Positive signs for Stock market in 2021
At the end of 2020, Vietnam is proud to be ranked as one of the 10 most resilient stock markets in the world despite the outbreak of the Covid-19 pandemic in many countries. Therefore, investors have welcomed 2021 with a state of “sublimation” when the portfolio value has grown significantly and there are many promises in the future.
More specific, the total value of capital mobilization through the stock market in 2020 reached VND 413.700 billion, increasing by 30% compared to 2019. The capitalization took up 84,1% of GDP in 2020, exceeding 14,1% of the set target. Total outstanding loans in the entire bond market as of the end of December 2020 was about 45% of GDP, increased by 17,6% in comparison to the end of 2019, of which outstanding loans of government bonds (Government bonds) were 27,7% GDP and corporate bonds (Corporate bonds) are 15,1% of GDP.
In addition, Vietnam – an emerging economy, is forecasted to become a bright spot, attracting foreign cash flows in the shifting wave of foreign capital into emerging markets in 2021, boosting Vietnam from frontier stock market to emerging market.
Notably, in the last trading session on April 20, VN-Index peaked the new high of 1268.28 points, before on March 29, this index broke over the resistance level of 1200 points due to VN30 Largecap. In the last 3 trading weeks, VN-Index gained mainly by the pull of some key stocks in Large-cap stocks such as VIC, VHM, HPG, NVL, PDR, VPB, STB, FPT, …
Except for large-cap stocks, logistics ones are also considered attractive and will grow in the future. Logistics stocks are a new favourite in a lot of investment portfolios.
The push makes “waves” of logistics stocks
In recent years, Vietnam is actively improving the logistics infrastructure. After the first year of COVID, Vietnam’s import and export activities remained vibrant despite the negative effects of the disease. In particular, the export value increased dramatically with a large contribution from orders to the US. Though economies are slowing down, the logistics services still express impressive performances, especially in the context of serious container shortage.
The shortage of containers which pushed the freight higher in Asia has created a great opportunity for container shipping enterprises. Freight increasing also boost the revenue of logistics providers. Moreover, in the condition that the aviation industry is also facing difficulties in transporting goods due to the restriction orders of the government, which raised the volume of cargo shipped by sea transportation, indirectly brings more to businessmen.
Besides, the trend of shifting the supply chain to Vietnam, after the heavy impacts of the Covid-19 pandemic in China, has brought the logistics industry in particular a huge amount of foreign currency investment. This is a great opportunity for logistics to achieve more outstanding achievements in the coming time.
In addition, the recovery in business results of seaport and transport enterprises also explains the sharp increase in logistics stock prices, along with the uptrend of the stock market.
For example, Hai An Transport and Loading Joint Stock Company (stock code: HAH) has announced its consolidated financial statements for the first quarter of 2021. Specifically, net revenue reached VND 359 billion, a sharp increase of 28,4% compared to the same period last year, but cost of goods sold (COGS) increased at a lower rate of 16%, so gross profit reached VND 96,8 billion, a dramatic rise of 80% over the same period in 2020.
Vietnam Container Joint Stock Company (VSC) achieved VND 435 billion in revenue and VND 76,8 billion in after-tax profit in the first quarter of 2021, increased by 6% and 7,2% respectively over the same period in 2020. However, FPT Securities Company believed that there is not much fiscal space for growth at the existing ports of VSC. By the end of 2020, VSC’s VIP Green and Green ports only operate with an efficiency of 76% and 71% respectively.
Is logistics stock a low-risk destination?
Covid-19 has made the economy reveal many problems, one of them is the excessive dependence of supply chains on Chinese enterprises. This pandemic has taught businesses many lessons, especially in building business models and supply chains more sustainably and flexibly to respond to environmental impacts. Thus, the wave of shifting supply chains from China to many neighboring countries like Vietnam is being promoted at a faster rate. That means the volume of imports and exports through Vietnam’s seaports will have more opportunities to grow, along with the development of logistics.
Accordingly, the total volume of goods through seaports in Vietnam in 2021 is forecasted to reach 771 million tons, rising nearly by 12% compared to 2020 with the driving force coming from the recovering demand for goods in major consuming markets.
However, the logistics market always has potential risks. Foreign container shipping lines have big market power, they form alliances to concentrate market share and control the market, making it difficult for domestic enterprises to compete. In particular, almost all container transport activities in Vietnam are held by foreign shipping lines, and the fact that many shipping lines are strategic shareholders in large-scale ports makes it even harder for domestic enterprises to gain foreign shipping companies a strong foothold in the market.
Moreover, now, the activities of Vietnamese enterprises in the maritime logistics chain are still fragmented, most of them only focus on developing a few stages in supply chain, so they do not have power in negotiation with foreign partners. Besides, the logistics infrastructure, especially, the distribution centers are currently underdeveloped, small, not commensurate with the economy, which causes the slow development of the logistics.
Clearly, these problems are expressing themselves in the logistics stocks. Despite many positive signals, it is still necessary to consider the potential risks behind them. So, whether Vietnam logistics stocks can overcome the existing situations and make good use of the opportunities to make logistics stocks a “safe harbor” for investors, perhaps everyone has their own answers.
Phan Quyen
