2024 begins with low interest rates and expectations of economic recovery, but the room for monetary policy seems to have been used up. This will be an important foundation to support the prospects of the stock market. On that basis, the analysis team from DSC Securities Company assesses that this year's investment story will focus on the actual business results of enterprises, not just on expectations.
"With the context of the slow recovery of the world economy and the low profit base in 2023, Vietnamese enterprises will achieve low profit growth in 2024, but it will be difficult to achieve a profit explosion," DSC said.
Accordingly, from a cyclical perspective, Vietnam is in the early stages of economic recovery. Theoretically, with the current expansionary monetary and fiscal policies, the economy is expected to improve in 2024. The stock market often moves ahead of the economy. Therefore, in terms of theoretical expectations, 2024 is expected to be a year of improvement for the stock market after 2023 was a transition year from the decline of 2022 to a sideways trend.
Expected lower market trend risks, improved corporate internals, and the KRX system coming into operation, promoting the upgrade process will be the foundation to support the market to a new level higher than the previous year. DSC expects the VN-Index in 2024 to maintain the 1,100 point area and move towards the target of 1,300 points.
Given the current macro backdrop, the analysis team is leaning towards the possibility that 2024 will be the year of a sideways market. That is, the volatility between the bottom and the top will fluctuate within a range of +/- 20%. Having experienced typical sideways markets such as the 2014-2016 and 2018-2019 periods, the value investing strategy will help investors have a higher probability of success than other strategies, as well as promote the best investment performance.
"Choose to buy when value stocks are close to strong support (the nearest major bottom) and sell when stocks approach resistance (the nearest major top), instead of mechanically buying value stocks through financial indicators. This approach is very easy to fall into the value trap of a sideways market and is only true in a bearish market" - DSC commented.
Sharing the same scenario of VN-Index fluctuating in the range of 1,000 - 1,280 points, the analysis team from ACBS Securities Company chose to prioritize the "stock pick" strategy. In which, they will select industry groups and businesses with positive profit prospects in 2024, not heavily dependent on the recovery expectations of economies, healthy financial situations, attractive valuations such as technology, industrial park real estate, oil and gas, chemicals, and public investment.
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