Vietnam stock market outlook positive despite corrections week: experts

Experts are maintaining a positive outlook for Vietnam’s benchmark VN-Index from now until the end of the year despite the stock market experiencing corrections during the September 9-13 trading week.

The VN-Index, which represents Ho Chi Minh Stock Exchange (HoSE), began the previous week on a negative note, falling 0.5% to 1,267.7 points, with 104 tickers gaining and 282 falling. The decline continued during the September 10 and 11 sessions, before recovering by 0.25% on September 12 and falling 0.4% on September 13.

The VN-Index closed the week down 1.7% at 1,251.7 points, the HNX-Index of the Hanoi Stock Exchange (HNX) fell 0.9% to 232.4 points and the UPCOM-Index of the Unlisted Public Companies Market (UPCoM) dropped 0.4% to 92.9 points.

Among the main stocks supporting the market were FPT of tech giant FPT Corporation (+0.7%), TPB of TPBank (+2.5%), and SBT of Thanh Thanh Cong-Bien Hoa JSC (+8.4%).

Meanwhile, the biggest losers were SSB of SeABank (-15.3%), VIC of private conglomerate Vingroup (-3.9%), and BID of BIDV bank (-2.2%).

Foreign investors were net sellers to the tune of VND1,133 billion ($46.1 million) across all three exchanges during the week: VND1,122 billion on the HoSE, VND17.2 billion on the HNX, and VND6.5 billion on the UPCoM.

Dinh Quang Hinh, head of macro & market strategy at VNDirect Securities, said the market continued to experience a quiet trading week, reflecting caution before significant macroeconomic events, including an expected interest rate cut by the U.S. Federal Reserve (Fed); anticipated reaction of the State Bank of Vietnam (SBV) after the Fed's rate cut; and the impact of typhoon Yagi, the largest in decades hitting northern Vietnam, disrupting the business operations of several companies.

He said he remained positive about the domestic stock market’s prospects in the final months of this year and believed that the VN-Index surpassing the 1,300-point mark in 2024 was entirely feasible.

Supportive factors for the possibility included the Fed's anticipated interest rate cut of about 0.75% in the last months of the year; the easing of exchange rate and inflation pressures that would allow the SBV to focus on economic growth, increase money supply, and maintain low interest rates; continued improvement in the earnings of listed companies; and new developments in market status upgrade, he added.

"Experience shows that market peaks always occur during active trading periods and market bottoms form when market liquidity is low. Therefore, I believe the VN-Index is in the phase of preparation for a year-end uptrend, and investors should take advantage of this period to increase their stock holdings when the index stands around its support level of 1,250 points, prioritizing industries with positive year-end growth stories like banking, securities, textiles, seafood, wood, and industrial real estate."

Analysts with Yuanta Securities Vietnam have assessed that the stock market has been in an uptrend since late 2022 and said long-term risks were still low. T

he Fed was likely to cut interest rates this month and the cooling USD/VND exchange rate would provide conditions for the SBV to maintain low interest rates to support the economy. The growth momentum of businesses has remained strong despite a slow recovery in major economies and and the impact of natural disasters, they said, noting the economy was in a recovery phase.

"Typhoon Yagi may affect some of our projections for 2024, but the impact will not be significant and the projected P/E for 2024 is still below 12.x, indicating that current valuations remain low. Therefore, we recommend that investors prioritize a buy-and-hold strategy for their long-term portfolios," the Yuanta analysts said.