Market finds equilibrium: opportunity for long-term investors

The past trading week saw an impressive recovery in the Vietnamese stock market after two sharp declines earlier in the week due to escalating US-China trade tensions. The VN-Index had fallen to a low of 1,073.6 points in the Wednesday session. However, the market quickly rebounded after the news that the US would temporarily reduce reciprocal tariffs with more than 75 countries to 10% for 90 days.

The Vietnamese stock market is forecast to continue its journey to find balance in the trading week from April 14 to 18.

At the end of the week, VN-Index reached 1,222.5 points, up slightly by 11.8 points (+1.0%) compared to the end of last week. According to Mr. Dinh Quang Hinh, Head of Macro and Market Strategy Department, VNDIRECT Securities JSC, this is a signal that the market is in the process of finding a balance after a period of strong fluctuations.

Mr. Hinh said that this week the market will receive support from four factors: attractive valuation level, with the P/E of VN-Index currently below 12 times; expected positive business results in the first quarter of 2025; accelerated progress in implementing the KRX trading system; and positive credit growth thanks to the VND500,000 billion support package of the banking industry.

However, VNDIRECT experts also noted that risks from US-China tariff tensions still exist. “The 1,240 – 1,260 point range will be the resistance level for this recovery. Investors should take advantage of the increase to restructure their portfolios, focusing on businesses that are less affected by international political fluctuations,” Mr. Hinh recommended.

Experts recommend that investors should prioritize sectors with good resilience or benefit from domestic support policies. Accordingly, five highly rated sectors include: banking, residential real estate, retail, electricity and public investment.

Sharing the same view, Phu Hung Securities Company (PHS)'s April strategy report stated that the market is going through one of the most uncertain periods, when investor sentiment is greatly affected by external factors. PHS warned that if the worst scenario happens, the VN-Index could fall to 900 - 930 points, corresponding to a P/E of around 9.x times - a level that has triggered strong buying power in the past.

However, according to analysis from KIS Vietnam Securities Company, now is the time to consider long-term disbursement. “The current P/E is 9.5 times, lower than the 3-year average (11.3 times) and 5-year average (12.9 times), equivalent to the COVID-19 period and the bond crisis in 2022,” said KIS experts.

In addition, KIS estimates that up to 80% of the stocks in their portfolio are at a strong discount and have the potential to increase by more than 15% in the next 12 months. History also shows that after each sharp decline of 4.5% or more, the market's ability to recover is very high, 76% of cases bring an average profit of 19% after 6 months, and 75% achieve a profit of 37% after 12 months.

Another bright spot is stocks with attractive cash dividends. Construction Consulting Corporation (NAC) will pay a 20% cash dividend in April; Nhat Viet Securities Corporation (VFS) issues bonus shares at a ratio of 100:8 from after-tax profits; BVBank also offers shares to existing shareholders at an attractive price of VND10,000/share - lower than the book value of VND11,153/share.

Notably, foreign funds are making opposite moves to domestic cash flows. While Dragon Capital has just sold 600,000 PVS shares, VinaCapital has registered to buy nearly 1.5 million PVS shares through two member funds, showing the differentiation in strategies of institutional investors.

With supporting factors gradually becoming clear and attractive valuation levels, the Vietnamese stock market is entering a period of reshaping a new price range. Despite many uncertainties from the outside, experts believe that this is an opportunity for long-term investors to build a reasonable portfolio, especially in fundamental sectors and high-dividend stocks. The journey of "finding a balance point" may not be over, but it is opening up more opportunities than risks.

Source: https://thoibaonganhang.vn/thi-truong-tim-diem-can-bang-co-hoi-cho-nha-dau-tu-dai-han-162712.html