While savings interest rates have dropped, allowing for reduced lending rates, credit growth has been slow due to challenging global and domestic macroeconomic conditions. (Photo: VNA) The domestic stock market in Vietnam, comprising the Ho Chi MinhStock Exchange (HoSE), the Hanoi Stock Exchange (HNX), and the Unlisted PublicCompanies Market (UPCoM), has shown improvement in transaction value since thebeginning of the second quarter. The average session value has risen from 476million USD in the first quarter to 677 million USD in the second quarter andfurther to 1.01 billion USD in the third quarter of 2023.
This growth can be attributed to the decrease in deposit interest rates and amore favourable macroeconomic context, encouraging investors to seekhigher-risk and higher-profit investment opportunities in the stock market.
Although interest rates have reached historically low levels, even lower thanduring the COVID-19 pandemic when the State Bank implemented monetary policymeasures to support businesses and individuals, the stock market has notwitnessed trading sessions with values exceeding 2 billion USD as it did duringthe pandemic.
Tran Minh Hoang, head of Analysis at Vietcombank Securities Company (VCBS),explains that the current context differs from the previous period, making itunlikely for a significant capital shift towards securities.
Hoang suggests that the Government and the State Bank are currently directingcapital towards production and business activities while limiting speculativeinvestments to prevent asset bubbles. Although credit growth for the entireeconomy reached 7.4% by the end of October 2023, significantly lower than the11.6% increase during the same period in 2022 and far from the 14% creditgrowth target for 2023, banks still have excess liquidity. Hoang believes thatlow interest rates need to be maintained for a longer period to observe asubstantial capital flow shift to the stock market.
Le Pham Duy Nhan, head of the Portfolio Management Department atVietcombank Fund Management Company (VCBF), anticipates credit growth for thebanking system to reach 11-12% in line with GDP growth projections of over 5%.While savings interest rates have dropped, allowing for reduced lending rates,credit growth has been slow due to challenging global and domesticmacroeconomic conditions. Banks need to exercise caution in lending to minimisethe risks of bad debt, which has recently increased significantly.
Nhan emphasises that for industry-wide credit growth to accelerate, it willtake time for government support policies to penetrate the economy. Positivesignals from major export markets are also necessary for Vietnam, given itshighly open economy.
Observing the current market, investor Nguyen Xuan Bach notes attractive priceranges for many stocks, particularly in industries benefiting from expansionand real estate businesses with an advantage in land resources. However, cashflows into the market are not yet substantial, mainly consisting of short-termand alternating movements. Bach advises investors to be cautious, analyseindustry trends, and carefully select available stocks. Patience is crucial infinding the best buying points and avoiding hasty investments.
Le Pham Duy Nhan reveals that VCBF is maintaining a highproportion of stocks in long-term favoured industries such as information technology,industrial parks, logistics, and utilities due to their potential for stableprofit growth. The retail and consumer sectors also present attractiveopportunities due to their lower valuations resulting from weak domestic demandand declining profits.
Nevertheless, Nhan emphasises the importance of asset preservation, especiallysince the market has recently experienced a recovery. Short or long-termtrading strategies should be based on individual preferences and stock types,but investors should allocate capital appropriately for their investments./.
VNA
