Stocks revolve around exchange rate movements, opportunities lie in key industries

The domestic stock market has faced strong correction pressure after many months of strong growth. At the end of September, the VN-Index decreased by 5.8% compared to the previous month. A group of experts from VNDIRECT Securities Company assessed that the pressure from macro risks is gradually increasing, specifically including:

First, the FED left open the possibility of continuing to increase operating interest rates in 2023. The increase in US government bond yields has since put pressure on the USD/VND exchange rate.

Second, the market reacted negatively to the news that the State Bank issued treasury bills to drain liquidity from the system to support the domestic currency. Third, investors took profits and reduced their margin ratios after the recent strong rally.

VN-Index faced strong correction pressure in September, down 5.8% since the beginning of the month. Photo: VNDIRECT

After the above fluctuations, VNDIRECT found that the VN-Index has successfully maintained above the weekly MA200 line, thereby expecting to form a balance zone to accumulate again. The trend of accumulating within the range of 1,130 - 1,210 points may be the scenario for the stock market in October.

This month, market risks focus on exchange rate pressure, which if continued to increase will put pressure on monetary policy in Vietnam. In addition, there is also the risk of deflation from the large economy , especially from the real estate sector, which can affect domestic investor sentiment in this sector. Therefore, investors should pay attention to interest rate-sensitive sectors and limit risky buying positions.

However, hidden in there, the market still has potential with many opportunities when the profit picture in the third quarter is expected to be more positive and the market valuation level has returned to a more attractive area.

Investors can seize opportunities as public investment remains the spearhead of economic growth. Import and export prospects are gradually recovering. Following the improvement in the manufacturing sector, retail sales will grow thanks to improved purchasing power. At the same time, FDI inflows remain positive, improving the prospects of industrial park real estate groups.

Vietnam has maintained its position as a market with impressive growth performance since the beginning of the year, second only to Japan. Photo: VNDIRECT — Vietnam has maintained its position as a stock market with impressive growth performance since the beginning of the year, second only to Japan. Photo: VNDIRECT

From a long-term perspective, Ms. Nguyen Hoai Thu - CEO of VinaCapital Securities Investment Fund - assessed that the stock market is still in an upward cycle. The foundation comes from the Vietnamese economic cycle which is on a good development path. Foreign capital is continuously pouring in.

Vietnam's market valuation compared to the region is currently the cheapest and has the highest discount. In the medium term, the potential also comes from corporate profit growth, which VinaCapital predicts will increase by about 25 - 30%. Therefore, in the long term, stocks will increase according to the economic growth cycle.

"Investors with a long-term vision should not be too worried. Of course, individual investors may have psychological fluctuations that cause market fluctuations to be stronger. However, market fluctuations will not be too worrying," said Ms. Thu.

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