Vietnam’s benchmark VN-Index is forecast to reach 1,300 points in 2024 on the back of low deposit interest rates at commercial banks, says leading broker Vietcombank Securities (VCBS).
In a new report on Vietnam’s stock market outlook, the broker says that while low bank deposit interest rates is a major factor, global macroeconomic risks are likely to trigger both falls and gains next year.
“Risks that the Vietnamese economy as well as its stock market will face are a pause to the easing of monetary policy as both purchasing power and capital needs of the economy have not seen any significant improvements, and higher inflation,” the report says.
Lingering geopolitical tensions in the region and the world can continue to drag down economic growth of Vietnam's major trade and investment partners, it adds.
The broker projects average trading value per session to reach VND16-17 trillion ($658 million-$700 million) on all three exchanges in Vietnam – the Ho Chi Minh Stock Exchange, the Hanoi Stock Exchange and the Unlisted Public Companies Market (UPCoM) – for the whole of 2024, down about 5% compared to 2023.
Given the strong divergence likely among stock groups, VCBS recommends that investors look for investment opportunities in businesses with bright prospects and buy stocks within a reasonable valuation zone to ensure optimum risk management.
It recommends that investors focus on three major groups – banking, industrial real estate and infrastructure construction using public investment funds.
The broker explains its recommendation thus: apart from low interest rates that can go lower, the ongoing trend of production shifting from China to other countries in Asia is benefiting Vietnam’s industrial real estate sector; and the government is speeding up disbursement of public investment capital for major infrastructure projects.
It says long-term investors can look for opportunities in "defensive" industries with business results less dependent on economic cycles like information technology, telecommunications, hydropower, thermal power, and water supply.
Another broker, KIS Vietnam Securities, has also forecast that the Vietnamese stock market will make a breakthrough in 2024 thanks to the recovery of the domestic macro-economy and positive influence of supportive policies from the government and the State Bank of Vietnam.
The market outlook is optimistic because: the net selling momentum of foreign investors will gradually slow down or may turn into net buying; and selling pressure from domestic investors is no longer strong (preventing sharp falls), says Truong Hien Phuong, senior director, KIS Vietnam Securities.
The VN-Index closed Friday down 0.71% at 1102.3 points.