VN-Index unlikely to recover old peak in September

The lasting pandemic has affected the growth of the VN-Index

Mirae Asset Securities Vietnam (MASVN) gave a very wide forecast range of 1,200-1,400 for the VN-Index in the last four months of the year. In the most negative scenario, the index can reach 1,200 points, but it can surpass the old peak with 1,440 points in the most positive scenario. (The VN-Index set a new peak of 1,420.27 points on July 2, 2021, the highest in the past 21 years).

“The market reflects the negative impact of this fourth outbreak since July. However, the disease is still a complication in major provinces and cities and remains a major variable for the economy, expected to cause continued market volatility in September,” MASVN stated.

As the pandemic has lasted for more than four months with the implementation of stricter distancing measures since the third quarter, MASVN believes that business results in the third quarter will be severely affected. However, it expects recovery in the fourth quarter with the assumption that the government will loosen distancing measures from October.

Thus, earnings per share (EPS) in the second half of the year will increase by nearly 12 per cent compared to the same period last year. With this optimistic assumption, MASVN maintains its expectation of EPS growth of about 33 per cent this year. However, if the pandemic control period extends to the fourth quarter, it is expected that EPS growth will be about 26 per cent in 2021.

MASVN believes that the banking industry is still a bright spot in terms of profits this year because asset quality is not expected to change badly when banks are still allowed to restructure loans for customers affected by the pandemic.

However, according to Vo The Vinh, head of the supervisory board of Guotai Junan Securities Vietnam, it is still early to expect the market to rebound or return to its peak.

He explained that the pressure is being shown at the main pillar group (banks) with most codes trading at the bottom in July. Prospects for the banking industry are still bright but it is no longer likely to generate sudden profits.

Groups with good momentum recently such as real estate, industrial parks, utilities, and logistics are mainly composed of small and medium-cap stocks. Therefore, the VN-Index will be slower in recovering.

Tran Minh Hoang, head of the Analysis Department of Vietcombank Securities Company (VCBS) said that the VN-Index is influenced by a number of large-cap stocks. VCBS forecast that this situation will continue in September but along with the abundance of cash flow, the index continued its recovering trend, and the VN-Index may return to the range of 1,350-1,400 points.

Meanwhile, experts of MB Securities Company (MBS) expect that the area of ​​1,285-1,300 points will be a strong support area for ​​the market in September but in the context that the economy, as well as business activities, are affected by the fourth COVID-19 pandemic, the index could hardly regain the peak.