Income from the securities market is expected to increase by about 14% in 2023, meaning that stocks would be more attractive than bank deposits, said Tran Khanh Hien, chief analyst at top broker VNDirect Securities.
December is always considered a golden time for investors to review their investment portfolio to prepare for the next stages. However, this year-end is different, according to Hien.
At the recent "Finance Street" talkshow, she said that now not only Vietnam but almost all major economies in the world are under pressure from rising interest rates and tightening financial conditions.
Besides, after a series of incidents in the market, most commercial banks have strengthened their solvency, and financial institutions have consolidated their defensive foundations. Therefore, interbank and deposit interest rates have increased sharply.
"Deposit interest rates of some banks can reach 10% per year. Businesses will have relatively few opportunities to access capital to restructure loans and pay for debt in the short term. In general, our economy will face more difficulties in the year-end and early 2023," Hien noted.
"Under pressure of the above factors, market players are tending to increase their defenses and seek to sell the most liquid assets, including stocks and corporate bonds. This will cause a drop in trading volume as well as scores in the stock market.
"Normally, many large financial institutions choose the last quarter of the year to restructure their portfolios and put their money down for the new year, as companies’ third-quarter and annual business results have somewhat loomed. In the context of increased input interest rates, the securities investment channel will become less attractive. However, this correlation will be broken when the profits of listed firms continue to increase," she argued.
In 2023, although profit growth momentum will weaken, listed companies are expected to post a profit increase of 12 to 14%, Hien said, adding that with this rate of return, income from the stock market will grow about 14%, meaning investing in stocks will become more attractive than depositing money at banks.
In addition, since the beginning of October, foreign investors have actively poured money into the Vietnamese market, with a total net buying value of about VND8 trillion ($324.6 million). This development is in stark contrast to the first half of 2022. Recently, ETF Fubon - one of the major ETFs investing in Vietnam also announced it would raise about VND4 trillion ($162.3 million) to continue investing in the Vietnamese market.
"It proves foreign investors see that Vietnamese stocks have become very cheap and started purchasing," Hien noted.
The VNDirect analyst said that as market liquidity has improved but remains limited, industry waves like previous years are unlikely to occur. However, some industries will benefit from the growth drivers of the economy and public investment disbursement. Besides, difficulties no longer affect aviation-related industries, especially after re-opening of the international tourism market.
"In addition to focusing on industry groups, investors should pay attention to the story of each stock. They can choose tickers of leading companies in an industry, with low risk to interest rate hikes, a strong financial structure, and attractive valuation compared to the three-year average," she recommended.
The Vietnamese stock market has made a strong recovery in recent days, with the VN-Index, which tracks the performance of the Ho Chi Minh Stock Exchange (HoSE), gaining for the fifth consecutive session on Wednesday.
The benchmark closed the Wednesday session at 1,048 points, an increase of 16 points or 1.58%, with more than 1.1 billion shares changing hands for VND17.76 trillion ($720.6 million).