A woman performs a transaction on mobile phone at Bao Viet Securities’ office. (Photo: VNA)
Hanoi – The stock market is expected to see more
investment opportunities for the medium and long term in the second quarter of
2023, according to analysts.
In its latest report, BSC Securities Company said that the market witnessed
strong divergence among industry groups in the first quarter of the year.
Particularly, the financial, material, and energy sectors all posted better
performances than the benchmark VN-Index.
The securities firm also lowers its GDP growth forecast to 5.8% in the positive
scenario, compared to 6.7% in early 2023, and to 5.3% in the negative scenario,
the report said.
Many signs show that production activity is weakening while the real estate
industry is still facing many challenges. In the first four months of the year,
import and export value growth also declined.
However, the macro situation has shown some positive signs, as
inflation was controlled stably with the CPI data in April up only 2.84%, the
benchmark exchange rate was under control, and FDI capital inflows improved.
The macro factors will create favourable conditions for the
central bank to continue lowering the policy rates to support the economy.
The State Bank of Vietnam on May 23 announced another rate cut of half
a percentage point. And the decision is expected to have a positive impact on
the stock market in the long term, said Nguyen Minh Hoang, director of the
Analysis Department at VietFirst Securities.
“As the central bank cut interest rates as expected for the third time, it
is already priced in. So in the near term, the market will not show a strong
response,” Hoang said.
“However, the move helps reduce the borrowing cost for businesses,
increasing the credit cycle and supporting the economy. So it will have a long
term impact on the market.”
The expert also said that given the lower interest rate environment, flows of
cash running to savings in 2022, when interest rates were high, are now likely
to find other investment channels, including the stock market.
“It will also create expectations even for industries which are now weak
in the market. For example, the manufacturing, retail, import-export groups are
the groups seeing better prospects in the second half of 2023,” Hoang
added.
Activities to boost disbursement of the State budget and accelerate
disbursement of public investment in the second half of 2023 will be the
driving force behind the economic recovery and growth plan in the period of
2023-25, according to BSC Securities.
In the first four months, disbursement of budget capital is estimated at 131.2
trillion VND (5.59 billion USD), up 18% over last year and equal to 19% of the
year plan.
The Government is making considerable efforts to promote public investment. BSC
expects that directly affected industries such as infrastructure construction,
building materials, and indirectly affected groups, including commercial real
estate, industrial parks, and seaports, will benefit.
BSC also expects foreign investors to maintain their net buying position in the
second half of 2023 when corporate profits will gradually improve compared to
the first quarter and monetary and fiscal policies help the economy grow.
Meanwhile, the issues related to bonds and the real estate market have been
gradually resolved.
In the long term, foreign investors still show considerable interest in the
Vietnamese market as it continues to receive some additional capital flows from
the Fubon ETF and the China Trust Vietnam Opportunity Fund from Taiwan.
In terms of industry valuation, some groups show more attractive valuations
than in the past, such as banking, real estate, industry, fisheries, oil and
gas, and retail.
On the contrary, some industry groups with higher valuations than in the past,
such as textiles and garments, basic resources, seaports, and aviation
services, will be strongly affected by profit prospects this year./.
