According to KBSV, the current group of securities has partly reflected a positive outlook in the second half of 2024. Along with the information gap related to the progress of implementing KRX, stocks may record short-term adjustment and accumulation periods.
Despite many efforts, the Vietnamese stock market still missed the important threshold of 1,300 points, thereby failing to establish a sustainable uptrend. The upward momentum of the main index encountered many strong resistances, combined with the lack of supporting momentum due to the somewhat divergent developments among industry groups. Among them, the group of securities stocks seemed unable to regain their form after the "wave" of strong increases at the beginning of the year.
Stocks have performed well in the first 4 months of 2024.
After revealing a bright picture of first quarter business results plus the “dopping” of capital increase games. However, since the end of April until now, this group has shown a somewhat “lost steam” performance compared to other industries. Transactions have been gloomy, many codes cannot even maintain the previous price increase.
In fact, extending the recovery is not simple for the securities group, especially in the context of gloomy market liquidity when cautious sentiment prevails. According to records, liquidity in the past few months has maintained a downward trend in both volume and transaction value. There have been almost no billion-dollar trading sessions, instead, the common matched liquidity level is only around 12,000 - 15,000 billion VND.
According to some experts, the gradual increase in interest rates has more or less affected the market, especially the group of securities companies when lending activities and the use of margin are limited, especially in the context of many unpredictable market fluctuations. In addition, the lack of motivation from margin may make it difficult to untie the liquidity bottleneck in the short term. This may affect revenue from brokerage and margin lending activities.
Along with that, the trend of capital flow shifting in the world will continue to be maintained. The strong net selling momentum of foreign investors also affects domestic sentiment. According to records, the cumulative net selling value since the beginning of 2024 on HOSE has surpassed the record high net selling level of the whole year 2021, approximately 59,000 billion VND. Although the VN-Index has received great support from domestic investors in the past, it has not been able to overcome the 1,300 point barrier.
The failure of the domestic market to break through will significantly affect the self-trading portfolio, which has brought significant profits to securities companies in recent years.
In addition, the delay of the KRX project or the pending upgrade to emerging market status are also not really positive factors. The "quiet" of the securities industry's stock group in recent months partly shows the caution and waiting of investors with market fluctuations.
There is not much room for short-term growth, medium- and long-term prospects remain positive
In a newly updated report, KB Securities Vietnam (KBSV) noted that the current valuation of securities stocks partly reflects a positive outlook for the second half of 2024. Currently, stocks in the industry are all trading above or approaching the std+1 level of the 5-year P/B average. Along with the information gap related to the progress of KRX implementation, the securities stocks group may record short-term adjustment and accumulation phases.
However, the prospects of the securities industry are still considered relatively optimistic in the long term. KBSV maintains a positive view on prices and liquidity for the Vietnamese stock market in the second half of 2024. According to KBSV, the overall market profit growth could reach about 10% this year and valuations are still at a reasonable level.
The base interest rate after the increase can still stimulate demand for securities investment when the deposit channel does not bring attractive enough profits. In addition, the expected moves to reduce interest rates from major central banks in the world in the second half of 2024 and 2025 will narrow the interest rate gap with Vietnam, thereby possibly affecting the change in the net selling movement of foreign investors that has taken place in the recent period.
In particular, upgrading the market will be a driving force for the industry in the medium and long term. In KBSV's view, the possibility that the Vietnamese market can be decided to be upgraded in September 2024 is not high because changing the transaction process without requiring pre-funding requires time for the authorities to build a mechanism as well as for securities companies to prepare resources, systems and appropriate risk management plans.
However, with the government's determination, KBSV expects that Vietnam's stock market will be upgraded according to FTSE Russell's assessment in 2025 and officially added to the FTSE emerging market index basket in 2025 - 2026.
In addition, the capital increase "game" continues to heat up, and securities companies are expected to continue to increase capital in the rest of 2024. According to KBSV's synthesis, the group of observed securities companies is expected to increase a total of more than VND 26,000 billion in charter capital, equivalent to an increase of ~ 23% compared to the first quarter of 2024 through issuance to existing shareholders, private issuance and ESOP.
The new capital increase will boost the business activities of securities companies, including increasing resources for margin lending; increasing resources for investment as well as investment in systems, technology and human resources.
Source: CafeF
