New Year, New Opportunities for Stock Trading?

After a tumultuous 2023, the investment community is looking towards a new year with optimism.

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At the beginning of 2024, Mr. Nguyen Dinh, a young investor, decided to open a stock trading account and put in a small amount of capital. Having a stable income from self-employment, but recently he saw the prospect of his shop’s growth difficult as customers tightened their spending; he thought he needed to diversify his investment channels.

The idea of investing in stocks emerged when he remembered his friend who worked in banking and participated in the market from the 2020-2022 period with billions of dong in capital.

In 2024, the tense pressures had passed, but the path to economic recovery still had many obstacles. In contrast to 2023, which started with many financial market constraints domestically and headwinds from the global macroeconomic picture, 2024 was seen as “easier” in most aspects compared to the previous year.

Entering the new year, the market is looking forward to the key phrase of the Fed’s interest rate cut. The global macroeconomic context, specifically the US, is favorable for the stock market, as signals about the Fed and central banks of many countries seem to have completed the interest rate hike process and become increasingly clear. Economies and stock markets are anticipating that the Fed will begin the interest rate cut process from mid-2024.

In the domestic market, Vietnam’s management policy will continue to loosen monetary policy to support economic growth.

The macroeconomic outlook will recover from the low level of 2023 thanks to the positive confluence of fiscal and monetary policies, which will begin to have a good spillover effect on other economic components in 2024. The world’s demand for orders will recover after 2023, reducing inventory and improving consumer confidence, thereby promoting consumer spending and retail sales.

For the stock market, analysts believe that 2024 is ready to accelerate. The PE ratio of the Vietnamese market is currently around 11x. This is a fairly attractive valuation if based on the long-term prospects of the economy. In addition, the market is also near the bottom of the year, making it an ideal time to accumulate stocks.

Whether the market enters a long wave or not depends on the true health of the economy.

Furthermore, the Vietnamese stock market is also facing a changing trend in terms of quality since the prospects of upgrading to emerging markets are very close.

If the issue of prefunding and being added to the upgrade list by FTSE in September 2024 can be resolved, eligible Vietnamese stocks will be included in FTSE’s indices (such as FTSE EM Index and FTSE Global Index).

The most direct impact is that ETF funds using this index as a reference will automatically buy Vietnamese stocks.

In the long run, when upgraded, the openness, investment capacity, and transparency of Vietnam will reach a new high, attracting more money from various funds and investors to the stock market.

Individual investors are also expecting positive things in the new year.

After many years accompanying the market, Mr. T.K (Ho Chi Minh City) expects that 2024 will not have as much tension as the previous year. Investors expect businesses to have a more favorable business environment to operate and increase profitability. Therefore, the VN-Index will reach 1,300 before the end of the year.

Individuals are waiting for the recovery of export-oriented groups and the recovery of consumer activities to boost retail stocks.

Mr. N.X.N, another experienced investor, is looking forward to many positive developments in the stock market in 2024: maintaining low interest rates, increasing liquidity with many billion-dollar sessions, upgrading the market towards the end of the year, and KRX (Korea Exchange) entering into operation. He expects the VN-Index to reach 1,400 points.

Despite the many prospects, a negative scenario is still put forth for investors to have a cautious view.

In the pessimistic scenario, the US and European economies fall into recession with the potential for a crisis. The Fed will cut interest rates more aggressively, causing negative impacts on investor sentiment in the global market due to concerns about the crisis. In negative periods of the global stock market, the Vietnamese stock market often has a high level of correlation.

In addition, political risks affecting logistics costs will put pressure on global inflation.

Difficulties include: difficult credit funding pushed into the market due to concerns about bad debts of real estate businesses, unresolved pressures of overdue bond payments, and pressures of bond maturities of large private corporations, exports and imports continue to be sluggish due to low consumer confidence in the US and EU.

Idle money can choose other investment channels such as gold (with prospects for price increases in the context of political risks and the weakening of USD as the Fed begins to cut interest rates) or residential real estate assets to meet actual housing needs.

There are still many considerations, but market participants still have expectations for a positive year.

Looking ahead, the stock market is aiming for higher goals. According to the market development plan, by 2025, the market capitalization of stocks will reach 100% of GDP, the bond market debt will reach at least 47% of GDP (of which corporate bond debt will reach at least 20% of GDP), and by 2030, the market capitalization of stocks will reach 120% of GDP, the bond market debt will reach 58% of GDP (of which corporate bond debt will reach at least 25% of GDP).

The derivative stock market will grow at an average rate of about 20% – 30% per year in the 2021 – 2030 period.

The number of securities trading accounts of investors in the stock market is expected to reach 9 million by 2025 and 11 million by 2030, with a focus on developing institutional investors, professional investors, and attracting the participation of foreign investors.

In recent years, the level of interest and coverage of the market has been wider than before. From the prejudice of fraud and easy money loss, the stock market is gradually becoming a familiar part of society. Investors are gradually having more reasonable expectations for the market, not just buying stocks to multiply their investments.

In the short term, the market is uncertain, but in the long term, the stock market is still wide open with upward and qualitative prospects. The key is for investors to patiently invest systematically to take advantage of the growth potential in the coming years.