VNDirect believes that investors should increase their stock holdings as pressure from exchange rates and interest rates on the interbank market has cooled down.
In the recently published June outlook report, VNDirect Securities assessed that the gap between VN-Index's E/P and 12-month deposit interest rates is remaining high compared to history, showing that the stock investment channel is still very attractive in the current low interest rate context.
The valuation of VN-Index is quite reasonable compared to emerging markets in terms of P/E ratio and relatively cheap in terms of P/B ratio. However, the trend of improving business results in 2024 will be a strong supporting factor for the stock market. VNDirect maintains its forecast of net profit growth of companies listed on HOSE at 16-18% over the same period and the index will reach 1,300 - 1,350 points in 2024.
In particular, the analysis report clearly shows that there is a negative correlation between the 10-year Government Bond Yield and the P/E ratio of the VN-Index. However, after approaching the important milestone around 3%, the yield of Vietnam's 10-year Government Bond has adjusted down to 2.85%. This will somewhat ease the market's previous cautious sentiment.
VNDirect believes that the stock market is converging conditions to return to a short-term uptrend thanks to a number of factors.
The first, The DXY index has weakened and the gap between international gold prices and domestic gold prices has narrowed, which will help ease exchange rate tensions.
Monday, after hitting the important 3% mark, the 10-year government bond yield has turned down and this will support market sentiment.
Tuesday, Vietnam's economy recorded a stronger recovery in the manufacturing sector, thereby reinforcing the positive profit growth picture of listed enterprises in the coming quarters.
Market risks still revolve around the FED’s monetary policy. Specifically, if higher-than-expected inflation figures are announced, it will slow down the FED’s decision to lower interest rates and thereby increase pressure on Vietnam’s monetary policy.
Investors should increase their weight in 4 groups with supporting stories.
VNDirect analysis team recommends that investors should increase their stock holdings as pressure from exchange rates and interest rates on the interbank market has cooled down.
“Investors can increase their stock exposure when macro indicators improve, paying special attention to industry groups with supporting stories such as steel, real estate, sugar and technology", VNDirect analyzed.
Regarding steel stocks, VNDirect believes that steel demand is expected to grow again thanks to the real estate market continuing to "warm up" and gross profit margin is expected to improve in the second half of 2024.
Real estate stocks are also worth paying attention to as real estate demand is showing many signs of recovery and the Government is promoting support policies.
Technology stocks, typically FPT, are expected to continue to "lead the wave" thanks to the solid growth of core business activities and semiconductor prospects.
The sugar industry is also positively evaluated by the analysis team thanks to the benefit from high domestic sugar prices.
Source: CafeF
