Vietnam's economy is showing signs of resilience and potential growth as it navigates through pressures to maintain its momentum. The VN-Index, having closed at 1305 points recently, reflects this sustained upward trend, overcoming profit-taking pressures and global market fluctuations. This is the first time since 2022 the index has closed above the 1300 mark, which has become a symbolic threshold for investors.
Over the past six weeks, the VN-Index has seen continuous growth, rising from 1220 points, driven primarily by midcap stocks. Despite fluctuations during the week, with substantial buying pressure from blue-chip stocks within the VN30 index backing the rise, the market maintained its position around 1300 points. Significant contributors to this upward momentum include state-owned enterprises like BVH (30%), GVR (21.2%), CTG (19.6%), and several others.
Investor sentiment has played a pivotal role as well, with fears of hitting strong resistance at the 1300 level increasing selling pressures. Yet, the rally of blue-chip stocks has created fresh opportunities for capital drawn from profit-taking activities. Observations suggest a necessary breather for midcap stocks to consolidate at new price levels after this rapid upward surge. The market’s structural adjustments mirror this need, with midcap stocks experiencing corrections to align with wider market movements.
Not only have blue-chips thrived, but groups of speculative stocks such as small-cap and penny stocks are reaping the benefits of shifting liquidity. Investors seeking higher returns are now turning to riskier assets, resulting in several penny stocks hitting their ceiling prices amid surges in trading volume. The real estate sector remains promising, buoyed by supportive credit growth policies and measures aimed at resolving legal bottlenecks within the sector. Those companies operating on substantial projects within major cities are expected to benefit the most.
Medium capitalization stocks have witnessed modest gains, particularly from industries like seafood, oil, and retail, all of which are positioned for potential capital inflow. Analysts predict the market might rally beyond the resistance zone of 1325 to 1334 soon. Information coming from the VN30 and supportive sectors like real estate, and food production could lead this charge.
Market analysts note the current momentum aligns with recovery, as most sectors have shown positive RS trends following corrections. The highest number of active firms is rooted in sectors such as securities, real estate, and materials, indicating comprehensive market re-engagement.
This resurgence also includes small-cap stocks, where many have restarted trading excitedly from their lows. There is much anticipation for how the strategy outlined by the government to revitalize private businesses will unfolded, particularly as discussions around the groundbreaking policy for private economic growth intensify.
A growing consensus among economists indicates the pressing need for a revolutionary resolution to bolster private sector initiatives within Vietnam’s economy. The current framework may not be adequate to meet the potential of private enterprises, which can become integral to the nation's GDP growth rate. From 2010 to 2023, investments from the non-state economy surged, representing more than half of the total social investment, growing from 44.6% to 56.1%. Yet paradoxically, the GDP contribution from non-state enterprises has seen negligible change, hovering around the 50% mark.
This dissonance begs the question: Why is the non-state economy, often touted as pivotal, struggling to expand? A possible explanation lies within the inconsistent treatment it receives compared to state-owned and FDI sectors. If lawmakers and regulatory bodies genuinely wish for the non-state economy to flourish, they must transition to creating rather than merely regulating existing frameworks, fostering easier engagement for grassroots and entrepreneurial enterprises.
Transparency and accessible operational landscapes are also highlighted. The National Statistics Office has been proactive, not only publishing GDP values but also GNI and other economic indicators, which reveals the outflows from FDI. Although FDI can inflate GDP figures, they often lead to reduced national income indicators as returns are sent overseas legally.
Fostering conditions for private sector growth through continual policy improvements can make Vietnam's socio-economic environment more favorable and adaptable. Upcoming changes aimed at creating new price tables for land values, following the Land Law revisions effective August 2024, might positively influence real estate and associated sectors and could compel citizens to expedite property registrations. Immediate action could potentially lead to significant savings, as the costs linked to property transactions should start to reflect market conditions more accurately.
Simultaneously, real estate sectors are hoping for clearer operational guidelines and policies. Current market needs can determine how effectively the property segment will adjust its strategies post-2024 regulations, particularly enhancing access to land titles. Clearly articulated policies are necessary for people seeking ownership changes and those needing land papers for initial registrations. Overall, the momentum exhibited by Vietnam’s economy suggests positive growth trajectories, bolstered by government initiatives aimed at nurturing private sector development.