The opportunities for the stock market remain very significant.

On May 22nd, the VN-Index recorded a significant decline of 10.23 points (-0.8%), closing at 1,266.91 points. This marked the second consecutive day of decline for the index, driven by selling pressure from 1.1 billion shares from the May 20th session. Domestic and foreign investors continuously sold off shares at lower prices, causing a rapid drop in stock prices in the afternoon. The total trading value across all three exchanges surged to nearly 33,400 billion VND, a record high in 23 sessions.

Investors are less worried now.

However, according to experts attending the stock market talk show titled "The Stock Market Wave Returns: Which Sectors Offer Opportunities?" organized by Nguoi Lao Dong Newspaper that afternoon, although the market may fluctuate, the overall trend remains positive.

Mr. Dinh Duc Minh, Investment Director of VinaCapital Fund Management Company, noted that about a month ago, investors were quite concerned about the pressure of rising exchange rates, fluctuating interest rates, and geopolitical tensions in the Middle East, causing the VN-Index to lose more than 100 points in just one week in mid-April. Currently, these concerns still remain, but investors seem to have become "accustomed" to them, while the domestic macroeconomic situation is showing more positive signs, with production, business, and import-export activities all looking promising. "The Q1/2024 business results of listed companies increased by about 12% compared to the same period last year. Looking more closely, many companies have very good profits," Mr. Minh said.

According to Mr. Nguyen Thanh Lam, Director of Individual Analysis at Maybank Securities Company, looking at current investment channels, stocks remain a more attractive option. Even with slightly higher deposit interest rates, the overall level remains low. Therefore, a sufficiently attractive drop in the VN-Index will stimulate capital inflow from investors.

This explains the sharp increase of about 100 points in the market from the end of April until now. "Even if input interest rates increase by about 1 percentage point from now until the end of the year, it cannot be confirmed that monetary policy has been reversed, so there is still no cause for concern," Mr. Lam said.

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

In this context, experts believe that the sharp market correction on May 22nd is not yet a cause for serious concern. Looking at the longer term, the outlook remains positive. Mr. Nguyen Thanh Trung, Director of Investment Consulting at Thanh Cong Securities Company (TCSC), argues that when assessing the upward or downward trend of the stock market, one needs to consider the flow of money into the market. In reality, at present, stocks remain a competitive investment channel compared to real estate, bonds, gold, and interest rates. Interest rates have increased but are still at a low level compared to a year ago. And although gold prices have reached a peak, not everyone is rushing to buy gold like they did 10 years ago.

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

When will foreign investors reduce their net selling?

Experts predict that in the short term, the VN-Index may experience more volatility as it approaches the 1,300-point mark, but this is merely a rotation of capital among investors, not a downward trend. Even the continuous net selling by foreign investors over the past several months is not overly concerning because their trading volume in the market is not very 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 influencing factors have reversed or changed. If they haven't changed, the trend remains positive, even if there may be fluctuations or a decline in the short term.

Mr. Dinh Duc Minh stated that foreign investors have been continuously selling off shares in many markets for the past 2-3 years, not just recently. The biggest reason is the significant interest rate differential between emerging markets, including Vietnam and the US. Consequently, foreign capital tends to flow to the US due to higher returns.

Mr. Minh cited the fact that US government bond interest rates are currently around 4.5%-5% per year, which is quite attractive to global investors and, importantly, almost risk-free. Therefore, they will sell securities in emerging and frontier markets (not just Vietnam) to shift investment funds to the US.

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

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

According to Mr. Nguyen Thanh Lam, many countries in the region have seen foreign investors withdrawing money from their stock markets. Mr. Lam predicts that when the Fed lowers interest rates, foreign investors will reduce their net selling pressure. In particular, if Vietnam qualifies for an upgrade to emerging market status in March 2025 or, at the latest, September 2025, it will stimulate a return of foreign capital.

Statistics show that foreign investors have sold a net amount of approximately 27,000 billion VND on the Vietnamese stock market since the beginning of the year. However, upon closer analysis, Mr. Nguyen Thanh Trung stated that the Vingroup group of stocks (VIC, VHM, VRE) alone accounted for about 45% of the net selling value, with the remainder coming from other large-cap stocks such as MSN, VNM, and ETFs. These figures indicate that the net selling was concentrated in certain groups of stocks, not the entire market.

"Five to ten years ago, foreign investors accounted for about 20% of total market transactions, so their net selling had a significant impact. Currently, daily liquidity can reach billions of USD, with foreign investors only accounting for about 5%-6%, so the impact is not too great," Mr. Trung said.

Suitable for medium to long-term investment.

Sharing their insights at a stock market talk show, experts outlined a series of promising stock sectors for the upcoming period, including banking, industrial real estate, exports, seaports, technology, and retail.

According to experts, current stock prices remain reasonable for medium- to long-term investment, although they are no longer extremely cheap. When choosing stocks to buy, investors should focus on the business prospects of the company and the risk factors to consider... "If you choose a good stock, a company with promising prospects, then even a 5%-7% drop in price is not something to worry about," said Mr. Dinh Duc Minh.

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