Investors watch stock market's movements (Photo: VNA) The market capitalisation of the Ho Chi Minh Stock Exchange (HoSE)has increased by approximately 550 trillion VND (23 billion USD), reachingnearly 5 quadrillion VND. As for all three exchanges, the total marketcapitalisation of the Vietnamese stock market has increased by approximately 660trillion VND (27.5 billion USD) after a relentless two-month climb.
The recent market uptrend has been supported by positive businessperformance from listed companies. According to broker VNDirect, the estimatednet profit of 1,128 companies (accounting for 96% of market capitalisation) inthe fourth quarter of 2023 rose by 30% compared to the same period in 2022.This growth is attributed to improved business activities of companies and thelow base effect from the fourth quarter of 2022.
The net profit of the banking sector in the fourth quarter of 2023increased by 22.5% compared to the same period, driven by accelerated creditgrowth, strong non-interest income (fee income, foreign exchange activities), industry-wideincome growth of 20%, and a 5% reduction in provisioning expenses. The bankingsector has played a leading role in the recent market surge.
The net profit of the real estate sector in the fourth quarter of2023 declined by 19.6% compared to the fourth quarter of 2022, and 24% comparedto the third quarter of 2023. However, the decline is primarily due to Vinhomes(VHM). Excluding VHM from the calculations, the net profit of the real estatesector still grew by 132% compared to the fourth quarter of 2022.
The positive performance in business activities of the two largestsectors, banking and real estate, has facilitated a smooth start to the year2024 for the market. Many investors are expecting improved stock marketperformance this year after a challenging 2023. In fact, large organisationsalso hold high expectations for this prospect.
In 2024, Dragon Capital forecasts that the global landscape stillposes challenges as global economic growth slows down. However, the domesticmarket will experience significant recovery as the low-interest rateenvironment has enough time to permeate the economy, stimulating consumerdemand and igniting investment intentions of businesses and investors.
The government's commitment to continue flexible monetary andfiscal policies is crucial to reinforce the confidence of private enterprises.Analysts predict that the profit growth of the 80 largest companies will rangefrom 16-18%, providing a solid foundation for the stock market to be the mostattractive investment channel in 2024.
Individual investors account for over 88% of the market. The12-month deposit interest rate at banks is only around 4.7%, which is notattractive compared to the expected market profit of 10.9% (based on aprojected P/E ratio of 9.1 for 2024).
Other investment channels such as real estate have certainlimitations, including the need for large capital, low liquidity, and investorconcerns about the legal aspects of real estate projects. Therefore, there is alikelihood that significant amount of capital will shift to the stock market.
Moreover, foreign capital flows may improve with any positivemarket information, such as the untangling of pre-funding or new progress inthe process of upgrading to emerging market status. Overall, Dragon Capitalconsiders 2024 an attractive time to participate in the stock market.
Similarly, Pyn Elite Fund also expresses optimism about themarket's prospects in the near future. The growth rate of Vietnam’s economy isshowing signs of recovery, and there are positive profit prospects in thecoming years.
Currently, the stock market has yet to reflect the pace of earnings growth ofcompanies and the story of interest rate reduction. If domestic interest ratesdecrease, market liquidity will increase, and the expected strong growth incorporate profits will contribute to the overall profitability of the market./.
VNA
