Stock market recovers, many stocks return to more attractive price levels

Although trading sessions last week all increased, liquidity remained low due to investors' cautious sentiment. Short-term bottom-fishing demand gradually emerged, but was still cautious, focusing on a number of industry groups expected to record positive profits in the third and fourth quarters of 2023. Foreign investors returned to net selling more than VND 1,770 billion on both exchanges. Of which, foreign investors net sold more than VND 1,923 billion on the HOSE and net bought more than VND 153 billion on the HNX.

There are still uncertain factors that the market faces, but experts say that the valuation level on the stock market is much more reasonable than before. If there are no major incidents in the near future, the current market has many investment opportunities.

Regarding valuation, data from MB Securities Company shows that the recent adjustment has brought the P/E of VN-Index down to nearly 13 times, lower than the average P/E of the past 3 years of 15 times.

In addition, in the correlation between the stock market and interest rates, the 12-month term deposit interest rates of major commercial banks have returned to the same level as during the COVID-19 pandemic, while current market valuations are relatively lower than that period.

Experts say the divergence will continue during the third quarter earnings season. Investors will reassess their expectations for a recovery in earnings and future prospects. Any negative signals compared to previous expectations could cause stock prices to decline.

According to analysis by experts from KBSV Securities Company, in the third quarter of 2023 business results announcement season, export stocks are worth paying attention to, especially seafood and textiles, with factors such as recovering orders, expanding profit margins, and benefiting from rising exchange rates. Industrial park real estate and maritime transport groups are also worth paying attention to with similar positive factors.

In the final months of the year, the export market is expected to recover more strongly as inventories in major partner countries gradually decrease and positive signals from the world economy appear. Considering seasonal factors, the fourth quarter of this year and the first quarter of next year may bring positive business results. Cash flow often goes ahead of expectations, so this is the reason why export stocks have increased in price in the past 2 weeks, going against the general market's adjustment.

For the banking industry, credit growth in the third quarter remains low, which may affect profits, but stock prices are likely to stabilize thanks to large capitalization and the holdings of major shareholders who lead the market.

Source