Under the conditions of converging factors: low interest rates, stable macro economy and positive profit growth of listed enterprises... the stock market is expected to continue to attract large capital flows in the coming time.
Many trading sessions exceed billion USD
In the first two months of 2024, in the context of savings interest rates falling to the lowest level, the VN-Index increased by more than 130 points (12%) thanks to a large amount of idle money returning to the stock market. Specifically, in February 2024, the average trading value on the 3 floors (HOSE, HNX and UpCOM) reached 21,301 billion VND/session, an increase of 26.2% over the previous month. In particular, the HOSE floor alone had a trading session worth up to 32,000 billion VND (session on February 23) and many trading sessions recorded liquidity of over 1 billion USD. The capitalization value of HOSE also increased by about 550,000 billion VND (23 billion USD) in the first 2 months of the year, reaching approximately 5 million billion VND.
The stock market's growth is thanks to the positive business situation of listed companies. Statistics from securities companies show that the net profit in the fourth quarter of 2023 of nearly 1,200 enterprises (accounting for 96% of market capitalization) is estimated to increase by 30% over the same period in 2022. Of which, the net profit in the fourth quarter of 2023 of the banking group increased by 22.5% over the same period, which is also the group of stocks that played a leading role in the stock market in recent times. In addition, the real estate industry is no longer too negative. Although the net profit in the fourth quarter of 2023 of this industry decreased by 19.6% over the same period last year and decreased by 24% compared to the previous quarter, the decrease mainly came from Vinhomes (VHM). If VHM is excluded from the statistical basket, the net profit of the real estate industry increased by about 132% compared to the fourth quarter of 2022. According to SSI Securities Company's assessment, profit growth will help stocks increase significantly in 2024.
In addition, record low interest rates will be the main growth driver for the stock market, especially for individual investors. “Bank deposits continue to increase due to limited other investment channels. Gold has increased significantly, while real estate and corporate bonds need a long time to recover, so this capital flow may return to the stock market in 2024. Since individual investors account for more than 90% of the average daily trading volume of the entire market in 2023, we predict that the VN-Index will have some leaps in 2024 thanks to this capital flow,” said the SSI expert. In fact, it is also shown that individual investors are participating in the stock market more and more.
Data from the Vietnam Securities Depository and Clearing Corporation shows that by the end of January 2024, the number of domestic individual investor accounts reached more than 7.35 million, an increase of more than 125,000 accounts compared to the end of 2023.
Effective capital channel
Speaking at the recent Conference on the Implementation of the Task of Developing the Stock Market in 2024, Prime Minister Pham Minh Chinh emphasized that Vietnam aims to become an emerging market by 2025, contributing to the goal of attracting about 25 billion USD in foreign indirect investment each year, equivalent to direct investment. The Prime Minister also affirmed that economic development cannot be without the stock market because it is a channel for medium and long-term capital of the economy. The stock market plays the role of a "thermometer" of the economy, a flexible and attractive investment channel for organizations and individuals.
Regarding foreign investment capital flows, although foreign investors returned to net selling VND 2,768.9 billion in February 2024, they also net bought VND 185 billion in January 2024, ending the previous 9 consecutive months of net selling (accumulated net selling of nearly VND 22,600 billion in 2023). Investment funds assess that foreign capital flows will return to the Vietnamese stock market in 2024 following the Fed's gradual interest rate cut and the opportunity for the Vietnamese stock market to be upgraded in 2024-2025. According to the 2024 strategy report of securities companies, some industries that will recover significantly are: steel, retail and securities. In addition, the information technology and industrial real estate industries are also active based on long-term growth potential.
Mr. Le Anh Tuan - Director of Dragon Capital Securities Division assessed that VN-Index is in a recovery cycle when factors such as low interest rates, stable macro economy and profit growth begin to recover. In this recovery cycle, industries with high profit margins are non-essential consumption, real estate, banking and finance. Founder and manager of foreign fund Pyn Eltie Fund Petri Deryng also said that the stock market this year is brighter because the money market, bank liquidity are stable and interest rates have been regulated back to attractive levels. "Listed enterprises are expected to grow profits by more than 20% this year and we put our trust in the banking sector," said Mr. Petri Deryng.
Ms. VU THI CHAN PHUONG , Chairwoman of the State Securities Commission :
Resolutely implement upgrading solutions
2024 will be the year to create the foundation for the development of the stock market in the medium and long term. The securities industry will implement solutions and tasks in the Stock Market Development Strategy to 2030 and the Prime Minister's Official Dispatch to promote the safe, transparent, effective and sustainable development of the stock market. In addition, the securities industry will also resolutely implement solutions to remove obstacles to attract foreign indirect investment, aiming to upgrade the stock market; support business operations through implementing a single-point information disclosure, reforming administrative procedures; and promoting supervision and law enforcement to ensure smooth and safe operations. The State Securities Commission will continue to closely coordinate with stock exchanges and competent authorities to strengthen supervision, organize inspections, checks and sanction violations.
HANH NHUNG
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