“Spiritual medicine” for the stock market after the correction?

Second quarter GDP exceeds forecast: “Spiritual medicine” for the stock market after the correction?

With the emergence of a series of supporting information, especially the recently announced GDP growth data of 6.93%, analysts from VNDirect recommend that investors consider disbursing again.

According to data recently released by the General Statistics Office, the gross domestic product (GDP) in the second quarter of 2024 recorded positive growth, with an estimated growth rate of 6.93% over the same period last year. The above figure is only lower than the growth rate of 7.99% in the second quarter of 2022 in the 2020-2024 period. GDP in the first 6 months of 2024 increased by 6.42%, only lower than the growth rate of 6.58% in the first 6 months of 2022 in the 2020-2024 period. The industrial and construction sector grew the most with a growth rate of 8.29% in the second quarter alone and 7.51% in the first 6 months of the year.

Ms. Nguyen Thi Huong - General Director of the General Statistics Office assessed that the positive GDP growth reflects the recovery trend of the economy , each quarter is better than the previous quarter; industries and fields have achieved many important results, creating growth momentum for the following quarters.

GDP in the first 6 months of the year in the period 2020-2024 - Source: GSO

Evaluating the recently released macroeconomic data, Mr. Dinh Quang Hinh - Head of Macro and Market Strategy Department, VNDIRECT Analysis Block, commented that GDP growth in the second quarter exceeded market forecasts with notable growth momentum from the manufacturing and processing industry.

The processing and manufacturing industry was the growth driver of the entire economy in the first half of the year with a growth rate of 8.67%, contributing 2.14 percentage points to the growth rate of total added value of the entire economy.

With the positive results just announced, Mr. Hinh believes that Vietnam can completely reach the upper limit of this year's growth target of 6.5%. However, this expert also noted that there is still certain pressure on inflation. The consumer price index (CPI) in June increased by 0.17% compared to the previous month and increased by 4.34% compared to the same period, only slightly down compared to the previous month and still at a fairly high level. Inflation developments therefore need to be closely monitored in the coming months, but up to now, it is still within the inflation target set for 2024, at 4 - 4.5%.

Not only Vietnam, the global stock market also received positive news from the world's number one economy at the end of Friday. The US has just released the latest data on personal consumption expenditures (PCE), the Fed's preferred inflation measure. Accordingly, the total PCE was flat in May and increased by 2.6% compared to the same period last year, both close to market forecasts. Meanwhile, the core PCE in May increased by only 0.1% compared to the previous month and also increased by 2.6% compared to the same period last year, both in line with Wall Street's forecasts and marking the lowest year-on-year increase since April 2021.

The newly released US inflation data is the market's expected information, reinforcing expectations that the Fed may cut the operating interest rate in the second half of 2024. According to CME Group's FedWatch Tool, traders are currently leaning towards the scenario that the Fed will cut interest rates as early as the September meeting and have 2 interest rate cuts this year.

Along with supporting information from macro factors, the market has entered the second quarter business results announcement season with many forecasts showing that the profit growth momentum will continue. Estimated figures announced by some listed companies in the past week also revealed quite positive results.

Experts from VNDirect believe that the newly announced supportive information could be a “spiritual medicine” for investors after the recent sharp correction. Vietnamese stocks have been quite negative in the past half month. In the last week of June alone, the Vietnamese stock index was among the top losers among global stock exchanges, second only to Iceland.

VN-Index turned down after reaching 1,300 points on June 13

After surpassing the 1,300-point mark - the highest level in more than 2 years on June 13, the VN-Index has dropped about 55 points from the psychological threshold above. Of which, in two sessions on June 14 and June 24, the HoSE index "evaporated" more than 20 points.

Strong selling pressure in the first trading session of the week (June 24) caused the VN-Index to drop to 1,254.1 points with a sharp increase in liquidity (over VND27,500 billion). After a series of tug-of-war developments, the VN-Index fell 2.9% throughout the week, down to 1,245.3 points at the end of the week.

According to Mr. Hinh, the first session of next week will be quite an important session when the VN-Index confirms whether it has really lost the psychological mark of 1,250 points or not.

“Investors should stop selling in this area because we believe that holding stocks in this area will still bring quite positive profits in the next 3 months,” said an expert from VNDirect. At the same time, Mr. Hinh also noted that investors need to be ready to disburse aggressively if the VN-Index corrects to the strong support zone of 1,200-1,220 points, prioritizing sectors that have not increased strongly in the recent past such as banking, real estate, securities, electricity and export groups.

Source: https://baodautu.vn/gdp-quy-ii-vuot-du-bao-lieu-thuoc-tinh-than-cho-thi-truong-chung-khoan-sau-nhip-chinh-d218927.html