20160109_BSC_Vietnam Macro & Market Outlook_EN_2017_Final

Vietnamese economy is going through a good growing cycle, capital market is focused, which makes a positive impact on several aspects of Vietnamese stock market including market scale, a larger number of listed stocks and investment accounts. However, the quality has not been improved, especially some aspects are going down such as (1) liquidity (market turnover, the quantity of stocks having a scale of transaction as more than 1 million USD is decreasing), (2) foreigner investors collect their capital from Vietnamese stock market, which increases the risk to the investment flow heavily dependent on margin, (3) the transparency is deteriorating (some new blue chips fluctuate unexpectedly, the rally and low liquidity both influence indices negatively and erode the investor’s belief, (4) new listings in Upcom exchange brings various selections to investors, but also create stock dilution of big stocks. Low liquidity has led to rally of new listed stocks on Upcom, nevertheless this will make a bearish pressure on the market like what happened in 2006-2007 period when these stocks moved to HNX and HOSE.

The expectation is not appreciated in the year of 2017 like it was previously because the macroeconomic risks are getting bigger, combined with a small source for executing fiscal policy, the decrease of interest rate, exchange rate and overseas cash flows in quoted market and the dramatic increase of stock supply. Besides, market supporting solutions have not been deployed yet, so short term measures such as adjusting the time for payment from T+3 to T+2, T+1 or T+0 is essential to push demand. According to the big problems in macroeconomics, stock market and current big trend in Vietnamese market (are mentioned above), we provide you some predictions and investment strategy for the year of 2017