In its latest market report, Yuanta Securities Vietnam said that the country’s economic background in February showed a positive recovery momentum.
Although registered FDI capital in the first two months of the year decreased slightly, the prospects are good for the coming months. Trade activities and industrial production maintained last year’s growth momentum amid the longer Tet holiday.
The bright spot in February was the growth of the travel and tourism industry after declining for nearly two years, supporting the growth momentum of total retail sales and consumer services in February.
Despite the rising number of COVID-19 infections, Yuanta found that it did not affect life and production as much as before. Labour shortages still persist but have improved compared to pre-Tet.
With the Russia-Ukraine conflict, the risk of higher raw material prices due to the impact of soaring oil prices and supply chain disruptions will put pressure on inflation in the coming months. However, the securities firm said that the government will take measures to stabilise gasoline prices when necessary, as well as regulate the market to help stabilise prices and keep the inflation rate below 4 per cent.
“The growth drivers in the future are clearer thanks to the growth of consumer demand, the recovery of tourism and travel services when Viet Nam is reopening normally to international tourists,” Yuanta said.
“In addition, the Government is speeding up public investment projects. According to the plan in April or May, the public investment package under the VND350 trillion programme is started, which will be a great driving force for economic growth in the coming future.
“We believe that the Russia-Ukraine issue will not greatly affect Vietnamese economic growth, and still think that economic growth in 2022 will be around 6.39 per cent.”
The Vietnamese stock market has seen corrections due to political tensions between Russia and Ukraine, so the US Federal Reserve’s rate hikes may no longer have a negative impact on the stock market in March.
Yuanta reaffirms that the market benchmark VN-Index’s valuation remains at an attractive 17.2x with return on equity (ROE) still being the highest in the region, showing that the valuation of the stock market is still attractive.
“We forecast that the VN-Index may fluctuate in the range of 1,440 – 1,512 points in the first half of March and gradually head back to the peak of 1,535 points in the second half of the month,” said Yuanta.