It is difficult to expect a breakthrough in stocks in the last quarter of the year.

Many securities companies lower growth forecasts for VN-Index

According to the forecast of FPT Securities Company (FPTS), the adjustment and accumulation process may be the main development of the market in the first half of the fourth quarter of 2023. However, the next price decrease may not be too large because the index has retreated close to the strong support area of 1,100 points. Signs supporting the new cycle in the long-term trend of the market are still holding.

The room for adjustment may continue to bring the P/E valuation closer to the 5-year average minus 1 standard deviation, corresponding to the range of 1,070 - 1,080 points of the VN-Index.

"The new equilibrium point is expected to be confirmed around the 1,080 - 1,100 point area of the VN-Index in the first half of the fourth quarter. The accumulation phase may be the next step in preparation for the expectation of forming a new wave in the long-term fluctuation cycle" - the analysis team commented.

Amid concerns about inflation and exchange rates, KB Securities Company (KBSV) lowered its forecast for the VN-Index at the end of 2023 to 1,160 points, down from 1,240 points given at the beginning of the year as well as in the most recent quarterly strategy report. Meanwhile, KBSV slightly raised its EPS growth forecast by 1% and lowered the reasonable P/E of the VN-Index to 14.5 times (from 15.5 times).

Similarly, considering the risk factors from exchange rate pressure and the FED raising interest rates, MB Securities Company (MBS) lowered the VN-Index forecast for the last months of the year from the previous level of 1,280 - 1,340 points to 1,260 - 1,280. Equivalent to 13.7 - 14 times the P/E valuation in 2023.

Many factors influence the market in the last quarter of the year

Factors shaping the stock market trend in the fourth quarter as pointed out by experts from KBSV include:

First, inflationary and exchange rate pressures on interest rate trends. With the State Bank's top goal of maintaining low interest rates and promoting economic growth, KBSV does not believe that deposit and lending interest rates will reverse and increase this year (unless DXY and US government bond yields continue to increase sharply). However, the trend of lowering interest rates in the last months of this year will not be favorable and the room for loose monetary policy may narrow significantly in the fourth quarter of 2023. Accordingly, policy factors will no longer be strongly supportive of the market in the last 3 months of the year.

In addition, although the target of controlling inflation below 4.5% can be achieved smoothly, the increasing rate of increase in recent months shows that managers should not be subjective. The group of experts forecasts that inflation will reach 3.6% by the end of the year when September inflation figures increased more strongly than expected.

Second, with the KRX trading system expected to be deployed by the end of this year, large-cap stocks (benefiting from the prospect of a shortened market upgrade) and securities stocks (benefiting from transactions allowing the sale of pending securities) are expected to have a positive reaction. This will then impact the stock market in general.

Third, the FED and the risk of recession in the US. Without many changes in spending plans and efforts to reduce the government budget deficit, KBSV predicts that we may witness a period of persistent inflation and interest rates remaining high until at least 2024.

Source