1-Month Return Reaches 29%
Economic Growth Accelerates, Boosting Expectations
Stocks Also Perceived as Undervalued
[Asia Economy Reporter Kwon Jae-hee] Vietnam is emerging as an alternative investment destination for individual investors. The Vietnam Exchange-Traded Fund (ETF) recorded double-digit growth over the past month. This is interpreted as a result of expectations for Vietnam's economic growth and the perception that stocks are undervalued relative to their growth potential.
According to the Korea Securities Depository's securities information portal, SEIBRO, domestic investors' net purchases of Vietnamese stocks amounted to $5,211,456 (approximately 6.8 billion KRW) over the past month (November 18 to December 19). This contrasts sharply with net sales during the same period in Japan (-$16,480,000) and the China Shanghai-Hong Kong linked markets (-$6,020,000).
In fact, the Vietnamese stock market is also recovering rapidly. The Ho Chi Minh VN Index, which had fallen to 911 on November 15, has steadily risen and surpassed 1,000 within two weeks, currently trading around 1,038.
As the index rose, Vietnamese ETFs also recorded double-digit gains over the past month, maintaining a strong upward trend. According to the Korea Exchange, the ETF with the highest return over the past month (November 18 to December 19) was the 'ACE Vietnam VN 30 Futures Bloomberg Leverage (H)', which rose 28.36%. The 'ACE Vietnam VN30 (Synthetic)' also showed a 12.90% increase during the same period.
The rise of Vietnam as a refuge for individual investors in the stock market is largely attributed to expectations for Vietnam's economic growth. The International Monetary Fund (IMF) estimated Vietnam's economic growth rates at 7% this year and 6.2% next year. This is the highest level among Asian countries and ranks among the top globally. It is considered an exceptional growth rate amid expectations that the global interest rate hike trend will continue next year.
The perception that the Vietnamese stock market is undervalued relative to its high growth potential is also cited as a factor driving investment demand. The 12-month forward price-to-earnings ratio (PER) of the Vietnamese stock market is around 8 times, lower than neighboring India and Thailand.
Researcher Lee So-yeon of Korea Investment & Securities analyzed, "Since last month, the 12-month forward PER has fallen to a historic low of 7.7 times, and foreigners have been observed buying Vietnamese stocks heavily at low prices," adding, "The fact that Vietnam has been removed from the U.S. currency watchlist is also positive news."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
