Three scenarios for Vietnam’s stock market by end-2021

VN-Index might still be on a long-term uptrend but mid-term correcting pressure is still there, as it stayed above week MA26 but was below MA13, and MA13 tended to drop negatively, said PHS.

In a negative scenario, PHS said investors should keep high cash weight and be cautious on stock holding. Photo: Quoc Tuan

PHS updated three scenarios that might take place on VN-Index by the end-year:

With basic scenario, VN-Index might drop from a peak level of 1,400 points and moves stably at the support level of 1,200 points at the end of 2021, namely:

Vietnam must still face the widespread COVID-19 outbreak, in which, big outbreak centers in the South are still complicated and spreading widely in the country. At the same time, the Government might push on outbreak control activities with strong social distancing solutions, while the economy suffers from the negative impact.

Stimulating bailouts help the world economy recovering, but the domestic outbreak makes Vietnam seeing a slower recovery than the other countries. This problem will only be resolved by pushing on vaccination to reach herd immunity at the end of 2021.

The said situation could cause foreign investors to raise selling pressure.

However, PHS said, a positive point would be that the Government might maintain an open monetary policy to support the economy in escaping the recession created by the outbreak, maintaining a low interest rate, and helping the stock market avoiding a big demolition.

“We forecast the chance on this scenario at 50%. The main impact is the more complicated outbreak situation, causing investors to keep a cautious manor on the market”, PHS stressed.

In a positive scenario, PHS said VN-Index would be strongly supported by cash flow from amateur investors. The index might recover to challenge the peak level of 1,400 points before correcting slightly to a support level of 1,300 points at the end of 2021.

This scenario is basded on the fact that a widespread social distancing to control pandemic might not be lifted soon before September. So new cash flow will move into the stock market to seek investment opportunities when other channels are disrupted.

More stimulating packages help the world economy recovering, but the Vietnam economic recovery could be slower than other countries arould the world. The Vietnam could only handle this problem by speeding up vaccination to reach herd immunity at the end of 2021.

Foreign investors could raise selling pressure. However, the Government might maintain an easy monetary policy to support the economy amid COVID-19 by maintaining a low-interest rate.

PHS raised its forecast on this scenario from 15% to 30%. The main impact factor is the cash flow from amateur investors. Investors might hold on to the shares and wait to sell when the market challenges the old peak level.

In a negative scenario, PHS said VN-Index would be dropping again from the peak level of 1,400 points. Selling pressure may increase strongly, so the index cannot maintain a support level of 1,200 points and might drop to 1,100 points at the end of 2021.

“We lowered its forecast on this scenario from 35% to 20%. The outbreak is very complicated and might last longer and cause big damage to the Vietnamese economy. So investors should keep high cash weight and be cautious on stock holding”, PHS emphasized.