(Tiểu luận) macroeconomics report topic price fluctuations in vietnam’s stockmarket from 2020 to 2023

FOREIGN TRADE UNIVERSITY SCHOOL OF ECONOMICS AND INTERNATIONAL BUSINESS -o0o - MACROECONOMICS REPORT Topic: PRICE FLUCTUATIONS IN VIETNAM’S STOCK MARKET FROM 2020 TO 2023 Group :6 Class : KTE204E | K61 Lecturer : Assoc Prof Dr Hoàng Xuân Bình Group members: Trần Trâm Anh - 2213140010 Nguyễn Thị Hồng Minh - 2212140058 Thái Thị Minh Huyền - 2212140038 Nông Minh Lý - 2213140053 Nguyễn Trung Kiên - 2212140041 Trần Minh An - 2212140002 Lê Thị Lộc Anh - 2214140211 Phùng Phương Ngân - 2211140208 Trịnh Như Yến - 2212140086 Hanoi, 4th June 2023 Table of content Introduction Rationale Research objectives Scope of the research Theoretical framework Key definitions How does the stock market operate? Major Causes of Price Fluctuation in Stock Exchange Research 2020-2021: Growth period 1.1 Actual situation and data analysis 1.2 Motivators 1.3 Impact of the stock market on economy in 2020 - 2021 2022: The year of volatility 2.1 Real situation and data analysis 2.2 Major influential factors 2.3 Impact of the stock market on economic growth 2023: The more stable year 3.1 Real situation and data analysis 3.2 Potential advantages and disadvantages suggested for 2023 Protective Mechanisms and Solutions for Price Volatility in Stock Market Protective mechanisms for price volatility in stock market Long-term solutions for price volatility in the stock market 2.1 Key tasks and solutions to speed up allocation and disbursement of public investment capital 2.2 Encourage more investors to participate in the stock market 2.3 Restore investors’ trusts in the stock market Conclusion References Introduction Rationale The Vietnam stock market serves as a critical platform for businesses to raise capital while providing investors with opportunities to buy and sell shares of listed companies However, like other financial markets, the stock market in Vietnam can experience fluctuations due to various factors Overview: - The stock market in Vietnam experienced a sharp decline in 2020 due to the COVID19 pandemic; however, as the government introduced stimulus measures and the country's handling of the pandemic was successful, the market recovered - In 2021, there were continued fluctuations due to the pandemic and inflationary pressures, but the market remained stable - In 2022 and 2023, the market is expected to continue growing due to strong economic growth, new investment opportunities, and increasing foreign investment Overall, despite the potential for volatility, the Vietnam stock market presents attractive opportunities for investors looking to capitalize on the country's dynamic economic growth Research objectives To analyze the impact of internal (company-specific) and external (macroeconomic) factors on the price movement of Vietnamese securities during the research period, this paper will act as a report on the Vietnamese stock market to find out what is the driving force behind the development of this market in recent years (2020-2023) Scope of the research In general, this study focuses on analyzing price fluctuations in the Vietnamese stock market, specifically at HOSE (the largest and the most active stock exchange in VN), with the variables that have affected it The study aims to provide a comprehensive understanding of the dynamics and performance of the HOSE stock market during this period Theoretical framework Key definitions A stock market, also known as a stock exchange, is a venue to trade securities, such as bonds and shares (Finance Strategists) A stock is a form of security that indicates the holder has proportionate ownership in the issuing corporation and is sold predominantly on stock exchanges A stock index is a collection of shares representing a sector, exchange, or economy A stock index usually consists of a certain amount of the top shares from a specific exchange (IG) - How does the stock market operate? Functions: The stock market is where stocks are bought and sold When a company decides to go public, it issues stocks in an initial public offering (IPO) Investors can then purchase company shares on the stock market, and investors can profit from buying and selling stocks at the right time Investors benefit by exchanging their money for shares on the stock market As companies put that money to work growing and expanding their businesses, investors reap the benefits as their shares of stock become more valuable over time, leading to capital gains In addition, companies pay dividends to their shareholders as their profits grow The performances of individual stocks vary widely over time but taken as a whole; the stock market has historically rewarded investors with average annual returns of around 10%, making it one of the most reliable ways of growing your money (Forbes advisor) - Regulations: The SSC (States Securities Commission of VN) regulates the stock market in VN SSC regulations cover four main areas: + Stock exchanges + Brokers and dealers + Financial advisors + Mutual funds The SSC’s mission is to protect investors, maintain fair, orderly, efficient markets, and facilitate capital formation Thanks to SSC rules, companies that publicly trade on the stock market must tell the truth about their business, and those who sell and trade securities must treat investors fairly and honestly Major Causes of Price Fluctuation in Stock Exchange Share prices generally go up and down because of supply and demand However, they’re also influenced by these factors: - Information: When trading in shares, buyers and sellers check the latest news on a company or an industry Their perception of the information may differ, influencing their decision to buy or sell For instance, if a company announces plans to expand internationally, the potential surge in profits may spark investors’ interest, and the share price may soar - The economy: The performance of a country's or region’s economy, most notably gross domestic product (GDP) and interest rates, can impact share prices As the GDP rises, production-based industries attract more investment and demand for shares If interest rates increase, companies have to shell out more money to borrow, causing profit margins to shrink and shares to lose their appeal - The company’s financial health: Listed companies are required to publish their financial statements regularly The profit and loss they include can help shareholders and investors make trading decisions If results presentations show positive figures, demand for shares could rise and affect their price - Government’s role: Government has a powerful influence on stock prices, either by increasing investment or reducing it When the government takes steps to increase investment, the share price goes higher, while when it discourages an industry, the share price falls and people leave the industry - External events: Impressions about a company’s performance can weigh heavily on the demand for its shares Non-financial events like wars, pandemics, and natural disasters give investors uncertainty about risks to the capital invested in the companies and industries they affect (Santander) Research 2020-2021: Growth period 1.1 Actual situation and data analysis a Stock market situation in 2020 - From the late January of 2020, the Covid-19 outbreak negatively impacted almost every sector of the economy; and the stock exception, market, with no witnessed a significant decline in the first quarter of the year The market saw its worst period in March, when the VN-index reached 657 points on March 24, down 33,51% compared to the end of 2019, the lowest within years (Figure: VN Index on Mar 24, source: https://tradingeconomics.com) - However, from the second quarter, the market experienced a substantial recovery and had positive gaining sessions Typically, in the trading session on April 6, VN-index increased by 4.98%, the strongest increase since August 2001 until there Between July and August, the VNindex hovered around the 850-point mark as the second Covid-99 wave hit in late July The market began to stabilize in September, rising 3.6 percent to 914 points, when the authorities considered the outbreak to be under control (Figure: VN Index on Apr 06, source: https://tradingeconomics.com) - According to the State Securities Commission of Vietnam, ending the last session in Document continues below Discover more from: Macroeconomics KTEE402 Trường Đại học Ngoại… 79 documents Go to course ĐỀ THI CUỐI KÌ KINH TẾ VĨ MÔ none Macroeconomics 100% (1) Assignment Macroeconomic : Philli… Macroeconomics 100% (1) Ch3 STU Practice questions Ch3 STU… Macroeconomics 100% (1) Ch05 STU Questions p1 Ch05 STU Questions p1 Macroeconomics 100% (1) Answer problem macro Macroeconomics None IS LM great depression 2020, VN-index closed Macroeconomics at 1103.87 points, rocketing by 67% compared to the lowest point of the year and increasing by 14,9% compared to the end of the previous year (Figure: VN Index on Dec 31, source: https://tradingeconomics.com) - In addition, thanks to the sharp recovery of the stock market, a record-low interest rate, the amount of money flowing into the securities investment channel, the market witnessed an unpredictably high level of new investor in history: by the end of November, the total number of new accounts opened reached 332,886 accounts, an increase of 94% compared to the number of new accounts opened in 2019 In which, the new domestic individual investors accounted for 329,425 This took the total number of accounts to nearly 2.77 million last year, equivalent to 2.8 percent of Vietnam's population b Stock market situation 2021 - In 2021, Vietnam’s stock market continued the upward trend from the previous year and continued setting many unprecedented records in its 21year history reached a surpassing The VN-index record high 1500 points when on November 25 (an increase of nearly 36% in comparison with the end of 2020) (Figure: VN Index on Nov 25, source: https://tradingeconomics.com) None - These results have put Vietnam’s stock market in the group of markets with the highest growth in 2021 with 35,73% Besides, the domestic stock market was also among the most profitable markets in the world, followed by the US, India and Taiwan (Figure: VN Index in 2021, source: https://tradingeconomics.com) - In terms of liquidity, the average trading value of the stock market increased remarkably from VND 19 trillion per session (in January) to VND 40 trillion per session(in November) The average transaction value reached more than VND 26,455 billion per session, 250% more than that of 2020 - The number of securities investors kept experiencing a sharp increase As reported by the end of November, the total number of securities accounts was 4.08 million Thus, within 11 months, there were more than 1.31 million new accounts registered, of which domestic individual investors opened 1.306 million accounts It can be concluded that 2021 was a record year of attracting investors to participate in the market 1.2 Motivators - Viet Nam has pumped a lot of money into the economy to save the economy due to the severe impact of the Covid-19 pandemic: + The Prime Minister assigned the State Bank to direct commercial banks to shorten the time for reviewing loan applications, restructuring debt repayment periods, considering loan interest exemption and reduction, maintaining debt groups, and reducing fees with customers having difficulties because of Covid-19 First of all, banks offer a credit support package of about VND 250.000 billion for this solution + The Ministry of Finance was requested to urgently submit to the Government a mechanism for tax and fee exemption and reduction; proposed to the competent authorities solutions on taxes and state budget expenditures estimated at 30,000 billion VND to remove difficulties for production and business, ensure social security to cope with the Covid-19 epidemic - Most of the capital flow was put back into the investment market On the other hand, the bank interest rates were continuously lowered over time: In 2019, interest on bank deposits exceeded 8% Nonetheless, in response to the pandemic, the State Bank of Vietnam, cut interest rates three times last year According to SSI's statistics, deposit interest rates decreased by a total of - 2.5% in 2020 In the first quarter of 2021, there were some adjustments to increase and decrease slightly from 0.1 to 0.4% of interest rates at some commercial banks, focusing on short terms and individual customers) (Figure: Vietnam's policy developments, source: eMagazine) These were the culprits to cause investors to find other profitable investing channels such as stock, real estate rather than saving or investing to expand production and business Even the social distancing also makes more people interested in the stock market, especially the profit from this channel is now more attractive than other legal investment channels - The Vietnamese have turned to stocks to make money - some because they lost their jobs, others because they can't invest in their businesses (According to the General Statistics Office, in 2020, 101.700 companies closed or suspended operations) So many people piled into the market in December, and the Government's Vietnam News reported that they jammed the Ho Chi Minh City Stock Exchange 1.3 Impact of the stock market on economy in 2020 - 2021 - In 2020, social distancing caused gambling and usury activities to be frozen (including the suspension of lottery issuance) Consumption demand decreased, tourism, eating, and daily social activities also decreased That caused a huge amount of money to be stagnant in the people Meanwhile, the stock market was considered an "essential activity" and remained open every day The attractiveness of securities attracting large amounts of money was an easy consequence And the rush to invest in securities spread all over the world, from the US or Pakistan to India, China, Indonesia and of course Vietnam - In the period of 2020-2022, the scale of new account opening was even more terrible: