Low interest rates create momentum for "king" stocks, 4 other industries to break out in 2024

Duc Manh - Phuong Anh (Implementation) - Monday, January 15, 2024 18:00 (GMT+7)

Sir, what notable growth drivers will the stock market have in 2024?

- It can be said that the Vietnamese stock market had a rather "sour" year in 2023 with ups and downs, recently with a very strong net withdrawal from foreign investors.

However, there are some important factors that we need to consider, both internally and externally. Recent comments from the FED Chairman show that in 2024 they have shifted their monetary policy stance from “hawkish” to “dove” with a forecast of 3 to 4 interest rate cuts. At that time, the economy will breathe easier, especially for frontier stock markets like Vietnam.

With the above financial market foundation, in which interest rates are cheap, it will be a great support for the stock market in 2024. Stocks can "breathe easier" and more optimistic thanks to improved macro foundations. Therefore, my view is that the market will be much more optimistic than in 2023.

With the above foundations, what do you think will be the scenario for VN-Index this year?

- The market upgrade has been given great attention by the Government recently. The FTSE Russell upgrading organization has pointed out some bottlenecks in the Vietnamese market such as free capital movement, information disclosure, foreign investor ownership room, etc. If the above factors are resolved, I think the Vietnamese market will probably have a market upgrade certificate in September 2024.

In addition, the market's earnings per share (EPS) in 2023 will decrease by about 8%, meaning the economy will decline. However, with the story of cheap money flow, support policies and income growth in 2024, I predict that EPS in 2024 can grow back by at least 20% compared to the previous year. Thus, the VN-Index can reach the 1,300 point area in 2024.

However, the biggest risk will come from the bond market. Only when the problem of real estate inventory is solved and liquidity is cleared will the bond problem be solved.

So in that scenario, which industries do you think will benefit?

- I think the first will be the real estate industry. When the legal issues are resolved, real estate companies will be granted investment licenses, thereby increasing supply to the market as well as sales revenue, bringing cash flow back, which means growth.

With industrial park real estate, last year we had a record year of registered and disbursed FDI capital. I believe 2024 will continue to be another record year. With the terrain and location of "a house with three facades, its back leaning on the mountain, below the plain, looking out to the East Sea", we will be able to attract more capital. In addition, Vietnam's current labor supply is also very large with many large corporations gradually shifting their production systems to...

Second is the banking group. When the circulars are extended, banks do not have to set aside and restructure their debts, so profits will increase. On the basis of cheap interest rates like now, credit will also grow.

Next is the public investment sector that can maintain good growth in the next 5 years. When infrastructure develops, there will be a very good multiplier, directly to the construction materials and construction industry.

Finally, the securities industry. When the KRX information system comes into operation, it will create more attractive products for investors, including the reduction of settlement dates. Trading in the market will be more active thanks to this. The three main profit segments of securities companies will benefit from this, including transaction fees, margin lending fees and underwriting fees.

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