Vn-Index on track to reach 1,800 points: Pyn Elite Fund

The index target would be achieved with a gain of 80 percent. If the earnings grow as expected, the stock market’s P/E ratio would be in the range of 15–16 to equal index level of 1,800 points.

“We believe it is a realistic level. We don’t think this is overly optimistic, taking into account the companies’ earnings growth forecasts, the strong outlook of the Vietnamese economy and the opportunities presented by the modernisation of the stock market,” he commented in a recent report.

The surge seen in the late autumn has pushed the index higher, but listed companies are expected to achieve significant increase in earnings in 2021.  Vietnam’s economic growth will surely support even higher valuations and index levels.

The Vn-Index is now 9 percent below its all-time high (1,204 points), which it reached in April 2018. After the spike seen in early 2018, the index corrected which was followed by a prolonged sideways trend, during which the valuation multiples of the companies in the index adjusted to moderate levels helped by earnings growth.

After the difficult spring of this year tainted by COVID-19, the VN Index has now found a new strength to perform. During the autumn, the Vietnamese stock market has also shown signs of more sustainable bull market supported by technical analysis by trading above the 50-day moving average, said Petri Deryng.

Vietnamese investors have opened 270,400 new accounts to invest in equities during the past 11 months. The total number of accounts is now 2.7 million, with more than 300,000 accounts set to be opened this year.

Interest in equity investments among local investors is seeing robust growth. The 41,200 new accounts opened in November was the highest monthly figure ever. Of this total, 123 accounts were opened for local institutions and the rest for retail investors.

Foreign investors have reacted to the uncertainty caused by the COVID-19 pandemic and sold large amounts of Vietnamese shares.

In January, net foreign investment flows were USD +84 million, but net flows since then have amounted to USD -557 million. In the summer, foreign investors started buying back shares, but the net foreign investment flows subsequently turned negative again in the autumn. Local investors have been active in the autumn and pushed the index up.

In November and early December, the situation with foreign investors has been balanced in terms of their buying and selling, meaning that their impact on the Vietnamese stock market has been neutral. PYN Elite has taken a different approach this year, with the net increase in our investments in Vietnam amounting to $110 million.

The country’s economic outlook for the next few years, the earnings growth of Vietnamese companies and the current valuation levels in the Vietnamese stock market will undoubtedly attract foreign investors back to Vietnam.