Experts believe stock market highs are positive signs for economic recovery
The draft economic stimulus package can be viewed as the key factor resulting in the historic peak of the benchmark VN-Index on the HCM Stock Exchange (HOSE) during the October 27 trading session, opening up greater prospects for economic recovery, according to securities experts.
The securities market on October 27 witnessed unexpected developments following the VN-Index picking up over 31 points to hit its all-time high of 1,423 points.
The index's strong rally was largely boosted by gains occurring in both mid-cap and large-cap stocks across major sectors such as banking, oil and gas, real estate, and securities.
Huynh Minh Tuan, brokerage director of Mirae Asset Securities Vietnam, pointed out that the new peak of VN-Index can be attributed to the draft stimulus package worth hundreds of trillion of Vietnam Dong, which the Ministry of Planning and Investment has been submitted to the Government.
The national economy has been on a downward trajectory following a prolonged period of social distancing measures, therefore it is the right time to launch a stimulus package in order to ensure that the Vietnamese economy does not lag far behind the rest of the world, suggested Tuan.
In his opinion, the new stimulus package is anticipated to exert a positive impact on investor sentiment as stimulus economic packages in Thailand, Malaysia, the European Union, and the United States have all brought about initial remarkable results after being deployed.
In addition, cash flows have increased strongly, with foreign investors returning to net buying trillions of VND after a period of consecutive net selling, which builds up investor trust in the country’s economic stimulus package.
Sharing this viewpoint, Truong Hien Phuong, senior director of KIS Securities Vietnam, affirmed information about the stimulus package has created excitement and confidence among investors regarding the country’s post-pandemic economic recovery.
He revealed that positive information about the business outcomes in the third quarter have proved that key industries, such as banking, securities, steel, oil, and gas have recorded robust growth amid numerous difficulties, a factor which has generated plenty of confidence and captured the interest of investors.
Moreover, the pandemic has been basically controlled in southern provinces, paving the way for businesses to gradually resume production – a move that helps strengthen confidence in the economic recovery and impact the psychology of stock investors.
Again, Huynh Minh Tuan from Mirae Asset Securities Vietnam, emphasised that stocks related to public investment, infrastructure, and construction materials are projected to witness a strong performance at the end of the year.
He advised investors to maintain a high proportion of stocks and restructure their portfolios in line with rising industries such as securities, banking, oil and gas, steel, and real estate.
Investors that have kept a large amount of cash flow are encouraged to take advantage of the adjustments in order to disburse funds to businesses with financial capacity and some projects of great potential, he noted.
