Economy in the year of the Dragon, stocks "in the clouds"

 A stable macroeconomy is a solid foundation for listed businesses to develop and grow profits in 2024, thereby promoting a sustainable rise of the stock market.

In 2023, Vietnam's socio-economic situation will continue to remain positive. The macroeconomy is stable, inflation is controlled much lower than the target. Major balances are guaranteed, many important results in all areas achieve the set goals, thereby making Vietnam an economic bright spot in the region and the world.

Entering 2024, the GDP growth target is 6 - 6.5% and inflation is controlled within the range of 4 - 4.5%. Analysts expect the macroeconomy to be more stable than in 2023. Although the recovery speed is somewhat slower than the 2013 - 2019 cycle, it is also inevitable when the world and Vietnamese economies Nam is in a different growth context.

The driving forces for the economy come from within the country such as plans to promote public investment disbursement, policies to stimulate domestic consumption, tax cuts, and salary increases in both the public and private sectors. In addition, the National Assembly passed a number of amended laws such as the Land Law, the Credit Institutions Law, the Housing Law... which will create a stable legal basis, promoting growth in the new period.

In addition, Vietnam's economy is expected to continue to benefit from its position as an important link to maintain the sustainability of the global supply chain, playing a connecting role between major economic powers. which is in strategic competition, thanks to its active neutrality. The role of manufacturing industries in Vietnam in the global supply chain is gradually being affirmed.

In addition, the Government's push to implement its commitment to green and sustainable growth, efforts to bring net emissions to zero, the electrification trend, or the story of the next stage of development of the electronics industry is Semiconductor industry makes Vietnam continue to be an attractive destination for foreign direct investment (FDI).

Through the first 2 months of 2024, the total registered FDI capital in Vietnam reached more than 4.29 billion USD, an increase of 38.6% over the same period in 2023. Implemented capital of foreign investment projects is estimated to reach about 2 USD. 8 billion USD, an increase of 9.8% over the same period in 2023 and the highest level of the first 2 months in the last 5 years.

The purchasing managers index (PMI) has had 2 consecutive months above 50 points, showing the improvement of the manufacturing industry, in which both output and the number of new orders increased. This partly proves that Vietnamese businesses are fully capable of taking advantage of opportunities from FDI capital flows, thereby aiming for deep integration into the world economy.

Stocks "in the clouds"

Besides the above factors, a positive point for the stock investment channel that will be maintained from 2023 to 2024 is the loosening monetary policy. The fixed interest rate for the first 2 years for new loans is currently only about 6-8%/year, down nearly half compared to last year, at 12-14%/year.

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This is expected to help businesses reduce interest costs, thereby strengthening profits. According to Dragon Capital's forecast, profits of the 80 largest listed enterprises may grow by an average of 15-18% in 2024 compared to the same period last year and are still being actively supported from macroeconomics.

Stocks continue to be an attractive alternative investment channel for term deposits when the average interest rate on 12-month deposits is currently 4.7%, compared to the peak of over 10%. According to Dragon Capital, cash flow was recorded flowing into the fields of Information Technology (+13.1%), Import-Export (+10.9%), Raw Materials (+9.6%) and Banking (+10.9%), +9.1%)…

In addition, the corporate bond market is on a stable trajectory thanks to the management agency's purification measures in 2023, which is expected to open up capital flows to the economy, reducing dependence on credit channels. banking use. In addition, the real estate market is also showing signs of warming up after the Government's efforts to overcome difficulties, which will contribute to promoting economic growth, thereby creating a springboard for the stock market to go up.

In addition, reasonable valuation is one of the factors that helps Vietnamese stocks continue to attract money. The expected P/E ratio for 2024, according to Dragon Capital's forecast, is 10.6 times for the top 80 businesses. This number is much lower than other countries in the ASEAN region such as Thailand (16.0 times), Malaysia (14.1 times), Indonesia (13 times) and the Philippines (12.6 times).

Many positive factors are supporting the market but there are still headwinds. Foreign investors have continuously sold more than a billion USD in net since April 2023, showing that global economic instability is affecting investor psychology and market stability. However, the net selling trend of foreign investors has slowed down somewhat in the first quarter of 2024.

Foreign capital flows are expected to reverse with the prospect of upgrading to emerging markets is more obvious. With the KRX system soon to be put into operation this year and the efforts of regulators and market members to perfect the criteria, Vietnamese stocks are forecast to be upgraded to FTSE secondary emerging markets this September.

Dragon Capital's analysis team said that about 700-800 billion USD is currently being invested in this market segment. This means that if Vietnam is upgraded to market status, the investment proportion could range from 0.2 - 0.24%, equivalent to 1.3 - 1.9 billion USD of foreign capital flow into Vietnam. Male.

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