Stock market faces bumpy ride in second half of 2022

HÀ NỘI — The Vietnamese inventory market has gone by means of almost half of 2022 with turbulence and memorable occasions, particularly the Authorities’s crackdown on unlawful actions manipulating the market.

For the time being, the market is struggling as each liquidity and the benchmark index fall sharply. Consultants stated that financial coverage tightening from the US Federal Reserve (Fed), extended Russia-Ukraine battle and China’s zero COVID coverage will not directly have an effect on the nation’s inventory market.

Inventory market crackdown

Within the first half of 2022, many massive enterprise house owners corresponding to Đỗ Thành Nhân, Chairman of the Board of Louis Holdings Group and Lê Anh Dũng, President of Tân Hoàng Minh Group, have been arrested for unlawful actions in the inventory and company bond market.

These instances confirmed the dedication of the Authorities on cleansing up the market.

The Authorities has carried out measures to advertise the improve of the market through the 2024-25 interval, together with disclosing securities enterprises’ proprietary buying and selling information, issuing warnings on shares with dramatic will increase or declines, and altering the calculation methodology of VN30 futures contracts. The measures are anticipated to assist the inventory market enhance liquidity and data transparency.

The crackdown is taken into account sensible, resolving many power bottlenecks and strengthening the sustainability of the market.

Representatives of the World Financial institution (WB) and FTSE Russell have dedicated to additional supporting Việt Nam to construct a sustainable inventory market, notably through common change and coordination out there improve.

They made the dedication at a latest working session with the State Securities Fee (SSC), throughout which the perimeters mentioned the precise scenario, and efforts made to take away bottlenecks in assist of the Vietnamese inventory market’s standing improve course of.

WB and FTSE Russell representatives stated they extremely respect the efforts of native administration businesses and market members in upgrading the market from a marginal to an rising one. In addition they proposed some options for the development of the market towards the improve.

Minister of Finance Hồ Đức Phớc stated that the inventory market has grown effectively, with a powerful rise within the variety of new accounts and the market’s common liquidity. Nevertheless, there have been manipulation actions on the inventory and by-product markets.

Many shares have been boosted with out relation to enterprise conditions, whereas info disclosure obligations of public firms, listed companies and buyers weren’t fully adopted.

The Ministry of Finance is engaged on amending and supplementing Decree No. 153/2020/NĐ-CP on personal providing and buying and selling of company bonds within the home and worldwide markets.

Lately, the inventory market has attracted consideration from native residents. They’re retail buyers, however play essential roles within the improvement of the market. Nevertheless, they’re a weak group when the inventory market is manipulated.

Challenges forward

Though the variety of new accounts is surging, the nation’s inventory market is struggling.

Information from the Vietnam Safety Depository (VSD) confirmed that within the first 5 months of this 12 months, retail buyers opened 1.38 million accounts, 2.5 instances greater than final 12 months. The quantity was almost equal to the variety of new accounts for the entire of 2021, which was 1.53 million accounts.

As of the top of Might, the entire of accounts opened coated round 5.7 per cent of the inhabitants.

Due to this fact, the Authorities’s goal of 5 per cent of the inhabitants investing within the inventory market by 2025 is accomplished three years early. The subsequent goal of the market improvement technique by 2030 is 8 per cent.

However the market skilled an awesome tumble in Might with the benchmark VN-Index briefly setting the bottom of the 12 months at 1,156.54 factors, down greater than 32 per cent from its peak on January 6 of 1,528.6 factors.

In June, the market remains to be in damaging territory because the liquidity drops and the VN-Index hovered round 1,200 factors. The index ended Monday at 1,202.82 factors.

Mirae Asset Securities Việt Nam stated that provide chain disruptions, strict COVID-19 guidelines in China, extended Russia-Ukraine conflict, sanctions on Russia, rate of interest hikes from main international central banks and slowing financial development amid excessive inflation are causes of the draw back.

As well as, the investigations of the violations on the native inventory market and the tightening situations to situation bonds additionally weighed on buyers’ sentiment.

Many specialists and public firms stated that the market will see fluctuations and new shocks or tread water with low liquidity. Accordingly, on the finish of 2022, the VN-Index is predicted to develop by below 10 per cent.

In the meantime, Vietnam Report JSC stated that regardless of a extra cautious outlook for the inventory market attributable to present challenges, there are nonetheless some optimistic components.

Within the second half of 2022, the expansion of industries affected by the pandemic is predicted to be optimistic in comparison with the low of 2021, whereas it’s believed that the disbursement of public funding can be accelerated.

The two per cent rate of interest assist package deal supplies extra momentum for inventory market development particularly and financial development generally, whether it is carried out as deliberate. — VNS