The Vietnamese stock market is forecast to rally in the second half of 2023 after a quiet start to the year, with investment expected to flow into firms with a positive growth outlook.
The stock market rebounded in January but faced heavier pressure in February and March amid stronger global headwinds, including the U.S. and European banking crises and the U.S. Federal Reserve’s interest rate hike.
In Vietnam, investor confidence has also been hit by woes in the corporate bond sector, the ailing real estate market, the current credit crunch, and the slowing economy.
Under the circumstances, Vietnam’s benchmark VN-Index has been hovering at around 1,040 points.
In the first four months of the year, a clear trend has been sideways movement in the Vietnamese stock market with substantially decreased liquidity due to lower investor confidence, said Nguyen The Minh, chief analyst at Yuanta Vietnam Securities.
He added that investment is unlikely to return to the stock market while global headwinds remain fierce and domestic companies face heavy bond payment pressure in the second and third quarters of this year.
"Recently, the most positive move has been from foreign investors who have turned to net buyers. Their improved sentiment has come as exchange rate worries have cooled," he said.
Rallies expected before end of year
Ta Thanh Binh, director of the State Securities Commission's market development department, said both the Vietnamese economy and the stock market are facing a tough time despite lower interest rates and the Fed’s less aggressive interest rate hikes. Therefore, improved liquidity will be gradual.
She added global investor confidence is still being held up by the U.S. banking crisis, not to mention prolonged geopolitical conflicts.
Binh noted the State Securities Commission is continuing to implement measures to ensure smooth operations in the stock market towards its transparent and sustainable development, with the legitimate rights and interests of investors protected.
Minh of Yuanta Securities forecast that the stock market will experience two important stages in the next eight months.
In the first stage, from now until the end of June, the market will continue to move sideways in a narrow band, and investment will be scattered among sectors with low liquidity. “In other words, a clear wave is still absent,” Minh said, adding that the market is unlikely to drop drastically.
The second stage will arrive after June with clearer waves and rallies expected, based on the expectations that the Fed will stop raising interest rates and maybe even cut them after the third quarter. Along with this, the Vietnamese government’s measures to tackle woes in the property and corporate bond sectors will make a difference.
Minh recommended that investors take a defensive position until the end of the second quarter. As for surfers, they should hold fast as the market continues sideways, and only experienced investors should look for wider opportunities.
He added that market trends will be clearer after June.
Like him, Nguyen Anh Khoa, head of analysis and research at Agriseco Securities, said global headwinds may ease in the second half, and the government’s solutions will become more effective. “I expect the market to start improving from the middle of the year,” said Khoa.
According to him, investors who prefer short-term surfing should catch profit points, cut losses, and avoid long-term holding, especially in stocks with unknown stories.
“Normally, there will be two to three waves a year regardless of other market moves. Therefore, investors who prefer long-term and safe holdings should choose bluechips and avoid stocks with periodical changes or those that are directly affected by macro factors,” he said.