Gold has limited upside potential, awaiting opportunities from the stock market.

What to invest in at the end of 2024: Gold has limited upside potential, wait for opportunities from the stock market.

Domestic gold prices are currently high, benefiting from the upward trend in global gold prices. However, a representative from AFA Capital believes that gold has already reflected expectations of a recessionary risk scenario, and there may not be much room for further price increases.

Mr. Nguyen Minh Tuan, CEO of AFA Capital and Co-founder of the Vietnam Financial Advisors Community. (Photo: Chi Cuong)

According to AFA Capital's recently published strategic report for investors at the WeTalk program "What to Invest in at the End of 2024?" held in Hanoi on September 15th, the "Tight Defense, Quick Counterattack" strategy has proven effective in 2024.

Defensive and growth assets have outperformed fixed-income assets and liquid assets such as deposits. In the coming months, AFA Capital believes that volatile financial investment assets may face uncertainty in the global macroeconomic environment .

Regarding liquid assets, Mr. Nguyen Minh Tuan, CEO of AFA Capital and co-founder of the Vietnam Financial Advisors Community (VWA), predicts that in the current global macroeconomic context, deposit interest rates will increase, but only slightly, as commercial banks have to increase preferential loan packages to compete for deposit sources.

The disparity between deposits and loans at commercial banks is the reason why deposit interest rates have continued their upward trend since the beginning of Q2/2024. Monthly credit growth (compared to the beginning of the year) is increasing faster than the same period in 2023, and this rate may continue to rise until the end of 2024 to achieve the target of 14-15% credit growth. However, interest rates are increasing at a slow pace and are not putting significant pressure on the retail market. Nevertheless, Mr. Tuan also emphasized that, when discussing deposits, besides the returns earned from investment, they are also a liquid asset that needs to be allocated in a portfolio to be ready to act when investment opportunities arise.

For the defensive asset class, domestic gold prices remain high, benefiting from the upward trend in global gold prices. The weakening US dollar and the uncertainty of the US economy are positive factors for gold prices.

Representatives from AFA Capital believe that gold will continue to benefit from this trend as well as stable gold demand for the remainder of 2024. Despite benefiting from uncertainty, Mr. Tuan believes that gold's upside potential is limited due to already high prices. The current gold price reflects expectations of a recession risk scenario, and there may not be much room for further gains. According to a JP Morgan report, gold is projected to reach $2,600 per ounce in Q4 2025. With the price at $2,578 per ounce as of the end of this week, gold may not have much room for further breakthroughs.

Vietnamese gold prices have closely followed global prices, especially SJC gold - Source: AFA Capital

For fixed-income asset classes, the CEO of AFA Capital forecasts that corporate bond investments will maintain their recovery trend. The slight decrease in the value of delinquent bonds is also a positive sign. The restructuring of delinquent bonds is also progressing steadily. However, the level of risk is increasing as the real estate sector still accounts for a high proportion and has a large number of delinquent issuers.

The risk of maturity is significant, as bonds maturing monthly in high-risk sectors still account for a relatively high proportion. The value of high-risk bonds maturing in August 2024 was three times higher than in July 2024. It is estimated that over the next 12 months, 20% of maturing bonds will be high-risk bonds with defaulted principal payments. Meanwhile, the modest value of new issuances indicates that market confidence remains low. The maturity structure is gradually shifting towards short-term maturities (under 3 years), however, medium-term maturities are trending upwards.

As for the stock investment channel, market sentiment is hampered by liquidity issues and the prolonged net selling trend of foreign investors. "Under the current baseline scenario, we are still expecting positive signals for this asset class to return in the fourth quarter when the US Federal Reserve (Fed) lowers interest rates," Mr. Tuan said.

Suggested portfolio allocation for Q4/2024 based on a balanced investment portfolio - Source: AFA Capital

Regarding asset allocation in the fourth quarter, AFA Capital recommends increasing the proportion of liquid assets in the portfolio to await opportunities; maintaining the proportion of defensive assets as a precaution in case the global economy enters a recession. Meanwhile, AFA Capital recommends reducing the proportion of bond investments. For growth assets like equities, maintaining the proportion during the current period of high volatility to await opportunities, and potentially diversifying with gold and bank deposits to seize those opportunities.

Source: https://baodautu.vn/dau-tu-gi-cuoi-nam-2024-vang-hep-cua-tang-cho-co-hoi-tu-thi-truong-co-phieu-d225021.html