Opportunities for stocks are still huge

On the trading session of May 22, VN-Index recorded a sharp decrease of 10.23 points (-0.8%) and closed at 1,266.91 points. This is the second consecutive decrease of this index when it faced selling pressure of 1.1 billion shares of the session of May 20 to investors' accounts. Domestic and foreign investors continuously sold at low prices, causing stocks to plummet quite rapidly in the afternoon session. The total transaction value of the 3 floors skyrocketed to nearly 33,400 billion VND, a record high in 23 sessions.

Investors are less worried.

However, according to experts attending the stock talk show with the theme "Stock market wave returns, which industry stocks have opportunities?" organized by Nguoi Lao Dong Newspaper on the same afternoon, although the market may fluctuate, the trend is still positive.

Mr. Dinh Duc Minh, Investment Director, VinaCapital Fund Management Company, commented that about a month ago, investors were quite worried about the pressure of rising exchange rates, rising interest rates or geopolitical tensions in the Middle East, causing the VN-Index to lose more than 100 points in just 1 week in mid-April. Currently, these concerns still exist but it seems that investors have "got used to it", while the domestic macro economy is showing more positive signs, production - business, import and export are all positive. "The business results of the first quarter of 2024 of listed enterprises increased by about 12% compared to the same period. If you look more closely, many enterprises have very good profits" - Mr. Minh said.

According to Mr. Nguyen Thanh Lam, Director of Personal Analysis, Maybank Securities Company, if looking at the current investment channels, stocks are still the more attractive investment channel. Even though the mobilization interest rate has increased, the general level is still low. Therefore, when the VN-Index has an attractive enough decrease, it will stimulate the cash flow from investors.

This explains the market's sharp increase of about 100 points since the end of April. "If the input interest rate increases by about 1% from now until the end of the year, it cannot be confirmed that the monetary policy has been reversed, so there is still no need to worry," said Mr. Lam.

Guest experts attending the stock talk show organized by Nguoi Lao Dong Newspaper on the afternoon of May 22. Photo: TAN THANH

In such a context, experts believe that the sharp market correction in the session of May 22 is not really a cause for concern. Because in the long run, the outlook is still positive. Mr. Nguyen Thanh Trung, Director of Investment Consulting, Thanh Cong Securities Company (TCSC), said that when assessing the up and down trend of the stock market, we need to look at the cash flow factor into the market. In fact, at the present time, stocks are still an investment channel with competitive advantages compared to real estate, bonds, gold, and interest rates. In particular, interest rates have increased but are still at a low level compared to 1 year ago. Although gold prices have reached a peak, not everyone is rushing to buy gold like 10 years ago.

"Market valuation by P/B (book value) is still the lowest in nearly 10 years; valuation by P/E (earnings on share price) is around 13-13.5x compared to the average of around 16-18x, so it is not too hot" - Mr. Trung said.

When will foreign investors reduce net selling?

Experts say that in the short term, the VN-Index may fluctuate more when approaching the 1,300-point threshold, but this is just a cash flow rotation among investors, not a downward trend. Even the continuous net selling of foreign investors in recent months is not too worrying because the trading proportion of this group in the market is not too large.

Mr. Nguyen Thanh Trung believes that the market may correct in the next few sessions, but it is necessary to analyze whether the positive factors have reversed or changed. If they have not changed, the trend is still positive, although in the short term it may fluctuate and decrease.

Mr. Dinh Duc Minh said that foreign investors have been net sellers in many markets for 2-3 years now, not just recently. The biggest reason is the large difference in interest rates between emerging markets, including Vietnam and the US. At that time, foreign investors' money tended to flow to the US because of higher returns.

Mr. Minh cited that the interest rate on US government bonds is currently around 4.5%-5%/year, which is quite attractive to global investors and especially has almost no risk. Therefore, they will sell securities in emerging and frontier markets (not just Vietnam) to transfer investment cash flow to the US.

"However, every time the VN-Index adjusts to an attractive level (P/E around 10x), foreign investors will still buy strongly again. This shows that foreign investors are always interested in Vietnamese stocks," said Mr. Minh.

So when will foreign investors continue to sell net? According to the latest forecast, the US Federal Reserve (FED) may start cutting interest rates for the first time this year at its policy meeting in September. Will foreign investors continue to sell net from now until then?

According to Mr. Nguyen Thanh Lam, many countries in the region have recorded foreign investors withdrawing money from the stock market. Mr. Lam predicts that when the FED moves to reduce interest rates, foreign investors will reduce net selling pressure. In particular, in the event that Vietnam is eligible to be upgraded to emerging market status in March 2025 or later in September 2025, it will stimulate foreign capital flows again.

Statistics show that since the beginning of the year, foreign investors have net sold about VND27,000 billion in the Vietnamese stock market. However, analyzing carefully, Mr. Nguyen Thanh Trung said that Vingroup stocks alone (VIC, VHM, VRE) accounted for about 45% of the net selling value, the rest were other large-cap stocks such as MSN, VNM and ETF funds... These figures show that net selling is concentrated in certain groups of stocks, not the whole market.

"Five to 10 years ago, the proportion of foreign transactions accounted for about 20% of total transactions in the market, so when they sold net, it would have a huge impact. Currently, daily liquidity can reach up to billions of USD, of which foreign transactions only account for about 5%-6%, so the impact is not too big," said Mr. Trung.

Suitable for medium and long term investment

Sharing at the stock talk show, experts presented a series of promising stock groups for the upcoming period such as banking, industrial park real estate, export, seaport, technology, retail...

According to experts, the current stock price level is still reasonable for medium- and long-term investment, although it is no longer too cheap. When choosing stocks to buy, investors should focus on the business prospects of the company and the risk factors to be noted... "If you choose good stocks, promising companies, then even if the price drops 5%-7%, it is not a cause for concern" - said Mr. Dinh Duc Minh.

Source: https://nld.com.vn/co-hoi-cho-chung-khoan-van-rat-lon-196240522211411867.htm