Stock market supported by diverse factors

Tran Xuan Bach, director of Market Strategies at Bao Viet Securities JSC, shares his mixed sentiments about the stock market's prospects for the rest of the year.

What’s your take on the VNIndex gaining 150 points since the end of last year?

Although the local stock market remains in the doldrums, various favourable factors have converged to herald a new growth cycle.

First, the possibility that the US Federal Reserve will cut interest rates this year is an important factor in giving a boost to investor sentiment.

Second, following determined efforts from the government, the Vietnamese stock market has an opportunity to upgrade to emerging market status in the very near future.

In addition, the development of the stock market is being supported by diverse internal factors, such as a low-interest environment and the strong profit rebound following the low of 2023.

Which areas of the economy offer investors the best potential?

Sectors that have seen the strongest rebound in profits should offer the best prospects, which include steel, consumer goods, seafood, retail, and garments and textiles, or sectors currently undervalued such as banking, industrial real estate, and energy.

Besides these, sectors with long-term potential such as IT and construction could also yield decent returns.

I believe the first half of the year will gear towards the undervalued sectors like banking, with the second half of the year favouring sectors related to exports, like retail, and consumer goods, along with real estate, as the overall economy recovers.

What factors should investors pay attention to?

Investors need to keep an eye on the country's macroeconomic prospects throughout the year, such as public investment, foreign direct investment, or an upgrade of market status, to better guide their decision-making.

Last year, stock prices picked up due to the expectations of low-interest rates and wide-ranging government support policies, while this year, I believe investors should watch out for actual profit news from businesses.

When a stock price is based off a high valuation, but the actual profits are below expectation, this poses a risk to the price movement in the short term.

In addition, stories relevant to raising capital, mergers and acquisitions, initial public offerings of subsidiaries or dividend payment, are also factors deserving attention.

How do you assess the banking sector's recent rally, and it prospects for the rest of the year?

The banking sector holds a large amount of capitalisation, making a significant contribution to the overall profit structure of the entire market. Therefore, this sector should greatly influence market movements for the rest of 2024.

The current low valuation and potential robust rebound in profits this year could yet help bank stocks to rise and become a game changer this year.

Finally, what’s your opinion of real estate stocks?

The property market is expected to warm up from the second half of this year and be in more robust health in 2025, but real estate stocks might see a more positive movement before the year is out.

Thanh Nguyen

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