VN-Index to hit 1,350 points by year-end: broker Vietcap

Vietnam’s benchmark VN-Index is forecast to reach 1,350 points by the end of 2024 and 1,550 points by late 2025, with corporate profits expected to grow strongly, according to broker Vietcap Securities.

The 2024 projection is similar to those by other brokers like SSI Securities and KBS Securities.

In a newly-released strategic report for the last six months of 2024, Vietcap points out three factors that will drive the index, which represents the Ho Chi Minh Stock Exchange.

Firstly, a continued cyclical economic recovery will support the labor market and improve household incomes and consumer confidence. Strong and sustainable economic growth will accelerate the recovery of infrastructure construction investment from the private sector by 2025. Additionally, strong GDP growth will boost revenue, profit margins, and incomes.

Secondly, Vietcap Securities forecast that the property industry will gradually recover in 2024, and increasing transactions in the housing market will show that supply-related bottlenecks are being removed and buyer confidence is gradually recovering.

This will also consolidate confidence that banks’ profits and ability to extend new loans will not be unduly constrained by bad debt.

Thirdly, inflation is under control, and the U.S. Federal Reserve (Fed) is expected to loosen monetary policy. The broker believed that the Fed will begin cutting policy interest rates in the second half of 2024.

Lower USD interest rates and a more stable USD will reduce the risk of a rising USD/VND exchange rate, which would have forced the State Bank of Vietnam to step up monetary policy tightening. A loose monetary policy will also give rise to a more supportive environment for capital flows to develop market assets.

A potential additional supportive factor is the upgrade of Vietnam’s stock market status from “frontier” to “emerging”. Being classified as an emerging market by FTSE Russell and Morgan Stanley Capital International (MSCI) will result in significant investment inflows from passive emerging market index funds, with an estimated $7 billion.

Regarding stock groups, Vietcap said that banks led the market's gain with an impressive increase of 20% in the first quarter of 2024, but the group's upward momentum gradually decreased in the second quarter, ending the first half up 13%.

Consumer stocks performed positively in H1, especially Q2, when economic data improved, tourism continued to recover, and business results of retail firms showed signs of improvement, the broker noted.

According to Vietcap, technology was the best performer in H1 with a surge of 55%, led by FPT of giant FPT Corporation (57%) thanks to the global "AI fever" catching the attention of investors.

In contrast, real estate suffered the strongest decline in the first half, it added.

At Tuesday’s close, the VN-Index stood at 1,245.006 points, down 0.12% from the previous session.

South Korea-invested KB Securities Vietnam JSC (KBSV) in mid July revised down its forecast for the benchmark VN-Index by year-end to 1,320 points from 1,360 in its previous report, citing lower earnings expectations.

Leading broker SSI Securities projected that the market could reach 1,300-1,350 points this year.