VN-Index could surpass 1,300-point threshold this year with right catalysts: experts

Vietnam’s benchmark VN-Index may surpass 1,300 points, an important psychological and technical threshold, later this year thanks to a range of catalysts, experts said, while cautioning about potential risks and volatility.

South Korea-invested Yuanta Securities Vietnam anticipated the VN-Index to reconquer the resistance threshold of 1,300 points next month, driven by ongoing positive market movements.

The stock market will be propelled by a potential rate cut by the U.S.'s Fed in September, positive macroeconomic data, and expected strong corporate earnings in the second quarter of 2024, it added.

Additional market drivers include the low valuation of large-cap stocks and the forward P/E of the VN-Index at 12.x, equivalent to a yield of 8.3%, making stocks more appealing than other investment channels, even though savings interest rates are rising again, the firm said.

Yuanta Securities Vietnam recommended potential stocks for July in the fields of transport, technology, chemicals, food production, oil & gas production, financial services, tourism and entertainment, banking, and electricity.

Experts from MB Securities JSC (MBS) predicted that corporate earnings could rise by 9.5% in Q2, 33.1% in Q3, and 21.9% year-on-year in Q4. For the whole of 2024, earnings are projected to jump by 20% from 2023 thanks to a low-base effect. The sectors expected to see positive performances are banking (up 20%), retail (up 204%), building materials (up 56%), and electricity (up 25%).

In the 2025 fiscal year, earnings growth is expected to slow to 15%, driven by banking (up 23%), building materials (up 33%), industrial parks (up 26%), and electricity (up 28%).

MBS noted that the VN-Index still has large growth room. During the Monday (July 8) session, the P/E ratio of the VN-Index stood at 14.93x, 8.1% higher than the three-year average (at 13.8x) and 10.6% lower than the three-year high in Q4/2021 (at 16.7x).

It forecast that the VN-Index could hit 1,350-1,380 points in late 2024 if corporate earnings hike by 20%, and the forward P/E ratio is 12x-12.5x in the 2024 fiscal year. MBS also anticipated that large-cap stocks will likely be more profitable than other groups in the 2024-2025 fiscal years.

Specialists from SSI Securities also foresee a rosy outlook for the VN-Index in late 2024 and next year, buoyed by the ongoing economic recovery. The market will be boosted by the 30% increase in base salary for public officers starting July 1, the extended 2% VAT cut until end-2024, promising export activities if the U.S. recognizes Vietnam as a market economy in late July, and the resolution of obstacles to a potential stock market upgrade.

SSI forecast that the market could reach 1,300-1,350 points this year.

The VN-Index on Monday ended up 1.6% to 1,283.56 points from early June, closing 13.5% higher from the start of this year.