by
Khanh Anh, Minh Hue
June 20, 2024 (Thursday) 9:50am GMT+7
Vietnam’s stock market is expected to continue rising in the second half of the year, with the benchmark VN Index likely to hit the 1,400-point threshold, said Nguyen The Minh, chief analyst at Yuanta Vietnam Securities Joint Stock Company.
The VN Index rose 0.02% to 1,279.79 points on June 19, 2024. Photo provided by The Investor/Trong Hieu.
He predicted that the VN Index, which represents the Ho Chi Minh Stock Exchange (HoSE), could return to its previous high of around 1,500 points as efforts continue to be made to upgrade the market status by FTSE Russell from “frontier” to “emerging.”
“Many investors are concerned that although the market has risen significantly, prices of large-cap stocks are still cheap. The market will likely continue to rise in the third quarter and early fourth quarter of this year, but in the second half of the fourth quarter, the market may take a break to observe whether the macroeconomy has truly recovered and provide an outlook for 2025,” Min said.
Truong Hien Phuong, senior director of KIS Vietnam Securities Joint Stock Company, shared a similar view, saying that barring any unexpected factors, the market is on a positive trend and will gradually improve towards the end of the year based on a number of positive signs.
Typically, when the Federal Reserve cuts interest rates and the U.S. becomes less attractive, foreign investors become net buyers again, driving global capital to seek more attractive investment destinations, such as emerging and frontier markets.
“If the Fed cuts interest rates, other central banks around the world, including Vietnam, will follow suit. Lower interest rates will lower capital costs and improve corporate profit margins, which will be a positive factor supporting companies and the economy. Therefore, investors will buy stocks in anticipation of this growth,” he analyzed.
He further said that many investors are looking forward to the upgrade of Vietnam’s stock market. From now until the end of the year, Vietnamese regulators will be sprinting to complete policy mechanisms and processes to upgrade the stock market’s status in 2025. The upgrade will boost the economy and motivate foreign investors to seize the opportunity and buy stocks in advance.
“Last week, the VN Index easily broke through the 1,300-point level, which indicates that the market will be more favorable in the next six months,” Phuong said.
Saigon Securities (SSI), a leading securities firm, predicted in a recent report that the VN Index will reach 1,300 points by the end of 2024, but may surpass this threshold multiple times. Profit growth will be the main driver of the strong rise in stock prices this year, the firm said, adding that high dividends will also be an attractive factor in the context of low interest rates.
“Retail investors’ funds are likely to return to the stock market over the remainder of 2024, which will benefit the VN Index,” he predicted.
Echoing these thoughts, VNDirect Securities believes that improved performance in 2024 will be a strong supportive factor for the stock market.
The securities firm maintained its forecast that net profits of companies listed on the Hong Kong Stock Exchange will rise 16-18% this year from last year.
Market Leaders in the Second Half
The VN Index has expanded 13% since the beginning of the year and is currently hovering around 1,270-1,280 points.
The only downside is that foreign investors have sold more than VND40 trillion ($1.57 billion) so far this year, but low bank deposit rates have encouraged domestic investors to turn to the stock market, helping to cushion the blow.
Some stocks continued to trend higher, posting strong gains many times greater than the 13% rise in the major indexes. However, not all investors booked profits as expected.
Securities experts shared investment opportunities for the second half of 2024, believing that as macro indicators improve, investors should increase their share of stocks, among which banking stocks will still lead the market.
2024 has not been a good year for bank stocks, but they are still very undervalued with price-to-book ratios below 2x and some even below 1.5x. However, banks with large current account balances remain attractive with talk of equity issuance to replenish capital.
The securities group also has a bright outlook despite the slowdown over the past two months: Essentially, the margin space for this group remains large.
Steel groups, whose exports are growing due to high demand in developed countries, are also an option. In the long term, steel is expected to benefit once the legal issues facing real estate projects are resolved.
Moreover, the Information Technology and Communications Services Group is likely to gain in the near future, owing to supporting factors such as software exports maintaining double-digit growth and businesses embracing digital transformation.
According to HSBC, 60 percent of companies operating in Vietnam plan to invest in technology and digitalization, with a focus on digital payments, e-commerce and artificial intelligence.
