The Year-End Wave: Riding the Stock Market Surge

For the past month, Minh Nam, a long-time stock investor in Ho Chi Minh City, has refrained from short-term trading and instead focuses on accumulating stocks when prices dip significantly. Nam’s portfolio includes a few stocks in the securities, investment, and real estate sectors, all of which are currently in negative territory. However, he remains confident in the potential for a turnaround by the end of the year. “I’ve been holding onto these stocks for months now because short-term trading in this market is incredibly challenging,” Nam explained.

Hitting the Bottom?

Many other investors share similar sentiments, acknowledging the complexities of short-term stock trading during this period. Some are starting to embrace the theory that “speculative markets are born in gloom, grow through skepticism, mature in optimism, and die in euphoria.” As a result, they opt for buying stocks with strong fundamentals, turning off their trading apps, and waiting for a more vibrant market to cash in on their profits.

Mr. Dinh Quang Hinh, Head of Macro and Market Strategy at VNDIRECT Securities Corporation, advises investors to maintain a long-term vision. He believes that market corrections present excellent opportunities to accumulate stocks. Moreover, he remains optimistic about the prospects of Vietnam’s stock market in the latter part of the year, deeming it entirely feasible for the VN-Index to surpass the 1,300-point mark before year-end.

According to this expert, several factors are supporting Vietnam’s stock market: The US Federal Reserve (FED) is expected to cut interest rates by approximately 0.75 percentage points in the final quarter; easing pressure on exchange rates and inflation allows the State Bank to shift its focus to prioritizing economic growth, increasing money supply, and maintaining low-interest rates. Additionally, the business performance of many listed companies continues to improve, and there is progress in the market upgrade process. Market peaks often coincide with active trading periods, while bottoms form during periods of low liquidity…

At a recent talk show on stock investing organized by NLD newspaper, experts analyzed the opportunities in specific sectors to provide investors with additional insights for stock selection.

Mr. Le Tu Quoc Hung, Senior Manager at Dragon Vietnam Securities Company’s Analytics Center, shared his outlook on the VN-Index reaching 1,300 points, acknowledging short-term challenges. He suggested that investors who opt for a longer-term hold strategy and can withstand short-term volatility will likely be rewarded by year-end, driven by the potential for double-digit profit growth in the latter half of the year.

“If the VN-Index plunges further, it will present a buying opportunity to accumulate stocks, with asset allocation strategies tailored to each investor’s risk tolerance,” Mr. Hung advised.

Scrutinizing Stock Sectors

In reality, the stock market’s liquidity is currently lackluster, with daily trading values struggling to reach VND 15,000 billion, just half of the levels seen in previous months. Notably, the last two sessions of the week on September 12 and 13 witnessed exceptionally low liquidity, with each session’s value only reaching VND 11,000-12,000 billion, the lowest in many months.

Mr. Tran Quoc Toan, Branch Director at Mirae Asset Securities Company, expressed his concern about the market’s poor liquidity. While the VN-Index’s P/E ratio is not cheap, it is reasonable. He remains hopeful for a market surge fueled by positive factors such as sustained low-interest rates, the anticipated implementation of regulations allowing foreign investors to purchase stocks without pre-funding by the end of September, and the FED’s rate cuts.

Among the various stock sectors, many investors are pinning their hopes on the banking group, expecting a more dynamic performance after a period of accumulation ranging from six months to a year. Mr. Phan Thanh Nghiep, Senior Customer Manager at DNSE Securities Company’s Ho Chi Minh City Branch, concurred with this view. He cited several bank stocks, including TCB, STB, and VPB, which currently have P/B ratios below 1.2, a safe criterion for medium and long-term investment.

“The challenges faced by the banking sector have already been reflected in stock prices over the past months. With prices seemingly bottoming out, long-term investors may find this a rewarding opportunity, given the brighter outlook for profit growth towards the end of the year,” assessed Mr. Le Tu Quoc Hung.

However, Dr. Nguyen Anh Vu, Head of the Finance Department at Ho Chi Minh City University of Banking, offered a different perspective. He pointed out that while credit growth is expected to surge impressively by year-end, potentially boosting bank profits, there are concerns about the circular on debt restructuring in the banking sector, which will remain effective until the end of 2024. What will the picture of bad debts look like after that?

Dr. Vu elaborated: “In the past, many banks’ profits were significantly bolstered by insurance sales through their channels. However, this segment is still struggling, impacting non-interest income. As a result, bank stocks may struggle to break out.”

In contrast, the VNDIRECT expert suggested that investors take advantage of this period to increase their stock holdings around the support level of 1,250 points. He recommended focusing on sectors with positive growth prospects towards the end of the year, such as banking, securities, export-oriented industries (garments, seafood, wood products), and industrial real estate…