Vietnam financial markets up and running on economic recovery in 2022

In their Vietnam Financial Markets 2021 and Outlook 2022, both ADB and BIDV agreed that the national economy is projected to expand 5.5-6% in 2022 and higher in 2023, while inflation is likely to rise to 3.8-4.2% in 2022 and to be kept at 4% in 2023.

Accordingly, profits of the banking sector are anticipated to grow by an average of 20-25% compared to 2021, with credit growth projected at 14-15%.

The stock market would be adjusted to become more stable and healthier, with VN-Index likely to rise 8% to 1,610 points under an optimistic scenario, or slightly fall 4% to 1,440 points under a pessimistic scenario.

The corporate bond market is forecast to continue to develop in a more transparent and healthier manner when stricter regulations are issued along with solutions to strengthen market management and supervision in an attempt to reduce risks for market participants.

Meanwhile, the insurance market in 2022 is forecast to maintain growth, with premium revenue increasing by about 18 - 20%, of which life insurance acts as the main driver of growth.

The report points out that the Vietnamese economy recovered quite quickly in 2021 thanks to appropriate changes in pandemic prevention and control and the reopening of the economy in the fourth quarter. Therefore, the country recorded impressive economic growth of 5.22% in the fourth quarter from a 6.02% contraction in the previous quarter, helping secure a rate of 2.58% for the whole year, while inflation was controlled at a low level of 1.84%.

Vietnam’s financial markets maintained positive growth thanks to macroeconomic stability, and implementation of a number of fiscal and monetary policies to support people and businesses affected by the COVID-19 pandemic.

In 2021, the net profit of companies listed on three stock exchanges HOSE, HNX and UPCOM grew by 49.5%, the VNIndex rose by 35.7%, the market liquidity expanded by 253%, and capital mobilization through the stock market reached VND757 trillion, up 62% against 2021.

However, the banking market also incurred risks of bad debts and financial crimes. The stock market, after a period of rapid growth, nosedived following acts of price manipulation and violations of information disclosure.

These risks are being examined and solutions are being introduced by competent management agencies in order to stabilize the market.

This is the first time a Vietnamese financial institution has collaborated with ADB to produce a comprehensive report on Vietnam’s financial markets in all three categories of banking - securities - insurance.