The VNDirect Analysis Division in the first 2021 investment strategy report released in mid-December 2020 gives the base scenario for the VN-Index in 2021 which is 1,180 points. The new report released this week has raised the scenarios for the VN-Index. According to the basic scenario given with a probability of 50%, this unit predicts that the VN-Index will reach about 1,180 – 1,230 points in 2021.
This scenario is given with the assumption that EPS in 2021 will grow 22-24% compared to the previous year. P / E Forward market at the end of 2021 is expected to be 16-16.5 times; Foreign investors started to return to the frontier market with a small scale, with a net buying of less than 5,000 billion VND. In addition, this securities company also forecasts that Vietnam’s GDP in 2021 will grow by 7.1% compared to the previous year and the deposit and lending interest rates may decrease by 20-50 percentage points.
Besides, VNDirect also offers a positive scenario with a probability of 30% when it is believed that the VN-Index can reach about 1,280 – 1,330 points. Meanwhile, the negative scenario assessed by VNDirect will likely happen only 20% and the VN-Index is in the range of 1,000 – 1,150 points in 2021.
The reason for the impressive increase in recent years
The impressive increase in recent years was explained by VNDirect for the main reasons such as the record low interest rate level stimulating domestic cash flow to pour into the stock market. The fact that the interest rate level is very low for many years has made a part of the cash flow in the population as well as organizations turn to asset investment channels, most notably securities. This is an important factor boosting cash flow and liquidity in the stock market to increase recently. In 2021, VNDirect forecasts that deposit and lending interest rates could fall further by 20-50 percentage points in the context of loosened monetary policy and cooling inflation pressure, thereby stimulating capital cost flow. cheap prices continued to flow into the stock investment channel.
The second reason is the domestic cash flow continued to pour into the stock market. In December 2020, the number of newly opened securities accounts reached 64,183 accounts, of which individual investors opened 63,629 new accounts, an increase of about 54% compared to the previous month and also the month with the number of accounts. New opening record high ever. For the whole year 2020, the total number of new accounts opened by individual domestic investors will reach 392,527, an increase of 108% compared to 2019.
Third, the Government’s confidence in the anti-epidemic effect and expectation of a stronger recovery in economic growth in 2021. The majority of domestic and foreign research organizations forecast that Vietnam’s economy will increase. growth of over 6% in 2021, of which VNDirect forecasts that Vietnam’s GDP growth in 2021 will reach 7.1%. This will create favorable conditions for listed companies to fully recover production and business activities and record high profit growth in 2021 and this is an important factor attracting cash flow. Investments continue to flow into the stock market.
Profits of the companies listed on the VN-Index increased approximately 23% in 2021
As of January 21, 2021, P / E of VN-Index reached 19.4 times (according to Bloomberg). The current market valuation is slightly higher than the 5-year average P / E of the VN-Index of 16.2x, but still relatively attractive compared to the average of the stock market in the East region. South Asia (about 26.3 times).
With the current low interest rates, VNDirect thinks that it is reasonable for the market to be paid premium compared to the 5-year average. Currently, the average 1-year deposit interest rate of commercial banks is about 5.6% / year, so the P / E of the market in the range of 16.5-17.5 times is quite good. reasonable. Although the current P / E of the market is slightly higher than this, but with the forecast that profits of listed companies will recover from the fourth quarter of 2020, the P / E of the market will be pulled down. on a more attractive level.
VNDirect estimates that the profits of the listed companies in 2021 on the VN-Index will grow approximately 23% over the same period.
Currently, the P / E forward 2021 of the VN-Index is at 15.7 times, still lower than the 5-year average P / E of 16.2 times and still below the reasonable valuation range (about 16.5-17.5 times). Therefore, this securities company thinks that the VN-Index still has room for growth.
Source: ndh.vn – Translated by fintel.vn