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According to HSBC analysts, positives include accelerating FDI, a government push on infrastructure, structurally increasing purchasing power, and the rising profitability of the banking system.

Vietnam’s Bold Reforms Bring Good Growth Potential for the Stock Market, Economists Say
Vietnam is more investable than many think and is our most preferred frontier market, that it HSBC’ latest remark on Vietnam’s stock market. 
According to HSBC analysts, positives include accelerating FDI, a government push on infrastructure, structurally increasing purchasing power, and the rising profitability of the banking system
Profitability, attractive valuations, strong balance sheets and market reforms point to the likelihood of a multi-year bull run
Bigger than you think. There’s a common perception that Vietnam’s equity market is too small. HSBC disagrees. From two large-cap stocks with a market cap of more than USD5bn in 2015 in the Vietnam market as a whole, there are now 11. Average daily trading value in 2020 was USD430m, a record high, and more recently that has come close to hitting USD1bn. 
To put that into regional context, the Philippines has 13 stocks with a market cap above USD5bn and trades USD228m a day, Thailand trades USD3bn, and Indonesia USD1.5m. In short, Vietnam is now an investable market.
Foreign ownership limits. One argument often quoted about why it is difficult to buy Vietnam stocks concerns foreign ownership limits. A quick look at the VN30 index, which comprises 30 large-caps, confirms that foreign investors have enough investable stocks to choose from. 
Of the 30 stocks in the VN30 index, only six have reached their foreign ownership limits, nine have market caps above USD5bn and 15 between USD1bn and USD5bn, and 10 trade more than USD10m a day. Although the stocks which have hit their foreign ownership limits attract a valuation premium, they generate strong earnings growth and still trade at cheaper valuations than their peers in Asia. So, adjusted for valuations, the foreign premium doesn’t look excessive.
Market reforms. The government has passed new laws on securities and investment, effective 1 January 2021, which should reduce restrictions on foreign investors. In the meantime, covered warrants and the new diamond index are helping foreign investors to gain exposure to companies at their foreign ownership limits. HSBC believes these reforms put Vietnam, the largest frontier market, in line for an upgrade to emerging market status.
Plenty of more positives. Regular readers will know that we like the Vietnam growth story. It is worth reminding investors that Vietnam has outperformed all major regional indices since 2015. Add to that strong growth, low inflation, a stable currency, relatively attractive valuations, healthy earnings growth on back of strong corporate balance sheets, rising foreign direct investment, a healthy banking sector, and upwardly mobile consumers, and it is easy to see why HSBC thinks the Vietnam market is set for a multi-year bull run, in HSBC's view.

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