Lower interest rates and improved business results of listed enterprises are among the key factors driving this positive outlook, said experts. — VNA/VNS
HANOI: Vietnam’s stock market is poised for growth in 2024, supported by lower interest rates and improved business performance.
After a period of decline and stabilisation in 2022-2023, Vietnam’s stock market is expected to witness significant growth opportunities in 2024. Lower interest rates and improved business results of listed enterprises are among the key factors driving this positive outlook, said experts.
Dinh Quang Hinh, head of the macro and market strategy department for securities company VNDirect, highlights several supporting factors, including the expected decrease in interest rates by the US Federal Reserve and the resulting inflow of investment capital into emerging and frontier markets like Vietnam.
Domestically, the production and export sectors are showing signs of recovery, with increasing orders. Expansionary fiscal policies and wage reforms are expected to boost domestic consumption, contributing to improved business performance and driving stock market growth, he said.
Tran Duc Anh, director of macro and market strategy at KB Vietnam Securities Co, emphasises that the motivation for the stock market in 2024 will be driven by lower interest rates and the anticipated growth of listed enterprises, projected at 15% to 20%.
Market valuation factors are also expected to have a positive impact, with the current market price-earnings ratio at a neutral level, serving as a basis for assessing market improvements.
Experts from FinPeace Group Joint Stock Co foresee growth opportunities, particularly towards the end of 2024.
They anticipate two distinct positive periods: from mid to late April 2024, after the first-quarter results reporting season, and the end of the year when investor confidence in the market is expected to increase.
Undervalued key stocks with potential will play a crucial role in driving the VN-Index rebound. Overcoming the important resistance level in the 1,200-1,250 range will be crucial for the market’s long-term uptrend. It is anticipated that the breakthrough of this resistance area may occur in mid or late 2024.
Recognising the significant challenges faced by Vietnam’s stock market, both domestically and internationally, Finance Deputy Minister Nguyen Duc Chi emphasised the need for proactive measures during a recent conference held by the State Securities Commission.
He urged the commission to review and update regulations in the Securities Law as part of the legal-development programme.
Additionally, he called for the revision and amendment of decrees, guiding circulars, and relevant legal regulations to adapt to market conditions.
Monitoring activities were highlighted as a crucial aspect, with the aim of detecting and strictly handling violations in order to promote transparency and a healthy market environment. The deputy minister also underlined the importance of proactive coordination with relevant stakeholders to expedite market upgrades.
These measures aim to ensure a more sustainable development of Vietnam’s stock market, enhancing its transparency, efficiency, and overall health. The State Securities Commission and other relevant parties are working together to address these challenges and pave the way for a stronger and more resilient stock market in the future.
According to the State Securities Commission, Vietnam’s stock market encountered difficulties and challenges from both domestic and foreign sources in 2023.
The first half of the year saw quiet trading with significantly decreased liquidity compared to the previous year. This was attributed to the slowdown in major economies, inflation, and tight monetary policies implemented in many countries.
However, the market experienced a strong breakthrough in the third quarter, with the VN-Index reaching its highest level of 1,245.44 points on Sept 12, marking a 24% increase compared to the end of 2022.
Liquidity in the market also improved significantly during this period, with the average transaction value per session reaching 24.6 trillion dong, an 80% increase compared to the average in the first half of the year.
Despite the positive momentum, the market underwent a strong correction and returned to around 1,100 points. As of Nov 30, 2023, the VN-Index recorded an 8.6% increase compared to the end of 2022.
Market capitalisation reached 5.75 quadrillion dong, a 10.1% increase, equivalent to 60.5% of gross domestic product.
VNDirect’s Hinh noted that the market experienced a significant adjustment in September and October, erasing much of the earlier gains.
The market faced challenges as market support faded, and factors such as the sharp increase in US government bond yields and the rise of the US dollar put pressure on the exchange rate. The State Bank issued bills to support the exchange rate in response.
The market saw a decrease in profit growth that fell below expectations, leading to some investor disappointment. The valuations also became less attractive, making it difficult to attract new cash flows.
In November, the market recovered but only managed to regain half of the earlier gains. — Viet Nam News/ANN
