Rong Viet Securities Company (VDSC) believes that the low interest rates make securities continue to become an attractive investment channel for domestic investors in 2021. In addition, the valuation of Vietnam’s market is still quite attractive compared to other countries in Asia, an important highlight to help attract foreign capital flows.
According to VDSC, the Government’s efforts to regulate both fiscal and monetary policies after the complicated developments of COVID-19 will be a key factor in accelerating the recovery process of businesses. severe impact of the epidemic.
The recovery of the economy when COVID-19 is gradually controlled is the pillar for the sustainable uptrend of the market.
The prosperity of the market is evident in the abundant cash flow with an average liquidity of over 10,000 billion VND in the last trading sessions of 2020.
VDSC believes that the liquidity in the stock market will continue to be abundant in 2021 thanks to the cash flow of domestic investors due to low deposit interest rates.
VDSC believes that foreign cash flow will also be positive. Because, Vietnam’s economy recovered faster than other developed countries thanks to good disease control.
In addition, information such as Vietnam may be upgraded in the FTSE index basket and vaccines that may be widely issued next year may be factors that have a positive impact on the market.
VDSC assesses that foreign capital flows can choose Vietnam because of its cheap valuation, not only compared to history but also compared to other markets. The valuation of the Vietnamese market is estimated to be in the range of 16.5-18x while the average of other countries in Asia is 26.2x.
Vietnam’s P / E is the lowest while being the market with the highest profitability.
In 2021, according to Bloomberg estimates, Vietnam is still in the group of markets with the best profitability, with ROE forecast to increase to 15.7%, which is the highest level since 2014.
However, VDSC believes that the rapid increase of the market will stimulate the use of margin by individual investors (currently occupying a large number of the market), increasing market risks.
In addition, the recent US labeling of Vietnam as “currency manipulation” will increase the risk of US taxation on goods exported from Vietnam and affect the general psychology of the market.
VDSC recommends investors to consider and select carefully when some stocks have gained hot recently.