The Optimal Moment 2024 Asset Management Event was held on the morning of April 5, 2024.
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Mr. Nguyen Dong Hai – CEO of TCAM shared that interest rates are key to understanding upcoming investment trends. Currently, only the US maintains high interest rates. If US interest rates remain high, this may not be the ideal time to invest, but it is unlikely that US interest rates will continue to stay at this level indefinitely.
There are two reasons why US interest rates must fall. The Federal Reserve, which is the body that sets interest rates, uses data on inflation and economic indicators, including employment figures, to make its decisions.
Mr. Nguyen Dong Hai – CEO of TCAM
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In this respect, although inflation has shown signs of increasing, it has decreased significantly over the past year. The trend is a reduction from a peak of 7% to 3%. “It is uncertain at what level the Fed will cut rates, but it is likely to be below 3%,” Hai predicted.
In terms of economic data and employment, the US economy grew by 1% in the first quarter, which is lower than the previous quarter, indicating a slowdown in the US economy. Employment figures also fell short of expectations, and it has become more difficult for people to find work.
With this long-term view, TCAM is certain that the US will have to cut interest rates. The question is how much and when?
Hai emphasized that high US interest rates are a major obstacle, but the trend cannot continue indefinitely. Therefore, the ideal time is approaching. If investors wait for the US to cut interest rates, they may have to buy at higher prices.
The level of 1,200 for the VN-Index is very low in the 5-year cycle
Returning to the Vietnamese market, Mr. Ho Quoc Binh – Head of Portfolio Management at TCAM presented on the ideal time from the perspective of the Vietnamese economy.
Accordingly, the Vietnamese economy “has passed the bottom”, and many large financial institutions have also predicted that the country’s GDP growth rate could reach 6-6.5% this year. Recently, export activities have not only returned to positive growth but have also continuously recorded a trade surplus. Despite market difficulties, the disbursement of FDI capital has been very strong. In addition, the number of domestic and international tourists visiting Vietnam has also increased steadily.
 Mr. Ho Quoc Binh – Head of Portfolio Management at TCAM
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In 2023, investment disbursement reached a record of over 625 trillion VND. Public investment disbursement in 2024 remains positive.
Where is the stock market at? The economy is changing positively, but the market is discounting 20% from the level of 1,500. Unlike many other countries where the US stock market has continuously reached new highs, the level of 1,200 for the VN-Index is very low in the next 5-year cycle.
In terms of valuation, Binh cited figures showing that the average PE in Vietnam is 15 times, while the current PE is 13.7 times. Corporate growth has not been strong, so the current valuation is low based on low profits. When EPS (corporate earnings) increases, the growth potential will be significant. As for PB, this valuation ratio is at its historical low.
In 2023, Vietnamese enterprises recorded a negative growth of 5%. This year, growth is forecast to be 15-20%. Corporate profits increased strongly in the fourth quarter of 2023 and continued to grow in the first quarter of this year.
On the other hand, Vietnam is a country with a high level of savings deposits as a percentage of GDP, over 60%. In the trend of declining interest rates, interest rates in the coming period will be from 4% to 4.5%. Depositors will have to find other investment channels.
The flow of money into the stock market will be even stronger when interest rates decline. The figures are showing the potential of the stock market channel, as new account openings have surpassed those in previous years, the scale of capitalization on GDP has increased, and liquidity has increased strongly, with an average value of over 15 trillion VND in the last 3 years.
Notably, more than 104 trillion VND is being held by investors at brokerage firms, as of the first quarter of 2024.
Vietnam is also facing the opportunity to upgrade its market status. When upgraded to emerging market status, funds will allocate more money. It is predicted that at the end of the third quarter or fourth quarter, when the bottlenecks are resolved, FTSE will upgrade Vietnam’s market status. After the upgrade, 1.5 billion USD from funds benchmarked to FTSE will be poured into Vietnam in 2026.
Speaking about potential sectors, Binh highly appreciates the following sectors: The banking sector with strong domestic strength and growth with stable asset quality; the export, retail, and materials sectors will benefit from the trend of recovering consumption; the industrial park sector will benefit from the trend of foreign direct investment shift, technology, and Vietnam’s competitiveness thanks to its quality workforce and low costs. In addition, there are undervalued stocks with high dividends.
