Vietnam's financial and real estate stocks account for 57%

The Vietnamese stock market has experienced many fluctuations over the past year. The VN-Index has fallen sharply from the 1,500-point threshold and is now hovering around the 1,100-point mark for many consecutive months.

Many expert opinions have been given on the above issue, notably the imbalance in industry structure in the Vietnamese stock market.

Vietnam's financial and real estate stocks rose to 57%, much higher than many other markets in the world, picture 1 — Real estate and financial capital flows account for 57% of the Vietnamese stock market, much higher than other markets in the region and the world (Photo TL)

Recently, Bloomberg statistics have shown that the group of financial and real estate stocks according to the GICS industry classification system of the Vietnamese stock market accounts for 57% of the market capitalization. This means that more than half of the assets of the Vietnamese stock market are in financial and real estate companies.

Compared to other markets in the region such as Thailand, Indonesia, China... the proportion of real estate and finance in Vietnam is even much higher. For example, Thailand accounts for only 23%, Indonesia accounts for 36% and Japan accounts for only about 4%.

In terms of industry characteristics, real estate and finance are highly cyclical, depending on economic development as well as credit growth. Meanwhile, industry groups such as technology, healthcare, pharmaceuticals, retail... are the ones attracting investment from foreign investors.

The fact that these groups account for a small proportion of market capitalization has somewhat made the Vietnamese stock market less attractive to foreign investors. This is also a barrier that somewhat limits foreign capital flows into the Vietnamese stock market.

The capitalization ratio of real estate stocks and large banks also partly explains why market liquidity is mostly in familiar stocks in these two industry groups. This leads to the cash flow into the market being short-term, and at the same time makes it difficult for the market capitalization growth to have a long-term breakthrough.

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