Stocks in banking, retail, information technology, infrastructure construction, industrial parks, etc., are being highly recommended.
Regarding the stock market forecast for this year, investment funds, market analysts, and securities companies all agree that the VN-Index could increase by 15-25% thanks to the main support from low interest rates and rising corporate profits. They all predict that corporate profits will recover by at least 15-20% this year. However, the extent of recovery will vary significantly across sectors. Therefore, investors need to carefully observe, analyze, and select stocks to optimize their portfolios.
According to VinaCapital, with careful selection of sectors and stocks, investors have many opportunities to achieve superior returns compared to the market average. This year, this foreign fund favors information technology, banking, real estate, non-essential consumer goods, and securities stocks. The consumer goods and real estate sectors, in particular, are projected to experience significantly better profit recovery due to the low base levels of the previous year.
Michael Kokalari, Director of Macroeconomic Analysis and Market Research at VinaCapital, analyzed that consumer companies will benefit from the ongoing recovery in consumer spending, with total retail sales excluding inflation projected to increase by 7.5%. Accordingly, he expects profits of businesses in this sector to recover from a 22% decline last year, to a 33% increase this year.
Besides the consumer sector, real estate developers (excluding Vinhomes) are also assessed by VinaCapital as benefiting from this year's modest recovery. Profits for these businesses are projected to increase from a 51% decline to a 109% increase in 2024. Thus, compared to the overall market, the consumer and real estate sectors are expected to see profit growth that is double and five times greater, respectively.
VinaCapital stated that in addition to selecting the aforementioned sectors, choosing individual stocks is also crucial. The stock market has hundreds of small and medium-sized stocks, representing a potential source of opportunities for outperforming the market, as these stocks all rose by approximately 30% last year, far exceeding overall performance. However, the fund noted that this is an opportunity for professional investors, like VinaCapital itself. Meanwhile, many small and medium-sized stocks are not closely monitored or well understood by domestic retail investors.
Investors are monitoring the market at a stock exchange in Ho Chi Minh City, March 2021. Photo: Quynh Tran
Prioritizing sectors with strong profit growth, Dragon Capital has just announced its current investment portfolio. The DCDE fund is investing heavily in banking, retail, residential real estate, information technology, steel, chemicals, and securities. According to this foreign fund's forecast, these sectors all have the prospect of double-digit profit growth this year. Retail is the highest with nearly 153%, followed by steel (47%) and chemicals (39%).
Besides profit growth, Dragon Capital also believes these sectors have lower volatility than the overall market, aligning with the fund's cautious strategy. Experts note that investors should avoid building a portfolio that is overly dependent on any single sector to prevent risks from impacting the entire investment.
Securities companies also suggest that investors choose stocks this year based on the profit growth prospects of each sector. Vietcombank Securities (VCBS) believes that the differentiation between stocks will continue to become more pronounced in the context of high market volatility.
"Investors need to both screen and seek investment opportunities in promising companies, while also carefully selecting the right time to disburse funds when stock prices are still trading within a reasonable valuation range to ensure risk management objectives," this analysis team noted.
According to VCBS, interest rates remain low and may fall further, the partial relocation of manufacturing from China, and public investment activities continue to be key highlights in the coming period. Therefore, the sectors that will benefit are banking, industrial real estate, and infrastructure development companies.
For investors looking to hold stocks long-term for asset accumulation, VCBS suggests looking for opportunities in "defensive" sectors, especially leading companies whose business results are less dependent on economic cycles. On the stock market, stocks with such characteristics are often state-owned enterprises operating in sectors like information technology, telecommunications, and utilities such as hydropower, thermal power, and water supply.
Tat Dat
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