Stock investors advised to filter opportunities amid fluctuating market

With intertwined opportunities and challenges, stock investors in Vietnam are recommended to have an appropriate investment strategy to preserve capital as well as filter opportunities in the market.

Ending the past trading week of May 4-5, the VN-Index, which tracks the performance of the Ho Chi Minh Stock Exchange, dropped 8.81 points, or 0.84%.

VIC of Vingroup, CTG of VietinBank, and SAB of brewer Sabeco had the most negative impact on VN-Index. VIC alone stole more than 1.3 points from the index.

Meanwhile, PGV of Power Generation Joint Stock Corporation, ACB of Asia Commercial bank, and HVN of national flag carrier Vietnam Airlines were the most positive influencers.

According to top Vietnamese broker VNDirect, the market corrections provide good opportunities for investors to buy and hold stocks in the long term.

The less positive picture of Q1/2023 business results has been mostly reflected in the recent correction, it said, expecting that a series of recently issued support policies like the State Bank of Vietnam’s (SBV) Circular 02 on debt payment rescheduling and Circular 03 on purchase and sale of corporate bonds, and the government’s Decree 12 on extension of tax and land rental payment deadlines will help improve investor sentiment and cash flow in the stock market.

"We believe that the territory of 1,000-1,030 points will be a strong support area for the VN-Index and if the index falls to this area, attractive opportunities will open up for investors to buy and hold stocks in the long term," said the VNDirect analysts.

Investors should place businesses with positive growth prospects in 2023 on their watch list in the current period, they advised.

The May investment strategy will focus on firms engaging in public investment projects, the banking industry with improving performance thanks to issued policies, and those with special growth stories, the analysts added.

According to Agribank Securities (Agriseco), deposit interest rates will continue to decrease in the coming time, enabling commercial banks to reduce lending rates to support the economy.

"When deposit interest rates drop, cash flow will tend to shift from the deposit channel to investment channels with higher expected profit, including securities," it said, adding eased financial pressure will help enterprises recover production and business activities and gain better profits, thereby increasing the attractiveness of the stock market.

However, with a large amount of corporate bonds to mature in the second quarter, many businesses will have to sell their assets, including stocks, to pay bond debts, thus putting pressure on the market.

In addition, the Q2 profit outlook of listed companies is likely to continue to decline compared to the same period last year due to high inflation in Vietnam’s major export markets and weak global demand.

With the intertwined opportunities and challenges, Agriseco forecasts that the VN-Index would fluctuate in the range of 1,000-1,100 points in the second quarter.

The market’s profit in the first and second quarters of 2023 may fall 15-20% and 5-10% year-on-year respectively, before regaining growth momentum in the second half of the year, it said.