VN-Index hit an eight-year high October 13 as it reached 820 points. In an interview with TheLEADER Phan Dung Khanh, Investment Advisory Director of Maybank Kim Eng Securities, offered his thoughts on the market heading into 2018.
The VN-Index made a new peak in the early days of October 2017. In your opinion, is there anything special in the recent sessions?
In my opinion, the idea that most investors earned large profits from a rising index is a questionable and misleading.
The recent gains of the VN-index have come from stocks that fell significantly in 2017 and among small market cap that are not held by many people.
Why is there such a strong growth at this time?
The rise of the stock market is not only the phenomenon of October but the whole of 2017. This market increased almost every month with higher point than the previous month.
There are many reasons for this phenomenon.
First of all, there is effort to introduce many policies in order to support businesses while the economy has the steady growth rate. In 2017, the Government repeatedly had conferences to collect businesses' feedbacks and then reduced the administrative procedures. In addition, businesses had access to bank capital easier than in previous years.
Moreover, GDP in the first three quarters of 2017 increased and the Purchasing Managers' Index (PMI) of Vietnam was always above 50 points. Inflation in 2017 was also well under control and total import and export value surges, surpassing US$300 billion after 9 months. These are fundamental factors to help investors to pour capital into the stock market.
Besides, there are many factors supporting the stock market to attract more money than other investment channels, especially when Vietnam stock market is still estimated cheaper than other countries in the region.
In the next time, what should investors consider if they continue to invest in stock market?
That the liquidity is on the downward trend but many stocks are still rising in the medium term can increase risk of stock market.
Investors should also pay attention to the world financial factors in the end of the year such as the US interest rate which is raised by the US Federal Reserve System (FED). This will increase the cost of capital by foreign investors and force them toconsider when they decide where to allocate capital.
