currently around 1,200 points.
Mr. Tuan also noted that some of the factors that will support the recovery of the VN-Index are lower interest rates and stability of the exchange rate. Currently, the VN-Index has broken out of the lows and entered a recovery phase when four of these five factors converge. The only factor that still needs attention is better corporate profit margins.
However, there are some risks to keep an eye on, one of which is the withdrawal of foreign investors from the market. At present, there are still many uncertainties in the market, such as the trend of foreign capital withdrawal and earnings results that may not meet expectations. Therefore, the most important thing is for investors to determine their investment strategy.
Mr. Tuan revealed that it is difficult to estimate an exact figure for the VN Index because there are companies in the index that have the potential to increase their share value significantly, while there are also companies that may face a decline in share value.
Investors need to realize that the best time to invest is when there is potential risk because when market conditions are very good, stock valuations tend to be high. At present, there are still many uncertainties in the market, such as the trend of foreign capital withdrawal and earnings results that may not meet expectations. Therefore, the most important thing is for investors to determine their investment strategy.
For those who are willing to take risks, it is important to understand the risks they may face when the market corrects and declines. Meanwhile, investors with a long-term strategy can refer to the periodic and regular investment approach.