Cash flow into Vietnam's stock market in 2024 will be more stable than in 2023, with domestic investors expected to be the main source thanks to low interest rates, according to An Binh Securities JSC (ABS).
In a newly published strategy report, the broker says the current one-year deposit interest rate ranges from 4.2 to 5.7% per year, equivalent to a P/E (price to earning) ratio of 17.5-23.8x, higher than the valuation level of Vietnam’s benchmark VN-Index.
In addition, interest rates are likely to remain low for at least the first half of 2024 because credit demand will not recover immediately and banking system liquidity is still abundant. With the profit growth of businesses expected to improve this year, the deposit channel will be less profitable than stock investment, it adds.
With positive economic recovery prospects in 2024, interest rates remaining at a record low, and a better import-export recovery than 2023, ABS forecasts that the VN-Index, which represents the Ho Chi Minh Stock Exchange (HoSE), in 2024 will surpass its peak set in 2023 and move towards 1,320-1,358 points.
In a positive scenario, ABS believes that Vietnam's stock market will continue its recovery from 2023, achieving growth of 15-20% compared to the beginning of the year. The market is forecast to conquer the mid-term peak of 2023 at 1,256 points in the middle of the second quarter of 2024, and continue to move towards the territory of 1,320-1,358 points and possibly 1,390 points in the second half of this year.
Investors should put down money on the VN-Index's mid-term support zones at 1,130-1,080 points during market corrections and lower the proportion of shares at strong resistance levels at 1,255, 1,320, 1,340 and 1,358 points, it advises.
In a negative scenario, ABS says if global conflicts spread to many key regions, severe natural disasters occur on a large scale, the U.S. Federal Reserve (Fed) delays lowering the basic interest rate until the end of 2024 and/or continues to raise the basic interest rate, Vietnam's stock market may retest the territory of 870-800 points once again.
The VN-Index rose 5.30 points or 0.45% to 1,175.67 on Friday, with trading value on the HoSE expanding 14% to VND12.90 trillion ($524 million).