VN-Index is still hovering around the 1,200 - 1,300 point range, but the outlook for the Vietnamese stock market in the coming time is positive.
On July 29, exactly 24 years since the first trading session of the Vietnamese stock market, the VN-Index reached 1,246 points, up about 80 points compared to the end of last year but far behind the historical peak of 1,500 points set in April 2022.
Has a short term bottom been formed?
Mr. Nguyen Thanh Lam, Director of Analysis, Maybank Securities Company, commented that the Vietnamese stock market has certain limitations, such as being classified as a frontier market while most markets in the region are in the emerging group. This, to some extent, limits the assessment of the Vietnamese market. Upgrading the market is one of the urgent priorities at present.
With the current VN-Index, after a correction from the 1,300-point area that caused many investors to lose money, the market is recovering but the cash flow has disappeared, showing investors' caution and lack of confidence. As in the session on July 29, the VN-Index increased by nearly 5 points to 1,246 points but the transaction value on the HoSE floor only reached over VND11,300 billion.
Mr. Ho Sy Hoa, Director of Research and Investment Consulting, DNSE Securities Company, assessed that the recent weak market liquidity was mainly due to cautious investor sentiment after a sharp decline, combined with the season of announcing business results for the second quarter of 2024. Investors are observing and waiting for the second quarter report to assess the prospects of enterprises and make investment decisions for the second half of the year. "The market is still under pressure from the net selling momentum of foreign investors. Therefore, investors are cautiously observing, causing liquidity to be low," said this expert.
As a foreign investor who has participated in the Vietnamese stock market since the early days, Mr. Dominic Scriven, Chairman of Dragon Capital, said that after 24 years of ups and downs, the stock market has created a lot of value for Vietnam, Vietnamese enterprises and foreign investors. “I talked to many foreign investors, they see Vietnam as an emerging market with 100 million people, dynamic, proactive, efficient, united, stable, developed country... And they want to invest in Vietnam. But many funds when looking at the list of emerging stock markets do not have Vietnam's name, which makes them somewhat disappointed. This time, I am seeing a great determination, a lot of effort from the Ministry of Finance and the State Securities Commission to soon upgrade the market" - Mr. Dominic Scriven said.
There are always opportunities in the market.
Mr. Nguyen Thanh Trung, Director of Investment Consulting, Thanh Cong Securities Company, analyzed that although VN-Index has been hovering around the 1,200 point range for many years, looking at the long term for the entire 24-year journey, the annual growth rate of the market of about 11.5%-12% is not too low. In fact, this growth rate is close to international stock markets that have been operating for hundreds of years such as the US, EU...
If investors have participated in the market in the last 5-10 years, it is true that it is not as good as many other countries because the market still has many listed companies in the real estate industry, few technology stocks. While the record-breaking markets in recent times are all related to technology stocks... "Looking at it from a positive perspective, liquidity has increased very well, many times compared to previous years. If it was only around 10,000 billion VND/session before, it has increased to 15,000 - 20,000 billion VND, and there are even many billion-dollar trading sessions. Foreign investors also have many choices of companies on the stock exchange, many large-scale companies" - Mr. Nguyen Thanh Trung analyzed.
According to experts, whether the Vietnamese or global market has differentiation between groups and sectors of stocks, there are always opportunities at every stage. If investors know how to choose, there are still stocks that grow many times higher than the VN-Index, such as REE shares, which have increased nearly 30 times after 24 years of listing.
Dr. Ho Sy Hoa said that the macro pressure has cooled down compared to the first 6 months of the year. Currently, the exchange rate is much lower than the tense period in the first 6 months of the year. After enterprises announced their second quarter business results, it was also the time for groups of stocks to re-accumulate, waiting for confirmation of cash flow leading the market.
Even in the banking sector, only a few banks have announced their financial reports, most of which have good growth rates, including Techcombank and LPBank, which have post-tax profit growth rates of more than 39% and 241% compared to the same period. "The market expects the remaining banks, as well as the banking sector, to have impressive business results, thereby supporting the VN-Index. The two cash flows of credit and public investment disbursement are really challenging problems, but if they are positive in the second half of the year, they will be a driving force to support the market," said Dr. Ho Sy Hoa.
Mr. Nguyen Thanh Lam also stated that solid progress is being made in eliminating the pre-funding requirement. This is the final barrier for Vietnam to be upgraded to emerging market status. It is expected that the pre-funding requirement will be officially removed in the third quarter of 2024 and that FTSE will upgrade Vietnam to emerging market status in September 2025. “We can expect that starting from the end of this year, the upgrade wave may occur and help the VN-Index gain more momentum to go up,” said Mr. Nguyen Thanh Lam.
According to Mr. Nguyen Thanh Trung, foreign investors may reduce net selling from the end of this year and the next 2 years when the US Federal Reserve (FED) begins to reduce interest rates and the USD weakens... At that time, the cash flow will return to developing countries, including Vietnam. Not to mention, Vietnam is making many efforts to remove bottlenecks to upgrade its ranking in 2025, when the cash flow from foreign investors will return.
Source: CafeF
