Tellimer

Vietnam strategy 2021: Opportunity arises

  • Amongst the turbulence of the pandemic, Vietnam is a shining star given its excellent control of Covid-19
  • Our 154-page report covers strategy, macro and in-depth analysis of individual stocks
  • We forecast that the VNIndex will fluctuate in the range of 1029 - 1271
Vietnam strategy 2021: Opportunity arises

The global stock market is forecast to remain relatively optimistic when being supported by the easy monetary policy, a weak USD and the economic recovery. However, a cautious sentiment should be considered when tensions between trading partners are unlikely to abate rapidly and uncertainty on a variety of global accords could derail the recovery along with the complex situation of Covid-19 in developed countries.

In that turbulent situation, Vietnam is a shining star given our excellent control on Covid-19. The Government's effort in maintaining the expansionary monetary policy and stabilizing the exchange rate would be a key driver to accelerate the recovery progress of the economy and business. Therefore, we have a positive view on Vietnam's economic outlook with GDP growth of 7.0%.

Along with the strong economic prospects, the ability of Vietnam's stock market to rise is still led by the market upgrade story and the possibility of putting into use of Covid vaccine in the near future. Meanwhile, the story of divestment and equitization once stormed at 2017-2018 period will need more time to examine and follow up.

The largest risk to the stock market still comes from geopolitical developments and global trade. In particular, that the US labelled Vietnam as a "currency manipulator" recently would increase the risk of US tariffs on exports from Vietnam and will affect the general market sentiment.

In terms of the money flows outlook, we expect the cash flow will continue to flow into the stock market when the interest rate level is still maintained at a low level, thereby attracting the cash flow of domestic investors. Regarding foreign cash flows, despite our cautious view, we realize that the situation is getting better when foreign investors have reduced their net selling in the last months of 2020.

We forecast that the VNIndex will fluctuate in the range 1029 - 1271.

2021 will be the year to favor top-down investment strategy and follow the economic recovery. In particular, sectors benefiting from the robust recovery of consumer spending and ramp-up of import-export activities will be the potential investment destinations. In addition, some stocks with their own growth stories thanks to the Government's support/priority or the ability to enlarge market share will be opportunities that investors can consider.


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