VIETNAMESE STOCKS HAVE NOT RECOVERED MUCH COMPARED TO THE WORLD, LONG-TERM PROSPECTS REMAIN POSITIVE

Experts evaluate the outlook for the remaining months of the year, stating that Vietnamese businesses hit a low point in Q2 business results, gradually began to recover in Q3, and are expected to see strong growth in Q4. The stock market always presents both short-term and long-term opportunities, depending on investors’ preferences and strengths. (Mr. Le Quang Chung – Left)The Vietnamese stock market has just experienced a strong recovery, with many investors achieving significant profits. However, whether this upward momentum will continue in the coming period is what many investors are currently concerned about. At the Finance Street Talkshow on VTV8, Mr. Le Quang Chung, Deputy General Director of Smart Invest Securities JSC (AAS), shared insights on current stock market trends and stock investment opportunities.Editor Mui Khanh Ly: In recent times, the global financial market has strongly recovered and has achieved significant growth. So, in your opinion, what direction will the global financial market take in the coming period?Mr. Le Quang Chung, Deputy General Director of Smart Invest Securities JSC (AAS): In 2023, the Chinese market has been largely flat, while the US stock market has risen back to near its 2022 peak, the European market has continuously broken all-time highs, and the Japanese market in 2023 has seen strong growth, approaching its 1989 peak… In the coming period, the global financial market is forecast to show a clearer sideways trend, based on assessments of potential hidden risks. And currently, global aggregate demand has not truly improved, which will greatly affect businesses. At the same time, after a strong rally, I believe the global stock market will enter a correction phase in the short term.So, based on data from previous post-global financial crisis periods, how have market recoveries from the bottom typically unfolded?According to our statistics, post-crisis recovery waves are usually very steep, rising by 50-60% compared to the upward wave before a crisis occurred. For example, if the market gained 1,000 points before a crisis, then after falling to the bottom and recovering, it could immediately rebound by 500-600 points, quite steeply. After such a steep recovery, investors will then need to rely on existing factors to analyze which direction the market will take.As for the Vietnamese market, after a deep decline last year, it has now recovered and grown by about 20%. Will the market recover similarly to how other stock markets have in the past?Coincidentally, Smart Invest’s analysis and research department is also studying the market’s 4-year cycle, including the periods 2011-2013, 2014-2017, 2018-2021, and the projected 2022-2025. They observe that the current cycles are unfolding according to historical patterns, and the performance of the Vietnamese market after its recovery phase also indicates a trend similar to previous years. We assess that the 20% growth in the Vietnamese market during this period is consistent with current macroeconomic policies, with a P/E ratio of approximately 14.18 times. At the current price level, we believe the valuation is neither expensive nor cheap. Typically, for further price increases, investors need to look at the business prospects of companies, such as improved gross profit, revenue growth, and EPS growth, to find new drivers for market growth. Additionally, there might be cases where euphoria continues, and in such scenarios, an index trading around a valuation of 10-11 times is generally considered cheap in the current interest rate environment, while 14-16 times is reasonable, and 20-22 times would be expensive.In reality, the Vietnamese market has recovered, but compared to other markets, it has not truly recovered much yet. We expect the market to follow a positive trend next year.So, in your opinion, with this recovery, can the market rise to its previous high of 1,500 points or even higher?We should consider the 1,300-point mark as more feasible, although it’s quite difficult to predict the index. In the short term, during this period, we should monitor exchange rates to assess market developments. Secondly, credit growth is facing difficulties as it continued to be negative in July. The P/E valuation for 2023 is currently calculated at 14.5 times, lower than the average of 16.5 times. The current P/B valuation is 1.8 times, projected to be around 1.7 times by the end of 2023, which is still attractive compared to the average of 2.2 times. However, further increases will be slow rather than rapid; the 1,500-point level might be reached in 2024 if there are no “black swan” events like in 2022.Regarding the outlook for the remaining months of the year, Vietnamese businesses hit a low point in Q2 business results, gradually began to recover in Q3, and are expected to see strong growth in Q4. I believe the stock market always presents both short-term and long-term opportunities, depending on investors’ preferences and strengths. After the Q2 business results were announced, the stock market entered an information vacuum. This is a period when investors can re-evaluate their portfolios based on the first six months’ business results to select stocks of companies with good growth performance.During the recent recovery, many investors have made profits, but there are also some who have not truly returned to the market. Given the analyses above, what should investors do at this time, in your opinion?Typically, during the initial recovery phase, as the market rises from the bottom, stocks tend to increase uniformly, making it easier for investors to profit, whether a little or a lot. At this stage, the market will become more differentiated, and investors need a clearer perspective on the prospects of each industry and business, and should build a specific trading method and adhere to discipline to execute that strategy. According to our assessment, at the current time, we can pay attention to several industry groups such as retail, industrial real estate, or public investment. Also, with liquidity and market activity returning, the securities group is also worth considering. Furthermore, rising global and Vietnamese rice prices are helping rice industry stocks break out…SOURCE: CAFEF