Lack of ‘compelling stories’ undermines stock market vibrancy: brokers

Vietnam’s stock market is yet to strike a “dragon vein” and lacks “compelling stories” to attract more investors, representatives of major broker houses in the country said at a talk show Friday.

Sluggish cash flow and absence of leading industries were making it difficult for the stock market to become vibrant, Phan Thanh Nghiep, senior customer service director at the HCMC branch of DNSE Securities, told the event, themed "What are the opportunities for stocks at the end of the year?", in Ho Chi Minh City.

Many investors raised concerns about the stock market's performance despite positive domestic macroeconomic indicators, a rapidly cooling exchange rate, and clearer prospects for stock upgrades.

Additionally, with the U.S. Federal Reserve expected to lower interest rates and the European Central Bank having recently done so, why were Vietnamese stocks still struggling, they asked.

Nghiep noted that the current foundations of the Vietnamese stock market differed from the past. Today’s investors were not only focused on the fundamentals of listed companies but also monitored international stock markets, geopolitical factors and global monetary policies.

The potential risk of recession in major economies like the U.S. and China has heightened concerns among investors, he said.

In the stock market, medium-cap stocks that were previously popular among investors are no longer cheap and have limited growth potential. The banking sector, while still dominant, was facing challenges. Real estate, a major asset class, continued to struggle, and bad debt remained a concern. Sluggish cash flow and the lack of leading sectors are impeding the market's vibrancy, he added.

Tran Quoc Toan, director of Branch 2 at Mirae Asset Securities Company (MAS), remarked that the market has yet to strike a "dragon vein" – a leading group of stocks strong enough to drive cash flow.

The market lacked positive factors to boost investor sentiment, and ongoing concerns about international economic recession and persistent foreign net selling were factors contributing to the market’s current state.

Dr Nguyen Anh Vu, head of the Finance Faculty at the Banking University of HCMC, explained that while foreign investors have been net selling since the post Covid-19 period, the reason was not necessarily a negative macroeconomic situation. While the country attracted significant foreign direct investment, the stock market lacked compelling "stories" to allure investors.

While the VN-Index has only increased about 20% since 2019, global markets like the US have seen continuous record highs driven by sectors such as digital transformation, semiconductor chips, and artificial intelligence.

Foreign investors were selling off shares, but individual investors were no longer as reliant on foreign cash flow for trading, which meant there was no need for excessive concern, Vu added.

Le Tu Quoc Hung, a senior manager at the Analysis Center of Rong Viet Securities Company (VDSC), said that while there were short-term worries about natural disasters, such as super typhoon Yagi and floods, there was also positive information on the horizon. Positive business results have been forecast for the third quarter, and the roadmap for upgrading the stock market from frontier to emerging status was becoming clearer.

"The growth of listed companies is expected to reach double digits from a low base last year. With positive business results and the VN-Index's current valuation, which is more attractive, cash flow is likely to be stimulated," Hung said.