Broker predicts 1,150-1,300 points range for VN-Index in H2/2024

Vietnam’s benchmark VN-Index of the Ho Chi Minh Stock Exchange (HoSE) is likely to move in 1,150-1,300 points range in the second half of this year if the U.S. Fed starts interest rate cuts in September, says ACB Securities (ACBS).

However, it also cautions that maintaining the 1,150-1,160 points threshold will be challenging for the VN-Index after an uptrend it enjoyed since October 2023 was disrupted by deep corrections in late July and early August amid global selloffs.

The VN-Index erased earlier losses to close Monday up 0.54% at 1,230.28.

ACBS researchers note that the possibility of a slowdown in the U.S. economy has become a top concern for market participants after the release of inflation and jobs market data. The U.S. Federal Reserve (Fed) is expected to make three rate cuts this year, with a combined magnitude of more than one percentage point.

Similarly, researchers with KB Securities Vietnam (KBSV) have highlighted external risks to the Vietnamese stock market, including escalating tensions in the Middle East; signals of a possible recession of the U.S. economy; and the unwinding of the Japanese yen carry trade.

Meanwhile, ACBS researchers expect the Vietnamese economy to grow more than 6% in H2/2024 thanks to a broad-based recovery in industrial production and exports, as well as robust inbound foreign direct investment (FDI). However, this momentum can be harmed by a potential economic slowdown in the U.S. and other major export markets, they caution.

The researchers reckon that upward pressure on the USD/VND exchange rate may ease towards the year-end and the dong may strengthen against the greenback to narrow the year-to-date depreciation.

Meanwhile, KBSV researchers have noted that a U.S. slowdown may damage Vietnam’s exports, but maintained that this may still prove beneficial to the Vietnamese stock market since it will relieve pressure on the State Bank of Vietnam’s monetary policy.

They have also said that, technically, the VN-Index may slide to 1,150 or even 1,080 in the short term before bouncing back.

Looking ahead, ACBS analysts recommends that investors pick stocks of financially healthy and reasonably priced companies, particularly those operating in the fields of banking, industrial real estate, transport, technology and retail sales.

Constituents of the VN30 Index are good picks in H2/2024, especially if the Fed cuts rates and foreign inflows return to Vietnam, they say.