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Banking & Finance

Growth in VN-Index a global high

Released at: 15:49, 24/10/2018

Growth in VN-Index a global high

Photo: cafef

Index up 16.28% over the last year.

by My Van

The VN-Index has recorded the highest growth in the world over the last year, of 16.28 per cent.

Vietnam’s stock market has been anything but smooth in recent months. At the close of trade on October 23 the Index was at 939.68 points; down about 22 per cent compared to its peak early in the year.

Despite the fact that Vietnam’s stock market has not always been positive it nonetheless compares well globally and growth has outpaced growth on the NASDAQ and Russell 3000.

The Index’s high growth is largely due to substantial gains made in the fourth quarter of 2017 and the first quarter of 2018, when it moved up from 820 points to a record 1,200 points, due to positive macroeconomic factors (record growth, low inflation, a stable exchange rate, and record foreign exchange reserves), the prospects of upgrading from emerging market status, and effective support from foreign cash flows.

Expectations over major listings (Vinhomes, VPBank, Techcombank, HDBank, Binh Son, PV Oil, and PV Power), also attracted investors, as did a large number of divestments.

At the beginning of the second quarter of this year, when the market went through 1,200 points, the VN-Index’s P/E was over 20 times; quite high compared to other markets in the region and which led to profit pressure from domestic and foreign investors.

Since the record high, Vietnam’s stock market has been faced with greater pressure from global economic turmoil. Concerns about an escalating trade war and US interest rate hikes were key drivers in the market’s correction.

Foreigners were net sellers (excluding large-scale deals) at the beginning of the year and this gradually cast a shadow over the market.

According to assessments from local securities companies, the stock market is now entering a period of unpredictable volatility and investors should focus on risk management rather than trying to find profits in the short term. They also suggested that the support threshold would range from 885 to 920 points.

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