Banking and securities in spotlight for late 2024 market watch

Banks are among the most resilient sectors, providing a cushion to the market and driving upwards.

Funds are increasingly gravitating towards stocks that benefit from the economic recovery and stand to gain from macroeconomic policies, said experts.

Positive economic trends, including a 6.42 per cent year-on-year GDP growth in the first half of 2024, coupled with strong production recovery, PMI and trade activities, suggest a promising outlook for the stock market, Nguyễn Minh Hoàng, Chief Analyst at Việt First Securities, told Việt Nam News.

"As policy direction shifted in 2023 and early 2024, marking a tentative economic resurgence, the clarity of this recovery is yet to fully unfold. Looking ahead, the economic recovery is expected to gain momentum, transitioning towards more pronounced growth within this cycle," Hoàng said.

"This pivotal perspective guides our view that the stock market will persist in its upward trajectory through accumulation."

Additionally, with the recent change in the US Federal Reserve’s policy stance, it is no longer imposing pressure on Việt Nam’s monetary policies, Hoàng said, adding that the country is poised to potentially revert to maintaining looser monetary policies to support the economy.

Last week, the Fed decided to lower the interest rate by half a percentage point.

Previously, on September 12, the European Central Bank (ECB) also cut its deposit rate by 25 basis points to 3.50 per cent, following on a similar cut in June.

This monetary easing will bolster the economic recovery in the US and Europe, key import markets for Việt Nam. The resurgence in consumer demand within these markets will be advantageous for export-dependent nations like Việt Nam.

Analysts anticipate that in the near future, the Government and the State Bank of Việt Nam (SBV) will enact more robust policies to support the business community and stimulate the economy, thereby sustaining a positive economic growth trajectory.

As companies prepare for the upcoming third quarter earnings announcements, analysts foresee that leading blue-chip and large-cap stocks could drive the market's momentum upward.

KB Securities Vietnam (KBSV) noted that the current price to earning (P/E) ratio of the VN-Index hovers around 15 times, aligning with the two-year average. In the medium and long term, the environment of low interest rates will serve as a pivotal pillar bolstering the recovery of domestic production, industry, investment and consumption.

Stocks to watch

According to Hoàng, during this period, cash flow will persist in a divergent trend throughout 2024, prioritising industries demonstrating distinct revenue and profit growth.

Specific sectors, like banking, will experience outstanding performance with reasonable valuations and transparent growth prospects, particularly towards the year-end. The bullishness is likely to be fuelled by anticipated credit growth driven by economic expansion.

In fact, banks have been the stock group attracting positive capital flow last week, demonstrating a superior recovery compared to other sectors.

“Banks are among the most resilient sectors, providing cushion to the market and driving upwards. Notably, ACB shares of Asia Commercial Joint Stock Bank hit an all-time high on September 20,” Hoàng said.

Also drawing interest from investors are securities stocks, especially after the Ministry of Finance (MoF) eliminated the pre-funding requirement for foreign investors before placing orders, the expert from Việt First Securities added.

As a result, expectations for the market’s upgrade to emerging market status are growing stronger, poised to become a key catalyst for the securities sector to surge towards the end of the year.

Moreover, industries exhibiting robust growth and profit resurgence, such as retail, are expected to witness profit expansion driven by economic recovery and the fundamentals laid in 2023.

At the very least, the retail industry is likely to maintain this growth trajectory strongly throughout the high seasons of the third and fourth quarters, traditionally peak periods for the sector.

Real estate, public investment and exports are other stock groups that should be on the watch list, Hoàng said.

Similarly, KBSV advises investing in sectors poised to benefit from demand recovery like banking and retail, market upgrading such as securities, foreign direct investment (FDI) sectors like industrial real estate and those leveraging increased public investment in infrastructure and construction materials.

On the other hand, Hoàng noted that investors should be cautious in October, a month typically marked by the period just ahead of US presidential election, known to positively influence market trends beforehand.

Statistics indicate a potential rise or sustained positivity pre-election, with notable fluctuations expected during this month.