Stock market gaining robust foundation

Tran Hoang Son, market strategy director VPBanks Securities

This year marks a significant transition, as listed companies have already established a profit baseline. The subdued business performance of 2023 paves the way for a resurgence in profits for various growth-oriented sectors in 2024. We are currently in a new uptrend with dual focal points.

Firstly, in terms of policy orientation, we are witnessing a growth impetus for at least the next two years, particularly in the emerging wave. Secondly, the recovery of businesses is ensuring a reasonably robust growth in 2024.

The stock market has undergone a fairly lengthy upward wave since November, with four consecutive months of positive movements, and globally, the stock market has seen eight consecutive months of gains. Investors should be prepared for one or two significant correction waves, followed by a resumption of the upward trend. However, caution is advised regarding short-term market confidence and pre-calculations of market resistance and support levels.

It is crucial to note that the stock market has already entered this new growth cycle. The valuation of many industry segments has recovered early in the recent period, such as securities, banking, and steel might no longer be significantly undervalued compared to the latest 12-month accumulated profits.

Hence, there will be adjustments in pricing before new business results are unveiled, contributing positively to supplementing market data for reevaluation.

The leading sector remains banking. With its large market capitalisation, influencing the index and attracting the largest trading volume, the banking sector contributes nearly 30 per cent of the market’s total liquidity, indicating significant attractiveness. The second sector is the securities industry, favoured by investors in 2023 and early 2024 due to recovery and clear profitability. The third sector includes construction and building materials, the steel sector included. Additionally, infrastructure construction is noteworthy as public investment is being emphasised.

Regarding small industry sectors, special attention is on the prospects of industrial real estate with the wave of capital investment shift from China. Additionally, a series of positive factors are influencing industrial real estate, such as the highly regarded foreign investor perception of Vietnam’s transportation infrastructure, the robust initiation of public investment through the commencement of various expressway projects, the increasing rental prices in industrial zones, and the return of investments from Taiwan, South Korea, and Singapore into Vietnam.

Smaller but influential groups impacting the index include large-capitalisation stocks that foreign investors net selling in 2023, such as Saigon Beer-Alcohol-Beverage Corporation, MWG, and Vinamilk. In 2024, as the US Federal Reserve is beginning to lower interest rates and capital may flow back into these stocks, potentially leading to a significant market recovery if the group gains momentum.

Ho Sy Hoa, research and investment director DNSE Securities

When looking at the valuation of listed companies, the big-cap group is currently cheaper than mid-cap when comparing their valuations to the median. For example, the big-cap group is around 20-30 per cent cheaper than the median, while the mid-cap group is already higher than the median.

Considering this valuation, for investment in 2024, I would choose the big-cap group first because it is currently undervalued. Within this group, I would select some stocks. We have talked a lot about the limited space of monetary policy when interest rates have dropped significantly. To ensure a GDP target of 6-6.5 per cent, there is still a lot of room for monetary policy.

Therefore, I also focus on choosing the construction investment sector because significant public investment will contribute to achieving the GDP growth target.

The next sector is the securities industry, which benefits from a low-interest environment. The short-term prospects of the stock market in 2024 are also positive.

Regarding specific companies for 2024 investment, I agree with Tran Hoang Son that Coteccons would be a suitable choice in the construction and investment sector due to its financial status and potential for development. In the securities sector, listed DNSE is the preferred choice for me. Based on the argument that if securities companies are in a race for market share, with DNSE’s achievements in 2023, we have shown positive growth with a rate of 20-30 per cent.

With such growth, I expect DNSE to become a formidable competitor in 2024. Additionally, the expected profit from the initial public offering with a compound annual growth rate of 40-50 per cent makes DNSE a personal choice for me in the securities sector.

Pham Huyen Trang, stock analysis director SSI Securities

Margin reports not being tight imply that investors have not fully utilised their buying. Despite the lowest savings interest rates in the past decade, personal deposits in credit institutions continue to increase. Investors’ funds are available.

However, they are not truly enthusiastic about entering the stock market at the current time. Although there have been several sessions with high liquidity, averaging over $1 billion since October 2023, the average has not exploded.

The investor sentiment, after being reinforced by government policy measures and the current interest rate cuts by banks, requires time for observation to gauge how effectively these supports are being absorbed. In addition, investors are concerned about and contemplating questions about the recovery of the real estate market this year, non-performing loans in banks, and the corporate bond market.

Investors have lost confidence due to assets being stuck in the sluggish real estate market. Now, they need to focus on internal factors progressing, recovering, and growing, alongside considerations of the macroeconomic resurgence and potential upgrades.

The steel, retail, and securities sectors, and particularly industrial real estate, could lead not only this year but also in 2025. Industrial real estate is entirely different from real estate and has an excellent foreign capital flow into the market. In the long term, the noteworthy sector is consumer goods, even though short-term challenges may arise, I believe it will remain stable as Vietnam possesses a golden population.