Weighing up stock appeal in June and beyond

June 04, 2024 | 10:55
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Le Duc Khanh, director of Analysis at VPS Securities, delves into market prospects and stock appeal in June and beyond.
Weighing up stock appeal in June and beyond
Le Duc Khanh

A stock rally in May helped relieve investor concerns after a bearish April. How do you perceive the market prospects in June?

Despite concerns related to global geopolitical tensions, the US Federal Reserve’s caution over cutting interest rates, and volatilities regarding USD-VND exchange rate and gold price, investor sentiment has bolstered, as the money streams flowing into the market have seen improvements.

Accordingly, if April was the month of corrections when the VN-Index receded from its short-term peak of 1,290 points to the supportive zone between 1,165-1,170 points, then May was an important period for the market when it once again confirmed the uptrend, with the rally going from the 1,210-1,215 point zone to 1,280-1,285 points.

Challenges and foreign net selling may make some investors still hesitant about the stock market trend, yet I believe that the VN-Index is likely to maintain positive developments, reaching 1,290 - 1,300 points in the first two weeks of June.

I expect a more positive scenario as the second quarter business result announcement season approaches, along with anticipated positive macroeconomic data soon being released.

What is the impact of exchange rates on the stock market?

Controlling exchange rates has always been a top priority for the government and the SBV.

Though the USD-VND exchange rate has surged considerably and currently stands at a fairly high level, the economy and the monetary market are likely to maintain positive movements in June and Q3 of 2024.

This period is pivotal to accelerating disbursement of public investment sources, boosting credit growth, and stimulating import-export activities, helping the economy extend growth momentum after the GDP grew 5.66 per cent in Q1.

In my view, the current concern over exchange rates is not a factor that can strongly affect the stock market as in fact the cash flow into the market has been stable, focusing on the fields with rosy prospects to grow from a low base in 2023 such as steel, chemicals, oil and gas, and retail. In the current stage, it can be said that the impact of exchange rates on the stock market is moderate.

What factors do investors need to pay attention to if they invest in the stock market at the current time?

The VN-Index has inched up around 12 per cent in the year to date. The stocks with outstanding price increases include the technology-telecommunications tickers such as FPT, CMG, ELC, and CTR; tickers of the chemical and natural rubber group such as DGC, CSV, LAS, DDV, and GVR. In the steel, oil and gas, finance and insurance industries, there are also stocks with outstanding price hikes compared to the general market, such as VGS, BSR, or PVI.

Market developments show that flexible trading, striving to best avail of market ups and downs to adjust the proportion of stocks held are essential to achieve high investment efficiency.

Investors must not only pay attention to choosing the right potential stocks, but also need to pay attention to portfolio restructuring.

The polarisation of money streams reflects investors’ diverse sentiments. What groups of tickers deserve attention in your view?

Among the priority investment sectors this year, I highly appreciate large-cap groups with a large number of stocks in circulation such as finance, chemicals, technology-telecommunications, petroleum and basic resources.

The economy is recovering, capital and credit bottlenecks are gradually removed, helping tickers of financial services companies such as securities and insurance firms entice investors thanks to their positive prospects.

The room for price upsurge of stocks differs, the investors need to pay attention to how to best allocate capital, prioritising stocks with attractive valuations.

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By Hoang Anh

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