At the “HoSE welcomes newcomers, what opportunities are there for investors?” talk show recently, experts said that bank stocks are always the focal point of the Vietnamese stock market and especially at the beginning of 2024 re-assumed their leadership role.
Could the VNIndex reach 1,400 points in 2024?
According to Mr. Tran Thang Long, Director of Analysis at BIDV Securities Company (BSC), the banking stock group accounts for 40% of the market capitalization and contributes 67-68% of the profits of listed companies on the stock exchange in 2023. In 2023, banking stocks were not outstanding, but at the beginning of this year, many stocks in this industry reached their all-time highs. The overall valuation of the banking industry through the P/B ratio is still relatively cheap compared to the average of the past 5 years.
Mr. Tran Thang Long – Director of Analysis at BIDV Securities Company (BSC)
Explaining why money is flowing into banks, Mr. Vo Hoang Hai, Deputy General Director of Nam A Bank, said that this industry has received quite a lot of positive information since the beginning of the year, especially regarding the credit growth limit being removed. The State Bank has a new credit granting mechanism when it allocates the entire “room” from the beginning of the year instead of each quarter like last year, based on ratings. In addition, during the operation, there will be flexible policies for some banks that need additional “room” to support the recovery of the economy. This has a positive impact on banks as net interest income is still the main source of revenue.
Mr. Vo Hoang Hai – Deputy General Director of Nam A Bank.
“Last year is a difficult year, but we have overcome the challenges. This year is quite favorable as a series of interest rate reduction commitments have been made by many big commercial banks. The foreign exchange market and the stock market are closely related. Recently, the large discrepancy between the VND and USD interest rates has put pressure on the exchange rate and caused net selling activities from foreign investors. This year, when developed countries stop tightening monetary policy, exchange rate pressure will not be too significant. This is positive news supporting the market,” Mr. Hai said.
The same view is shared by Mr. Tran Thang Long, who also believes that 2024 is a relatively optimistic year with many favorable conditions for the market and the recovery of businesses. The capital flow of investors has an advantage in participating in the market when interest rates are low. “According to our calculations, this year, in the optimistic case, VN-Index can reach 1,400 points. Banks are still the stocks with high potential to continue leading the market. This is the industry with the largest proportion of market capitalization and is relatively cheap at the current time. Especially, many banks have good operational plans this year,” Mr. Long forecasts.
Good businesses, attractive stock exchange transfers for investors
Regarding the story of market upgrading, Mr. Tran Thang Long said that more companies need to be listed on HoSE. Transferring to HoSE is an important step for companies. It’s not just about listing shares, but behind that is meeting strict requirements from regulators regarding capital, information disclosure, profits… These factors contribute to making listed companies and banks more transparent and increase recognition with investors. “Observing the past years, I also noticed that many companies have performed better after listing on HoSE,” Mr. Long shared.
According to Mr. Phan Nguyen Huu Phuong, Director of Ho Chi Minh City Branch – DNSE Securities Company, from the perspective of individual investors, they like the story of companies with good financial performance and preparing for the stock exchange transfer. Although regulatory agencies always encourage companies to list shares on the stock exchange, in reality, there were almost no companies listed on HoSE in the past year. Only at the beginning of 2024 did the wave of transfers from UPCoM to HoSE begin, including NAB of NamABank, and it’s been a long time since a bank transferred to HoSE.
Mr. Phan Nguyen Huu Phuong – Director of Ho Chi Minh City Branch – DNSE Securities Company
This expert believes: “The transfer to HoSE helps attract investment capital from individual investors and foreign investors. This is an opportunity for businesses when the market in 2024 is more positive, and listing at this time is relatively suitable to raise capital from the stock market.”
As the first bank to transfer to HoSE this year, Nam A Bank has had a meticulous preparation. Mr. Vo Hoang Hai said that the transition process from UPCoM to HoSE is calculated over the years because it involves many standards for information disclosure, financial indicators, transparency…
Transferring to HoSE also brings opportunities to access foreign investors. Mr. Hai shared that in practice, during the process of transferring to HoSE, NAB has also attracted a lot of foreign investors’ attention. “When entering the big playground, we will have access to a larger capital market,” Mr. Hai said.
