Which industries are "bright" in the stock market?

“Bright spots” of the stock market

In the online discussion "Macro focus and stock market in the fourth quarter of 2023" held on the afternoon of October 10, Mr. Tran Ngoc Bau, General Director of WiGroup Financial Data and Technology Joint Stock Company said: The world economy and Vietnam's economy are facing many difficulties, which have a strong impact on the stock market.

Which industries are shining on the stock market? Figure 1 — The world economy and Vietnam's economy are facing many difficulties, which have a strong impact on the stock market. (Photo: VMX)

At present, the performance of Vietnamese stocks is in line with the global trend, but somewhat more positive. Specifically, if the VN-Index maintains a growth rate of nearly 15% after 9 months, it will be more prosperous than regional markets such as Thailand, the Philippines, and Malaysia.

In the short term, investor sentiment is being affected by international and domestic factors. The US Federal Reserve (Fed) continues to signal continued interest rate hikes while the DXY index strengthens, causing investment capital flows to reverse. Domestically, the State Bank's issuance of treasury bills, credit growth, and macroeconomic variables are attracting investors' attention.

Mr. Tran Ngoc Bau said that the upcoming third quarter business results reporting season is the time for investors to select businesses with bright business prospects.

Agreeing with this assessment, Mr. Nguyen The Minh, Director of Analysis at Yuanta Vietnam Securities Company, said that since the beginning of 2023, VN-Index as well as most other stock indexes have recovered with a strong upward trend. The biggest plus point of VN-Index in the first 9 months of the year is the liquidity factor.

“Perhaps, in terms of VN-Index scores, it is not possible to return to the peak of 2021, but market liquidity has returned to the peak of 2021,” said Mr. Minh.

Average liquidity in the period from May to September recorded approximately 1 billion USD per session. It can be said that our transaction value is slightly higher and is in the Top 3 stock markets with quite good transaction value in Southeast Asia.

Thus, it can be seen that the recent market growth is one of the factors stimulating increased cash flow into the market, combined with the impact of falling interest rates and the expectations of global investors, which have also encouraged investors to return or increase investment in the stock market in recent times.

“That is why we see a large amount of money moving into the market with such large liquidity value,” Mr. Minh analyzed.

Which industries are shining on the stock market? Figure 2 — Overview of the discussion. (Photo: VNB)

Up to now, in recent weeks, there has been a significant decline, especially after the decline on August 18 and at the beginning of September, it can be seen that the liquidity of the market has begun to decline.

Therefore, Mr. Nguyen The Minh said that in the fourth quarter of 2023 and 2023, investors still have to wait for the business results of the third quarter to decide which industry group we can allocate to in the coming time.

Which industry to invest in?

Currently, the economy in general is still facing short-term difficulties, affecting the business results of enterprises. Therefore, the number of industry groups with positive profit growth this year is not much, including steel, securities, oil and gas, and technology.

Mr. Dao Minh Chau, Deputy Director of Stock Analysis at SSI Research, analyzed that regarding the securities group, this year, when market liquidity in the third quarter of this year increased by 50% compared to last year's average, it helped securities companies increase business results from areas such as brokerage and lending.

Which industries are shining on the stock market? Figure 3

Second is the steel group. Steel companies are almost all expected to record losses in 2022. In the second half of this year, it is forecast that steel companies will not return to the average level but will have improved compared to last year's results, and companies will no longer record large inventory provisions like in 2022. Currently, steel prices are only flat and have not increased.

In the oil and gas group, oil prices have recovered quite well in the second half of this year. In the coming time, major forecasting organizations all believe that oil prices may adjust to around 90 USD/barrel due to recovering demand and the remaining cut policies of Russia and OPEC+. In addition, recent conflicts will be a factor that can support oil prices in the short term.

Through 2024, SSI Research leaders forecast total corporate profits to increase by 17% compared to a 3% decrease in 2023, and growth will come from more industry groups. Corporate profits are expected to improve strongly in 2024 in many industry groups such as retail, steel, fertilizer, and seafood.

“However, the current valuation level has partly reflected the prospect of profit recovery. Therefore, investors should consider buying during corrections rather than “buying in at the right time,” said Mr. Dao Minh Chau.

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