Positive Outlook Amid Global Uncertainties
Despite current geopolitical uncertainties and barring major shocks, fundamental forecasts suggest a recovery for the global and regional economy, along with a modest rebound in Vietnam's economy.
Foreign Investors and Government Policies
After a continuous net sell-off phase with a total value of nearly VND 19 trillion in 2023, foreign investors are likely to return to net buying on the stock market (TTCK), anticipating the "market upgrade" wave from late Q1/2024. Strong signals from the Government and the State Bank of Vietnam (SBV) is to boost credit growth and "inject money into the economy" to support and stimulate growth. The stock market investment channel could strongly attract investment capital, and the VN-Index may rise to the 1,250 – 1,350 point range in 2024.
Global Monetary Policies and Positive Signals for Vietnam
While the U.S. economy's 2024 outlook appears relatively bleak, lower-than-expected inflation and robust economic indicators from businesses data and the unemployment rate have allowed the Federal Reserve (FED) to adopt a "dovish" policy stance for 2024, with a scenario of cutting interest rates 3 to 4 times, from 5.5% to around 4.6% after the scheduled meeting on September 18, 2024.
Forecasted interest rate cuts by various central banks in Europe and the U.S. are positive signals as global inflation shows signs of decelerating. The SBV also plans to boost credit growth from VND 13.5 trillion in 2023 by an additional VND 2 trillion in 2024 to support and stimulate economic and business activities after the challenging period of 2022 – 2023.
Vietnam's Production and Investment Activities
Vietnam's manufacturing activity improved in the last months of the year after a prolonged "stagnation" phase. The processing and manufacturing industry has shown positive signs. Industrial production contracted while foreign direct investment (FDI) emerged as a bright spot. Economic growth in 2024 is expected to benefit partly from ramped-up construction activities, infrastructure projects, and key national projects funded by the state budget. Liquidity and capital flow bottlenecks in the financial and real estate markets are gradually being resolved, leading to significant progress. The investment environment has become more favorable, not only for domestic but also for foreign investors.
VN-Index Projections
The stock market's 2023 performance reflects the state of the economy, marked by two distinct phases: recovery from a low base from late November 2022, reaching 1,240 – 1,250 points, followed by a consolidation phase from 1,020 – 1,025 points to 1,130 points in late 2023, before rebounding to 1,150 – 1,155 points in the first trading week of 2024. Stock groups with favorable 2023 business results and projected strong growth in 2024 include Financials, Chemicals, Steel, Oil & Gas, Technology, and Retail.
Investment Opportunities and Stock Selection
The investment environment has become more attractive with numerous opportunities from unique stocks representing sectors such as Financials, Seaports, Chemicals, Agriculture, and Utilities. In 2023, although the VN-Index increased only 12% compared to the start of the year, many stocks saw strong gains, such as CTD, BMP, HAG, DGC, HPG, SSI, DTD, CSV, and PVS. In 2024, the opportunity to buy and hold stocks appears even more evident, especially for undervalued stocks with good revenue and profit growth potential, which are also targets for foreign and index investment funds.
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(*) Disclaimer: This report is intended to provide information for investors' reference only. The views, forecasts, and estimates in this report reflect the author's opinions at the time of publication and are subject to change without notice. Investors should independently assess the information in this report.
