Securities companies are stepping up the race to increase capital in the context of the Vietnamese stock market recording positive developments. It is forecasted that the VN-Index may rise to the 1,350 - 1,400 point range, or even 1,700 points by the end of 2024.
According to statistics from VIS Rating in the first 5 months of 2024, about 1/3 of the 30 largest securities companies (SCs) have announced plans to increase new capital with a total of about 38 trillion VND in the next 12 months. This is a very significant capital increase plan and will help increase the total equity of the companies to about 20%.
Accelerating the race to increase capital
With additional capital, securities companies can boost their core businesses of investment and margin lending. Higher profit growth from these businesses will help securities companies strengthen their risk buffers.
Securities companies predict that VN-Index will increase strongly in the last months of the year.
Capital raising plans are largely from large-scale domestic securities companies such as HCM, SSI, VCI, VND as well as companies affiliated with banks such as ACBS, MBS, ORS, SHS. These companies have set a target of 30% in profit growth in 2024 compared to the same period last year, mainly driven by the expansion of core activities such as investment and margin lending, along with improved business conditions in the industry.
“This is a very significant capital increase plan and will help increase the total equity of the companies to about 20%. With the additional capital, the companies can boost their core businesses of investment and margin lending in 2024. Higher profit growth from these businesses will help the companies strengthen their risk buffers,” said a representative of VIS Rating.
Notably, the strong capital increase in the first 5 months of the year by securities companies took place in the context of low interest rates and increasing trading demand from domestic individual investors. In the first 5 months of 2024, the average trading value per session on the stock market increased by 36% compared to 2023, reaching 24 trillion VND.
Most securities companies assess that securities are still an attractive investment channel, attracting cash flow from domestic investors. Therefore, companies are constantly planning to increase capital to expand margin lending space to keep up with market trends.
“The new context puts securities companies in a position where they have to increase their charter capital to meet market demand, increase competitiveness, and have resources to build a trading system to ensure the provision of diverse products,” an expert commented.
Get 1,700 points by the end of the year?
It can be seen that the VN-Index, after recovering from the bottom of 1,165 - 1,170 points, had a correction before returning to the 1,240 - 1,245 point area. Along with that, liquidity began to show signs of increasing strongly again when cash flow in some other investment channels such as gold began to change direction after the actions of the State Bank.
“The cooling of gold bar prices could be a factor stimulating the stock market,” Mr. Dinh Quang Hinh, Head of Macro and Market Strategy Department of VNDirect Research, emphasized. According to many securities companies, the VN-Index has many opportunities to increase in the second half of the year, reaching the 1,350-1,400 point range, accompanied by a broad-based increase in stock prices.
In fact, one of the important indicators that determines the market trend as well as evaluates the market strength is the number of stocks that increase significantly compared to the market, the number of stocks that increase back to the old peak area and the number of leading stocks that surpass new peaks.
It is not difficult to list a series of industry groups, from finance, chemicals, retail, oil and gas, technology - telecommunications... that have surpassed the peak of the year as well as the historical peak. Some large stocks can be listed as: DGC, FPT, CMG, GMD, CSV, PVS, VCB, REE, CTR, VTP, DRC, PHR, BID, CTG... The stock market's return to the old peak and surpassing the peak is just a matter of time. The favorable time will most likely take place at the end of 2024 and 2025.
On the other hand, the picture of the Vietnamese stock market in the second half of 2024 is predicted to have many bright colors thanks to positive signals from macroeconomic factors. Domestically, GDP in 2024 is forecast to reach a growth rate of 5.8 - 6% compared to last year. Import-export activities and attracting foreign direct investment (FDI) all have positive signals.
Globally, the US Federal Reserve (Fed) has been considering the timing of interest rate cuts, although the current view is still to keep interest rates at high levels in the second quarter of 2024. The first interest rate adjustment is expected to take place on September 17-18. That means that the Fed's Open Market Committee meetings on June 11-12, 2024 and July 30-31, 2024 will not have any announcements of monetary policy easing. The timing of interest rate cuts may be postponed for a longer period when the country's inflation data has not cooled down to the 2% target, except for signs of a weaker labor market.
According to the analysis team of VPS Securities, in all scenarios, from the baseline to the optimistic, the probability of the Fed cutting interest rates in the third quarter is higher. If the US monetary policy reverses and the recovery of the global economy gradually improves in the late 2024 period, the stock market will likely perform more positively.
If the US and world stock markets have increased to the old peak and surpassed the peak, it is likely that the Vietnamese stock market will also have a better acceleration, and the VN-Index is likely to reach 1,350 - 1,400 points in the third quarter.
Even Mr. Petri Deryng, head of PYN Elite Fund from Finland, said that the VN-Index is still in a slow upward trend from the bottom in the second half of 2022 until now. And with the clear positive signals, the VN-Index is likely to reach 1,700 points by the end of 2024.
Source: Vnbusiness
