The Vietnamese stock market witnessed a strong correction recently, mainly due to international macroeconomic factors, including global soaring inflation and the US Federal Reverse rate hikes.

However, experts are still optimistic about the market’s outlook in the second half of 2022 thanks to positive internal forces.

After recovering quickly in 2021 with a growth of 5.7 per cent, global economies are facing uncertainties due to the ongoing complexity of the COVID-19 pandemic; geopolitical risks, especially the Russia-Ukraine conflict; the slow down of the Chinese economy affected by the zero-COVID policy; and rising oil prices that resulting in record high inflation in many countries.

Inflation, debt and energy are three hot issues, BIDV Chief Economist Can Van Luc emphasised at the conference on “Inflation, Interest rates and Securities” held by Vietnam Financial Consultant Association (VFCA) and VietFirst Securities Corporation (VSC) on Friday morning.

Statistics showed that the country’s stock market has tumbled sharply to hit bottoms for four periods in its history, including 2007-2008, 2011-2012, 2018-2019 and this year.

In the three previous periods, the Fed rate hikes, high US inflation and high international oil prices influenced the market’s turbulence. And this time is no different, said Nguyen Minh Hoang, director of the Analysis Department at VietFirst Securities.

For the first half of 2022, the market benchmark VN-Index fell more than 20 per cent and lost 25 per cent from the peak of 1,500 points.

The market began its downtrend after Fed raised interest rates for the first time in June. And as the US inflation set a new record in June of 9.1 per cent, the US central bank is expected to make another hike of 75-100 basis points later this month.

This is likely to set another big fall in global stock markets and the Vietnamese stock market in particular.

On Friday, the VN-Index on the Ho Chi Minh Stock Exchange (HoSE) decreased by 0.25 per cent to 1,179.25 points.

However, experts are still optimistic about the market as the country’s economy sees positive signals.

“Our macroeconomy is stable with growth in GDP and consumer price index within control,” Hoang said.

Rallies of commodities prices are also expected to stop, helping to contain inflation.

In addition, the quick recoveries of listed enterprises are a bright spot for the market. “We believe that our listed companies still can post a growth of 21-25 per cent this year,” Luc said.

Experts also said that the VN-Index's price-to-earnings ratio (P/E) is at an attractive level of 12.57x.

Data showed that when the index's P/E is around 10-11x, the market starts a strong rebound, Hoang explained.

In a positive scenario, with expectations that global inflation hits a peak and cools down at the end of 2022, Fed hikes rates to 3 per cent and keeps it unchanged and Viet Nam's CPI is lower than 4 per cent, the VN-Index is forecast to trade at 1,150-1,300 points in the second half of 2022, Hoang said.

Meanwhile, in a negative case, the benchmark is likely to pull back to 1,080 points and hover around 1,080-1,300 points. — VNS