The Ultimate Guide to Stock Picks: How to Profit from Rising Wages

The forecast for the remaining six months of the year is positive, with experts agreeing that the economy has improved and is ready for strong growth in the latter half of 2024.

Wage increases will stimulate spending and shopping

Assessing the market for the second half, Mr. Huynh Hoang Phuong, a finance expert at FIDT Joint Stock Company, believes that the retail-consumer sector is expected to grow well from now until the end of the year. This prediction is based on the recovery of production and the active recruitment efforts of businesses.

One factor that will drive up consumption is the wage increase implemented in July. Higher wages will lead to increased spending after a long period of frugal consumer behavior. Additionally, the year-end is also a peak season for shopping and tourism.

Increased spending will boost other production and business activities. As a result, the banking sector is also expected to perform well, and bank stocks will remain the “king of stocks” driving the market. However, experts caution that we must wait for the release of the six-month business results in the next few days and, most importantly, assess the quality of the banking sector’s assets during this financial reporting season.

Along with banking, retail, and consumer goods, the real estate sector, despite its challenges, is expected to perform well in the coming months due to the economic recovery and the simultaneous implementation of three supportive laws from August 1: the Land Law, the Housing Law, and the Real Estate Business Law.

Additionally, transport stocks are expected to bring profits to investors in the latter half of 2024, as vibrant import and export activities continue to attract investors. The securities group, despite facing many negative influences earlier in the year, is a stable and potentially lucrative sector with attractive prices. Moreover, the expected market upgrade in the last quarter of this year will contribute to the growth of securities stocks.

Which stocks to choose?

AFA Capital Vietnam’s investment strategy report for the second half of 2024 also identifies retail and consumer goods as an industry of interest for the remaining months of the year, along with sectors with significant growth potential, such as seafood, electricity, and industrial real estate.

AFA Vietnam’s analysis shows that in the first half of the year, the growth of retail goods and services was not particularly impressive due to the slow economic recovery, and the positive performance of the accommodation services component did not significantly impact the overall index. Additionally, low credit growth across the economy led to a decrease in employment and income, affecting purchasing power and consumer spending.

However, from July onwards, the new wage level is expected to be a crucial factor in stimulating shopping and consumption. Moreover, the retail, service, and consumer goods sector is entering its peak season, as tourism is typically more active during the latter half of the year. AFA Vietnam boldly suggests three stocks to watch in the retail and consumer goods sector for the second half of 2024: MSN of Masan, PNJ of Phu Nhuan Jewelry, and DGW of The Gioi So Company.

SSI Securities’ July 2024 strategy report also predicts a continued growth trend in the latter half of 2024, despite the presence of risk variables. This report also expresses confidence in the retail, consumer goods, and export sectors, highlighting a series of potential stocks in these fields.

At the top of the list is PNJ, with an expected price increase of about 18%, driven by the recovery of jewelry demand. Additionally, with small-scale gold companies closing or limiting their operations, jewelry retailers have the opportunity to solidify their leading position by expanding their market share.

MSN, representing Masan, is also on the list, with an expected price increase of 21.8%.

SSI believes that Vietnam’s long-term consumption story remains positive. MCH, representing Masan Consumer, has demonstrated exceptional growth over the past year and continues on this trajectory. WinCommerce, a leading retailer, is expected to improve its profits in 2024, as the company approaches the breakeven point for net profit, which it achieved at the end of 2023.

Simultaneously, MSN is also expected to benefit from foreign capital inflows as Vietnam’s stock market is upgraded.

VHC, representing Vinh Hoan, is another potential stock, with an expected price increase of 20.5% as demand recovers in key export markets.

Mr. James Cheo, Director of Investment for Southeast Asia and India at HSBC’s Global Asset Management and Specialized Banking Services, believes that Vietnamese companies’ profits continue to recover robustly from the lows of 2023. If profits remain strong, the stock market can maintain its upward trend.

Vietnamese stocks have been among the better-performing markets in Asia year-to-date. Currently, stock valuations are still considered low compared to demand.