The Vietnamese stock market was one of the best performing in the world last year, rising by 35.7%, and Dragon Capital Group, the largest independent asset management company in Vietnam, is anticipating strong growth for the country in 2022.
Fuelled by new government infrastructure projects that are estimated to be worth over £60bn between 2021 and 2025 and other macro drivers including a stable growing economy, positive export and supply chain shifts, a rapidly growing middle class, and low interest rates, Dragon Capital is predicting annual GDP growth for Vietnam of over 7% in 2022, potentially even beyond 9% under certain scenarios. The currency remains stable and was supported by £14.2bn in disbursed FDI and a sixth consecutive trade surplus in 2021, ending the year at £3bn, estimates suggest a surplus of over £5bn could be recorded in 2022. It also believes inflation will be kept under 3.5%, compared to 1.8% for 2021.
Dr. Tuan Le Anh, Deputy CIO at Dragon Capital said:
“With vaccine and treatment drugs available, Covid will no longer be the government’s top priority. The target for the next four years of their five-year term is economic development. We believe that with a low base from 2021, Vietnam’s economy can deliver 7-10% growth in 2022 if international flights resume early in Q1 and the stimulus package is implemented effectively.”
“The contribution of FDI enterprises is undeniable at nearly 70% of total trade and this is expected to continue in coming years thanks to stronger supply-chain shifts that favour Vietnam. With the Regional Comprehensive Economic Partnership free trade agreement taking effect from 1st Jan 2022 with numerous preferential terms and principles, we expect the shift to continue and possibly accelerate.”
“Vietnam’s capital markets have enjoyed tremendous growth, yet the 2022 forward valuation is 14% lower than its five-year average, with a strong earnings outlook underpinned by solid fundamentals. Vietnam’s banking sector is increasingly understood to be gaining M&A interest from overseas institutions and we expect property stocks can deliver another stellar year. We also anticipate a strong recovery in the retail sector.”
The value of average daily turnover on Vietnam’s stock markets is now consistently over £1 billion, higher than a number of emerging markets, and market capitalisation now over £250bn dwarfs that of several emerging markets including Turkey, Poland and Qatar. While the Vietnam Index enjoyed growth of 35.7% in 2021, the MSCI Emerging Markets Index actually fell 4.6%.
“We believe Vietnam offers some of the most exciting value creation opportunities for investors, and we expect this to remain the case for some time.”
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