An investor watches share movements in the floor of Vietcombank Securities Co. (Photo: VNS/VNA)

Vietnam’s stock market is expected to grow further this year as the Government has increased public investment, creating a premise for long-term growth.

Given this, investment based on the economy's recovery has been opted by many experts this year.

HSBC Global Research has forecast that the VN-Index will reach 1,850 points in 2022 as the prospects of Vietnam’s stock market remain positive this year as well as in the long term.

James Estaugh, head of Securities Services at HSBC Vietnam, highlighted a new trading system provided by the Korean Exchange, expected to be put in place this year.

“The new technology will be capable of facilitating significant increases in trading volume and resolve system congestion… [at the same time] it will also provide the infrastructure to launch new products such as intraday trading, sale of receivable shares, and non-voting depository receipts (NVDRs), etc. which will attract new and increased foreign investment,” he said.

Michael Kokalari, Chief Economist of VinaCapital, said in the “Looking Ahead at 2022” report that Vietnam’s economy will benefit from positive factors and recovery in different sectors.

“We expect Vietnam's GDP growth to surge from 2.6 percent in 2021 to 7-7.5 percent in 2022 and believe that the country’s economic growth could even exceed 7.5 percent this year,” he said.

“We expect another very good year for Vietnam's stock market following the 37 percent increase in USD terms (or 35.7 percent in VND terms) of the VN-Index (VNI) last year.”

According to the chief economist, VinaCapital’s current investment strategy remains focused on identifying stocks and sectors that benefit from the economic recovery that is already underway in Vietnam, including consumer discretionary, financials, real estate and materials stocks.

In addition, Vietnam’s long-term growth drivers have remained intact despite the COVID-19, so VinaCapital also continues to focus on stocks and sectors that are beneficiaries of FDI inflows, infrastructure development, clean energy, and digitisation.

“We are particularly focused on the banking sector (which has a circa 30 percent weighting in the VN-Index), property (which has a 25 percent weighting), and consumer discretionary stocks (which have a circa 3 percent weighting) – but should benefit from both cyclical and secular tailwinds this year.”

Banks’ earnings are likely to grow by about 30 percent this year, driven by 14 percent credit growth, and Vietnam’s banks to be less impacted by COVID-19 in 2022.

“Next, we expect the earnings of real estate companies to grow by nearly 25 percent in 2022, driven by a near-doubling of sales/pre-sales of new housing units by property developers following a drop of more than 50 percent in 2021.”

He said VinaCapital expects the growth of real retail sales in Vietnam (i.e., excluding inflation) to surge from a 6.2 percent drop in 2021 to 5 percent growth in 2022, versus consistent 8-9 percent annual growth pre-COVID.

Truong Hien Phuong, senior director of KIS Securities Vietnam, said such sectors as banking, securities and oil and gas will continue to attract capital this year.

Meanwhile, others like construction will benefit from the Government’s policy aiming to boost public investment./.