Stocks extend gains

The stock market has been on a steady rise and hit a three-year high as investors have confidence in economic growth this year.

VN-Index hits 3-year peak

Yesterday (March 7), the stock market extended its streak of gains as major indices rose simultaneously. At the close of the session, the VN-Index increased by 7.83 points to 1,326.05 points, the highest level in the past 3 years. Compared to the end of 2024, the VN-Index increased by 4.5%, officially surpassing the important threshold of 1,300 points after many failures, helping investors' sentiment to be optimistic again.

Stocks have been on a continuous rise since the Lunar New Year. Large-cap stocks led the increase such as Vingroup, Hoa Phat, FPT ; banking stocks, securities... pulled cash flow back to the market strongly. Yesterday, more than 1.1 billion shares and fund certificates were traded with a value of nearly VND 23,000 billion. This is also the highest trading value since July 2024. According to Mr. Phan Dung Khanh, Investment Consulting Director of Maybank Investment Bank Securities Company, in addition to surpassing the important threshold of 1,300 points, cash flow has been quite steady in the market despite foreign investors still net selling. This shows that domestic investors have high expectations for 2025 after the stock market moved sideways throughout the last 6 months of 2024.

"The Government's target of GDP growth of 8% or more this year and aiming for double-digit growth in the following years has brought optimism. This great expectation has overwhelmed concerns about a possible global trade war following US President Donald Trump's tariff policies. Stocks are considered a barometer of the economy , so this wave of growth has been predicted. In addition, the possibility of upgrading the Vietnamese stock market is also getting closer, so I think the wave of growth will continue. After surpassing the 1,320 point level, the VN-Index is likely to reach 1,350 points," Mr. Phan Dung Khanh confidently said.

The stock market is extending its streak of gains.

PHOTO: NHAT THINH

Sharing the same view, Mr. Dinh Minh Tri, Head of Analysis Department of Individual Clients at Mirae Asset Securities Vietnam, said that there are a number of reasons for the high increase in stocks. First of all, the stock market valuation is still low. Although there has been a series of strong increases, the current P/E (price/earnings) of the market is still around 13 times, lower than the average of the past 5-10 years. If Vietnam's GDP growth this year is from 8%, the growth in stock earnings (EPS) will double, from 15-20%. At that time, the market's projected P/E for 2025 will decrease to only around 11 times. In addition, to promote economic growth, the State Bank has announced higher credit growth than in recent years, meaning more money supply will enter the economy. In particular, the Government is promoting public investment projects, infrastructure development and is determined to upgrade the stock market from a frontier market to an emerging market, which also contributes to attracting investors back to the stock market.

Market upgrade possible in September

Earlier this year, Minister of Finance Nguyen Van Thang assigned the securities industry to focus on implementing the Stock Market Development Strategy until 2030, including the goal of upgrading the stock market from a frontier market to an emerging market by 2025. Most recently, at the end of February, at the headquarters of the State Securities Commission (SSC), SSC Chairwoman Vu Thi Chan Phuong chaired a meeting with representatives of the FTSE Russell Market Rating Organization to update information on the management agency's efforts to promote the process of upgrading the Vietnamese stock market. Ms. Wanming Du, Director of Index Policy, Asia-Pacific, FTSE Russell also exchanged more technical information on the market assessment and ranking process. The SSC and FTSE Russell agreed to continue to strengthen information exchange to promote the process of upgrading the stock market according to the criteria of this unit.

According to Mr. Dinh Minh Tri, a series of policies to remove obstacles to meet the upgrading criteria have been issued by the Government, including allowing foreign investors to buy stocks without requiring sufficient funds when placing orders, creating a premise for FTSE to consider upgrading the stock market. He expects that the Government will continue to implement measures, such as having a centralized clearing center. At that time, the upgrade for Vietnam may take place in September. Currently, Vietnam is still on the watch list with a marginal role of FTSE Russell. This year's re-evaluation will be carried out by this unit in March and September.

"In our opinion, there is a high possibility that Vietnam will be upgraded in the September review period. Most recently upgraded stock markets usually rebound 6-9 months before the review period. Vietnam is also in this period. However, the stock market's uptrend always has corrections. Large investors usually take profits when profits reach 15-20%. Therefore, it is possible that the VN-Index will reach around 1,350 points and fluctuate around this level by the end of the first quarter of 2024," said Mr. Dinh Minh Tri.

Mr. Phan Dung Khanh also said that with specific policies, the possibility of upgrading the stock market is getting closer. For example, the meetings between the State Securities Commission and rating organizations or changes in policies and mechanisms related to listing and trading activities on the stock market continue to show the Government's determination to achieve this goal. Upgrading the stock market will help increase foreign capital flows into the Vietnamese market.

Many positive supporting factors

The Government is pushing to reduce interest rates to stimulate growth. Following the Official Dispatch No. 19/CD-TTg dated February 24, 2025 on strengthening the implementation of interest rate reduction solutions, many banks have adjusted their deposit interest rates for all terms. In addition, public investment - one of the main growth drivers, is being strongly implemented by the Government in key projects from the beginning of the year. 2025 is also the year of completion of key national infrastructure projects for the 2021-2025 period and a pivotal year for strategic projects to transform the country's position for the 2026-2030 period.

In parallel, the KRX system is expected to be deployed in the second quarter of 2025, paving the way for the possibility of upgrading the stock market in September. This could attract foreign capital to return. The VN-Index remains above the 1,300-point mark, with an average trading value on HOSE reaching more than VND18,000 billion/session. This is a positive sign that money is returning to the market. With these factors, we assess that the psychological threshold of 1,300 points is not a worrying barrier. With a strongly promoted policy foundation and strong commitment from the Government, business confidence has recovered significantly. This creates favorable conditions for the market to break out in 2025 and the coming years.

Dragon Capital Fund Management Company