Positive medium, long-term outlook for Vietnam stock market: broker

Leading broker Saigon Securities (SSI) sees a positive medium and long-term outlook for Vietnam’s stock market, with businesses returning to a growth trajectory.

The market has fluctuated for more than a week now. The VN-Index, which represents the Ho Chi Minh Stock Exchange (HoSE), jumped 15.78 points, or 1.23%, to 1,300.19 points on Wednesday, a record high since mid-2022.

A recent SSI report says the stock market has just gone through a period of strong fluctuations from correction to recovery and needs time to consolidate supply and demand and reach its old peak.

The broker says that market tracking since 2010 indicates that June is unlikely to be a positive month.

It notes that corrections can follow the recovery of 10% seen by the VN-Index this year in five trading weeks or so, with even higher growth in some groups like information technology, retail, steel, energy, and finance.

“Taking advantage of high price ranges to make profit can be a suitable strategy for the current market context,” the broker says, adding that “diversifying portfolios by industry can help investors proactively anticipate constantly rotating cash flow and minimize risks.”

It says the proportion of stocks needs to be maintained at a balanced level. Investors should only put down their money during corrections, focusing on tickers of companies with high and stable business growth potential.

According to the broker, industries with solid growth such as retail, fertilizer, steel, securities and export will provide the most opportunities in 2024, not to mention a number of groups with almost flat valuations since the beginning of 2023 like food and beverage and electricity.

Business groups from which high dividends are expected also offer good investment potential, it adds.

However, it also cautions that geopolitical risks and the U.S. Federal Reserve's delay in reducing interest rates will greatly affect domestic macro balances and have a negative impact on the stock market.

Domestically, major risks include exchange rates and pressure on interest rates, a weak real estate market, large volume of corporate bond debts, high consumer spending and lower-than-expected recovery pace.

SSI believes that maintaining a flexible monetary policy and an expansionary fiscal policy in 2024 will help production, trade, investment and consumption activities recover gradually.

The expectation that business results of listed companies will return to a growth trajectory has been one of the main driving forces for the stock market in the second quarter and this will continue for the second half of 2024.

Another important factor will be the measures taken to remove barriers to the stock market’s status being upgraded from “frontier” to “emerging” by FTSE Russell, the report says.