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Shares to struggle in near future, market still attractive in long term
Although Việt Nam faces huge macroeconomic instability this year, analysts believe that the stock channel is still attractive.
A facility of Đức Giang Chemical (DGC). DGC increased 13.19 per cent last week. Although the general market fluctuated strongly in the past week, there were still many groups that performed positively, surpassing the old peak price areas such as chemical, technology and telecommunications groups. — Photo Đức Giang Chemical
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The VN-Index on the Hồ Chí Minh Stock Exchange (HoSE) lost 0.51 per cent last Friday, to close at 1,183.37 per cent.
The index had gained 0.46 per cent last week.
“The recovery was not sustained and the market retreated in the last session of the week. Liquidity increased slightly compared to the previous session, showing an increase in supply. However, in general, supply and demand are still in a state of hesitation and exploration, as shown by the liquidity not returning to a good level,” said Việt Dragon Securities Co.
“It is expected that the market will continue to struggle in the near future. However, downside risks still exist, because the current recovery may be technical in nature to retest supply and the market is still affected by previous distribution.”
Deposit interest rates are on a downward trend, the government is also actively offering solutions to remove difficulties for the corporate bond and real estate markets, according to the Investment Strategy report of Agribank Securities Joint Stock Company (Agriseco).
Việt Nam is the leading country in loosening monetary policy. The State Bank of Việt Nam has reduced its operating interest rate four times in a row starting from the end of the first quarter of 2023, Agriseco said.
Commercial banks are also reducing deposit and lending interest rates to help business and production activities recover. Lower interest rates will positively support cash flow into the stock market, Agriseco said.
According to statistics of Agriseco, during the period when interest rates decrease, not until after a year was the positive influence reflected on the VN-Index. Within one month since the interest rate cut, the market trend remained unclear.
Agriseco said that inflation in the second half of the year was under upward pressure, because commodity prices tend to increase again; such as the price of pork, housing and construction materials, electricity, water and health care.
However, inflation is forecast to remain stable at below 4.5 per cent, Agriseco said.
Some factors that can affect inflation in the last months of the year include the recovery of consumer demand; increased base salary; loosening credit room; increased disbursement of public investment; and increased prices of some domestic goods and services.
According to Agriseco, GDP in the second half of the year is forecast to increase by 8.2 per cent over 2022, recovering strongly from 3.72 per cent in the first 6 months, thanks to the promotion of public investment; recovering production; tourism and services.
To achieve the GDP growth target of 6.5 per cent for the whole year set by the Government, the growth rate in the second half of the year needs to reach 9-10 per cent. This is a very challenging target because consumer demand slows down; investment from the private sector decreases due to the unfavourable business environment; and import and export activities face challenges due to a decrease in global consumption demand, Agriseco said.
The VN-Index may end 2023 above 1,250 and continue to reflect the recovery of the economy.
“We expect Việt Nam's GDP to grow by 7.1 per cent in the second half of 2023, compared to 3.7 per cent in the first half of 2023, thereby accelerating the growth rate in 2023 to 5.5 per cent. We expect the economy to maintain its recovery momentum next year and forecast GDP growth of 6.9 per cent in 2024,” said VNDirect Securities Co.
“The main drivers came from the government's expansion of fiscal policy to support growth, lower lending rates to stimulate private consumption and investment, and orders for Việt Nam's agricultural and industrial goods are likely to recover significantly from Q4/23,” it said.
Struggling this week
“It is expected that the market will continue to struggle in the near future. However, downside risk is still lurking in the market, as the current rally may only be of a technical nature to recheck the supply and the market is still affected by the previous distribution process,” said Việt Dragon Securities Co.
“Therefore, investors still need to observe supply and demand movements and manage the portfolio properly. In the meantime, consider the recovery spans to take profits and reduce the proportion, giving priority to stocks that have shown distribution and weakening signals, to minimise risks for the portfolio.”
According to an analyst from Saigon-Hanoi Securities Joint Stock Company (SHS), although the general market fluctuated strongly in the past week, many groups still performed positively, surpassing the old peak price areas such as chemical processing, technology and telecommunications groups. Specifically, FPT Retail (FRT) increased by 7.20 per cent, Đức Giang Chemical (DGC) increased 13.19 per cent; Lâm Đồng Pharmaceutical JSC increased by 22.83 per cent, Domesco (DMC) increased by 6.97 per cent.
Stocks of financial services and securities also showed strong recovery, such as SSI Securities Inc (SSI) up 13.78 per cent, Saigon-Hanoi Securities Co (SHS) up 11.92 per cent, VNDirect Securities Co (VND) up 9.25 per cent, MB Securities (MBS) up 8.77 per cent, Việt Capital Inc (VCI) up 8.46 per cent, Bảo Việt Securities (BVS) increased 8.16 per cent.
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