Stocks at 10-year low valuation, two scenarios for the new week

Experts have given two scenarios for the stock market this new week. For the base scenario, the recent deep market correction may have reflected most of the 'hypothetical risks' in the medium term.

VN-Index ended November at 1,250 points, down 14 points compared to October, with average trading value per session reaching an 18-month low of VND12,200 billion - Photo: QUANG DINH

Two scenarios for the stock market in the new week

* Mr. Doan Minh Tuan - Head of Research and Investment Department, FIDT:

- VN-Index recovered beyond expectations last week, quickly regaining the balance zone of 1,250 points within 2 weeks.

The market continues to rise in the "doubtful" scenario of low liquidity, most stock groups show signs of having bottomed out, increasing well with the market.

A special point of the week is that foreign investors net bought for 5 consecutive sessions. This is the first week of net buying after more than 1 month of strong selling. This is also a clear sign that the removal of exchange rate risks will stimulate foreign investors to return to the market, helping to balance supply and demand in the market.

We expect that the restructuring process of indirect investment capital flows will almost end this year (end of 2024), foreign investors will reduce net selling, creating opportunities to attract new investment cash flows.

In terms of market valuation, VN-Index is trading around the P/E valuation range of 13 - 13.2 (market price per share earnings).

With an average EPS (earnings after tax of the company distributed per common share) growth rate of 15-17%/year, the P/E forward 2025 (estimated price on future earnings) is expected to be 11.3 - 11.5 times. This is the low valuation range throughout the period of more than 10 years from 2015 - 2024.

Mr. Doan Minh Tuan

We present two scenarios for this new week. For the base case, FIDT believes that the recent deep market correction has largely reflected the “hypothetical risks” in the medium term.

At that time, any significant reversal of key global variables such as the USD index (declining drastically to below 105), the 10-year US government bond yield (declining drastically to below 4.2%) will create an opportunity to help the VN-Index successfully bottom out, reversing the medium-term correction trend.

In the negative scenario, if global finance continues to reflect the negative "Donald Trump" policy variable, with the USD index rising to the historical level of 110, it will create pressure on the exchange rate and the selling pressure from foreign investors is expected to be very strong. In the negative scenario, the market risk factor is very large, the bottom of the VN-Index will be very difficult to predict.

In general, the necessary condition is still that risks related to the USD index and domestic exchange rate risks show signs of cooling down.

Avoid overbought conditions

* Mr. Nguyen Huy Phuong - analyst of Rong Viet Securities:

- The market continued to expand its recovery and denied the cooling signal in the last session of last week. This signal is helping the market balance before the 1,250 - 1,265 point zone, a disputed zone in the past.

The market is expected to move deeper into this zone to test supply and demand. There is a possibility that supply will increase again and put pressure on the market in this zone.

Therefore, investors still need to observe the supply and demand developments to assess the market status. Currently, investors can exploit short-term opportunities in some stocks that are gradually improving from the support zone.

However, it is still necessary to manage the portfolio properly, avoid falling into an overbought state, and consider the recovery to take short-term profits.

Exchange rate will cool down at the end of the year

* Mr. Dinh Quang Hinh - Head of Macro and Market Strategy Department - VNDirect Securities Analysis Department:

Mr. Dinh Quang Hinh

- Entering December, the general market trend is expected to remain recovery as risk factors such as exchange rates and short-term liquidity tensions gradually cool down.

The Fed is likely to continue to lower its policy interest rate at its meeting in December and domestic USD supply will improve significantly at the end of the year.

Normally, export enterprises tend to sell foreign currency to commercial banks at the end of the year to purchase domestic goods, pay bonuses to employees, etc.

This, together with FDI disbursement maintaining a positive trend and remittances flowing into the country at the end of the year, will help cool down the exchange rate pressure. The State Bank can shift to other goals such as supporting system liquidity and credit growth to reach the ambitious credit growth target of 15% this year.

If credit growth reaches the target and cash flows into the real economy, it will be a big boost for the stock market in December and early next year.

Source: https://tuoitre.vn/chung-khoan-o-vung-dinh-gia-thap-nhat-10-nam-hai-kich-ban-cho-tuan-moi-20241202080302076.htm