Vietnam stocks become world’s best after extreme turmoil in March

VIETNAM’S stock market, which in March tumbled the most since 2001, is now reviving.

The benchmark VN Index has rebounded 15% in April, becoming the world’s best performer, data compiled by Bloomberg show. That follows last month’s 25% slump on concern about the coronavirus impact. The gauge, which has been in a bear market since 2018, is trading at about 11 times estimated earnings for the next year, less than the five-year average of 14 times.

"Vietnamese investors on the ground feel that the government has taken swift and effective measures to manage the virus outbreak,” said Patrick Mitchell, director of institutional equities at ACB Securities Co. in Ho Chi Minh City.

"The market is dominated by retail flows and the buyers have come back to super cheap valuations in the companies they like, so it makes sense to buy more at these levels with a longer investment view.”

Like many other countries, Vietnam has been in isolation since April 1 to avoid further virus spread, even though the number of confirmed cases has remained below 300. The government is now considering extending previous mandates such as wearing masks and maintaining a distance among people after the lockdown ends April 15. The nation is also preparing a 180 trillion dong ($7.7 billion) stimulus package for companies and 61.6 trillion dong in relief for citizens who have been economically hurt during the pandemic.

The VN Index fell as much as 31% this year, hitting its lowest level since December 2016 on March 24. While it has rebounded 15% since then, it remains marred in a bear market while Southeast Asian peers Thailand, Indonesia and the Philippines entered bull territory in recent days. The Vietnamese gauge, which was down 0.9% as of Tuesday’s midday break, remains 37% below its record in 2018.

"It seems the market is looking beyond 2020 earnings as there are some very well run businesses especially in consumption-related sectors, which were trading at very attractive valuations,” said Ruchir Desai, a fund manager at Asia Frontier Capital Ltd. "Any major increases from here could suggest it could be getting ahead of itself as the near-term hit to exports, tourism and income levels is still to be felt fully.” - Bloomberg