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Standing at the same level of 1,200, HoSE capitalization has increased by more than 1.7 million billion dong after 4 years

Strong corrections are taking place on the Vietnamese stock market in the past month or so. VN-Index dropped rapidly from the historical peak of 1,522.9 points on April 6 to hundreds of points, even breaking through the important support level of 1,200. Until today, May 17, the market enjoyed “showers after drought” with the VN-Index closing with a record increase of more than 56.42 points to 1,228.37 points. In particular, this is also the peak area of ​​the HoSE floor index 4 years ago, around the beginning of 2018.

Although at the same point, the stock market after 4 years recorded many differences. The most prominent is the level Capitalization After that time, HoSE market recorded an impressive increase. Specifically, recorded at the close of the session on May 17, 2022, the market capitalization of HoSE reached VND 4,873,212 billion. This figure at the end of March 2018 was only VND 3,168,099 billion, corresponding to an increase of more than VND 1.7 million billion after more than 4 years.

Standing at the same level of 1,200, HoSE capitalization has increased by more than 1.7 million billion dong after 4 years - Photo 1.

Correlation between VN-Index and HoSE capitalization

In the period from 2018 to now, the new Law on Securities took effect with many amendments and supplements, expanding the investment space, stimulating the market to grow strongly. Liquidity was untied, the story of upgrading plus the context that bank interest rates remained low and other investment channels faced obstacles due to the epidemic have helped the stock market increase its attractiveness. Cash flow from individual investors poured in, helping the market gradually fulfill its function as a capital conduit for the economy.

Not only that, a series of businesses have been listed and listed in the past few years, including many big names such as HVN, SAB, GVR, BCM…. In particular, the typical representative is “blockbuster” Vinhomes (VHM) which has been listed on May 17, 2018, immediately attracting strong attention, creating a transaction worth over 1 billion USD. first in the history of Vietnamese securities. Then, from 2018 to 2021, a series of banks also listed or moved to HoSE such as TCB, TPB, HDB, ABB, VIB, OCB, VBB, MSB, SHB, ACB, LPB… market capitalization has grown tremendously.

At the same time, the market size is supplemented by a large number of newly issued shares by enterprises to take full advantage of the capital mobilization function of the stock market. It is estimated that in the most recent year of 2021, 147 listed companies increased their equity by 3.8%, equivalent to VND 102,600 billion through the issuance of shares – a record number of capital mobilized. through issuance, more than 5 times in 2020. However, the explosion of issuance activity also requires more careful supervision of the competent state agencies. This will ensure to avoid behaviors such as enterprises inefficiently using mobilized capital or businesses operating inefficiently but continuously issuing to raise capital.

While the market is constantly expanding in both breadth and depth, valuation is also a factor in attention. Standing at the same level around the threshold of 1,200, however, the stock market is much cheaper now than it was 4 years ago. Specifically, according to data from Algoplatform, the current P/E of the market has dropped to 12.63 times, which is quite a discount compared to the P/E of 16.4 times when the index peaked in April 2022. Even if compared to the same time in the 1,200 region of 2018 – when the P/E of VN-Index climbed to the threshold of 20.18 times – the current P/E level is also significantly lower.

Standing at the 1,200 point, HoSE capitalization has increased by more than 1.7 million billion dong after 4 years - Photo 2.

VN-Index valuation is much “cheaper” than the peak in 2018

According to the latest assessment of SGI Capital, Vietnam’s stock market in the past has had 3 sharp declines, all of which brought the VN-Index’s P/E valuation to below 12.x, and opened up very good investment opportunities later. with an increase of 35-80% after 1 year.

In the view of SGI Capital, the difference between the recent sharp decline is that Vietnam’s economy is having the strongest macroeconomic balance in the past 15 years and businesses are entering the post-COVID recovery cycle- 19. Therefore, the reasons to sell off stocks to very cheap this time do not come from internal factors of the business. The main reason comes from events, news that influence investor sentiment and cash flow in and out, creating short-term fluctuations that are sometimes extreme and excessive in the market.

“This market sell-off can be seen as the end of the era of cheap and easy money, and at the same time ushers in the beginning of a new and more sustainable uptrend based on the recovery of the economy. real economy and business growth”SGI Capital said.

Standing at the same level of 1,200, HoSE capitalization has increased by more than 1.7 million billion dong after 4 years - Photo 3.

Sharing the same view, Dragon Capital believes that the drop in share price combined with earnings growth makes Vietnam’s stock valuation very attractive as the P/E ratio slips to lower than the 5-year average. Compared with other markets in the region, from the foreign fund’s point of view, the current attractive valuation of the Vietnamese market becomes even more prominent. While there are still some short-term unknowns, at this valuation the potential profit for long-term investors is clear.

Dragon Capital has made a forecast of corporate EPS growth in 2022 at 25%, much higher than the annual average of 12.5% ​​since 2010. Also according to Dragon Capital, the Government’s actions during this time. In recent times, it will contribute to directing cash flow away from speculative stocks and into quality stocks with good fundamentals, high returns and low legal risks. 20220517134426321.chn

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