How will Vietnam stock market move in 2022?

VNDirect expects the VN-index to reach 1,700-1,750 pts in 2022

Re-ignite all growth engines 

After a pullback in 3Q21, the Vietnamese economy is supported by a high vaccination rollout and eventual reopening. VNDirect expects 2022F GDP to grow 7.5% YoY, propelled by some growth engines: manufacturing and exports to resume expansion; resilient FDI amid global supply chain diversification; domestic consumption to rebound following upcoming fiscal supports…. “We see picking up inflation, driven by both demand-pull and cost-push, pressure, is the major risk to the Vietnamese economy. Other macro risks include the China slowdown might hinder the export growth and Covid-19 resurgence”, VNDirect stressed.

FY22-23F earnings growth 

Aggregate earnings growth decelerated to 15.8% YoY in 3Q21 but was still robustly 53.4% YoY in 9M21. The results have surprised us as the economy was hit hard by stringent movement control in 3Q21. VNDirect estimates market EPS to surge 39% YoY in FY21F and sustain the strong average growth of 20% YoY over FY22-23F. Key drivers for market earnings growth will come from the solid performance of property developers, oil & gas, and the bounceback of retailers and food producers.

Investment themes in 2022F 

There are some investment themes in 2022F. First, VNDirect expects a divergence among commodity prices which oil & gas and chemical producers will still ride on the uptrend. Second, infrastructure development, empowered by accelerating public investment will buoy energy, property, and industrial parks. Third, the rising of digital consumers in the epidemic will bode well for companies with large exposure to the digital economy. Last, rebounding domestic consumption will propel retail, F&B, and tourism to recover faster than others.

New hope, new height 

With the above supports, VNDirect expects the VN-index to reach 1,700-1,750 pts in 2022; based on 16x-16.5x FY22F P/E and 23% YoY earnings growth. “We believe the VN-index could extend the uptrend further which is empowered by economic recovery and the growing interest of local individual investors”, VNDirect said, adding that downside risks to the market include the higher-than-expected inflation might trigger premature policy tightening. Upside catalyst includes the earlier-than-expected MSCI Emerging Market upgrade of Vietnam. 

“Our top stock picks are VNM, VHM, MWG, VCB, GAS, POW, ACV, and DGC”, VNDirect said.