Although the stock market is developing positively amid the slow economic recovery and Covid-19 pandemic, investors should be cautious when the transactions in the market are still hot. Mr. Le Ngoc Nam, Deputy Head of Research Department, Tan VietSecurities Incorporation, spoke to Customs News about this issue.

Le Ngoc Nam, Deputy Head of Research Department, Tan Viet Securities Incorporation.

Amid the Covid-19 pandemic which has a significant impact on the stock market, Vietnam’s stock market is still stable. How do you evaluate this issue?

Currently, the VN-index is traded at the 960 points threshold – the year-end threshold of 2019. This means that although 2020 is a difficult year, the stock market still has a stronger recovery than normal economic activities.

There was a jump in liquidity, especially for individual investors. The average liquidity in the third quarter was VND5,300 billion per trading day. This means that liquidity is gradually returning to the highest level of 2018 when the VN-Index was traded around 1,200 points. Compared to this peak time, the VN-Index was still 20% lower. However, the past period was a recovery period of the stock market, especially for small and medium-cap stocks.

What are the reasons forthe "recovery" in the past period?

There are many reasons for the good recovery of the stock market this year, although the economic indicators are still lower than the same period last year. One of the reasons for the good recovery of the stock market is the good control of the pandemic by the State during the first and the second wave, ensuringthe normal operation of the economy. Investors are still expecting this control. GDP will soon return to the expected milestone of 6-6.5%.

The second important factor is the bank interest rate. According to statistics, sincethe beginning of the year, the bank interest rate has decreased by about 2%. This has encouraged short-term cash flows, triggered an investment wave, especially inchannels such as securities.

The impacts of the Covid-19 pandemic may not end soon and will have an effecton the economy and the market. How do you predict the development of Vietnam's stock market and do you have any recommendations for investors?

The Covid-19 pandemic continues to be an issue, if Vietnam controls the disease, it will be the destination of the cash flow. Disease control will be the most important factor for the stock market in the future.

We are trading in a relatively "hot" market, especially cash flow is still speculative. I think that trading around 960 points exceeds expectations. Therefore, at the end of 2020, the market can fluctuate around 5%.

With the current situation, I recommend investors pay attention to the business prospectsof businesses on the stock exchange, because, if the growth rate is maintained, it will help investors accept higher P/E. However, our statistics show that although there was a good recovery rate in the third quarter, generally listed companies, especially small and medium enterprises, still had lower business performance than in the previous period.