What’s behind the strong performance of the stock market in 2017?

Last update: 12:00 | 02/01/2018

VietNamNet Bridge - The Vietnamese stock market in 2017 saw stock prices escalating, but not all investors could make money.


The stock market in 2017 saw stock prices escalating

Tuan, a 27-year-old investor, spends most of his time watching electronic boards on securities and trading floors and calling brokers. He was surprised that the CMG share price had dropped so dramatically despite the upward trend of the market.

Two weeks ago, Tuan bought 5,000 CMG at VND37,000 per share. One week later, the price escalated to VND52,300 per share. However, it unexpectedly dropped late last week to VND34,000,

Tuan was not the only investor who took a loss even though the VN Index climbed to new highs.

“When the VN Index increases by 50 percent, this doesn’t mean that all the investors who inject VND1 billion into the market will receive VND1.5 billion,” an analyst said. “If someone can receive VND1.5 billion from the initial investment capital of VND1 billion, this means that another investor injects VND1 billion but receives VND500 million only.”

The high GDP growth rate, the government’s actions, and foreign capital flow are the three factors behind the strong rise of the stock market in 2017.  

‘Too strong’, ‘crazy’ and ‘incredible’ are the words investors use to describe the rise of the stock market in 2017.

The VN Index increased by only 40 points in 2015 and by 80 points in 2016. But it has soared by 300 points so far this year and exceeded the 10-year high 950 point threshold.

In 2016, the average trading value was VND3 trillion per session and there were only a few sessions with the trading value of over VND5 trillion. 

Meanwhile, VND5 trillion sessions were commonly seen in 2017.

With the growth rate of over 40 percent, Vietnam has become one of the fastest-growing markets in the world.

SSC’s (State Securities Commission) chair Tran Van Dung said the high GDP growth rate, the government’s actions, and foreign capital flow are the three factors behind the strong rise of the stock market in 2017.  

Unlike 2007, when the stock market’s growth depended on domestic investors, in 2017, foreign investors have joined both the stock and bond markets. 

The shift of the global capital flow which is now heading for emerging markets and the upgrade in credit ratings given by Fitch have made Vietnam a brilliant market.

One report shows that foreign investors have bought more than sold by $1.8 billion. This  figure is only about secondary transactions in the stock market. In addition, there are many deals issuing shares specifically to groups of investors by Vietjet, Vincom Retail, HD Bank, VP Bank, Vinamilk and Sabeco.

Finance Asia in late November chose Vincom Retail’s stock sale as Asia Pacific's most successful private equity investment deal in 2017, with record trading value of $741 million. 


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Kim Chi

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