Investors urged to restructure investment portfolio amid challenging environment

Experts discuss new investment opportunities in 2023. (Photo courtesy of VIR)

Although significant challenges remain for the economic and investment environment in Vietnam, there are still opportunities for investors to increase profits through investment channels if they know how to restructure their portfolio, experts have said.

Economist Nguyen Tri Hieu told a roundtable titled “New Investments amid New Volatility” held in Hanoi on February 7 that looking back at 2022, from the beginning of the year, the economy recovered with growth and strong lending by banks. But, by the end of the year, the economy has shown signs of slowing down due to very strong impacts from both external and internal factors.

He said that this was shown in financial markets such as the stock market losing more than 30% of its value; frozen corporate bond and real estate markets; the gold market fluctuating very strongly and banks raising interest rates to attract capital because deposits were low compared to credit growth.

The State Bank of Vietnam also had to expand the credit room many times for banks. By the end of last year, the credit ceiling was increased to 15.5% and 16%.

"This proves that by the end of 2022, the Vietnamese economy had difficulties and these have lasted until the beginning of 2023," Hieu added.

Le Trong Minh, Editor-in-chief of Dau Tu (Vietnam Investment) Newspaper, said the investment environment in Vietnam has changed a lot.

“There were areas that used to be opportunities and advantages, but now, this is no longer true. Along with that, the world economic policies and the "taste" of investors have also changed,” he said.

Meanwhile, Thai Viet Dung, Director of Exness Vietnam, said 2023 could be a tumultuous year for investors as the conflict between Ukraine and Russia continues to worsen, and the COVID-19 pandemic has not completely disappeared. In addition, inflation is high, countries are tightening monetary policies, and there are mass layoffs at large global technology companies.

Talking about new investments in the difficult context, Hieu said in the five markets of securities, real estate, banks, foreign exchange and gold, the stock market will see little sign of recovery and will not be able to return to the 1,500-point mark as in 2022. However, the situation may improve more positively by the end of 2023.

Meanwhile, the real estate market has not had many positive signals. Investors still choose to wait and observe instead of participating in the market.

The foreign exchange market still has an "unpredictable factor" when the US Federal Reserve (FED) continues to make moves to increase interest rates. The bank deposit market shows signs of increasing when banks were racing to increase deposit interest rates.

As for the gold market, as inflation has not been controlled, it will push the price of gold up. The market therefore will undergo development in 2023. However, currently, the gold price in Vietnam is still higher than the world price. Investors still need to be careful when participating in this market.

From the above analysis, experts believe that investors still have the opportunity to increase profits if they choose the right investment channel. In particular, with the stock market, although it has not been able to return to the 1,500-point mark of 2022, with the 1,000-point mark in 2023, the Vietnamese stock market is receiving great attention from foreign investors.

However, in order to control risks, experts recommended that investors should restructure their portfolio of stocks, and choose good stocks with strong fundementals. In particular, they need to be disciplined and cut losses when necessary.

Many billion-dollar investment funds intend to pour money into the Vietnamese stock market, said Quan Duc Hoang, chairman of A Fund.

“Recently, I had business trips to work with big investment funds in the US, the UK, and the Republic of Korea. Not one of these investment funds have a sensitive overview of the Vietnamese investment environment. They estimate that it is an ideal time for investors to collect a portfolio of shares,” Hoang said.

“Despite of the difficult situation, during the past nearly 30 years, I have yet to see a large investment opportunity similar to the current situation because many Vietnamese enterprises are operating smoothly and generating good profits. Besides, we have yet to take thorough advantage of the opportunity from free trade agreements, especially the EVFTA. The important note is that the investors need to be careful in selecting partners.”

Hoang added that although many large investment funds want to pour money into the Vietnamese stock market, they have yet to implement their plans because they do not have big enough partners. Meanwhile, large domestic enterprises run out of room for foreign investors.

A study by BIDV Securities Company analysing over 50 billion USD owned by foreign investors on the Vietnamese stock market showed that more than half of foreign ownership is owned by strategic investors. This group usually holds stocks for the long term.

Foreign investors also expect Vietnam’s market to be upgraded to an emerging market. According to JPMorgan's CEO in the Asia-Pacific region, if it is upgraded to emerging market status, the market will receive approximately 5 billion USD from ETFs. Therefore, the fact that the market is in a period of low valuation is a very good opportunity to invest and hold.

Regarding new investment opportunities in 2023, Nguyen Trung Thanh, Head of Web 3.0 Department, Vietnam Blockchain Association & Founder of Trustkeys Network, said: “2023 also has bright spots such as opportunities to build, complete and open new ideas. In particular, with Blockchain as a new technology, the number of young investors and current market entrants is an endless source. The market is still very small, only reaching 1-2% of the size of the US stock market. The actual amount of cash in the market is about $137 billion at present. So the market's ability to expand in the next 5-10 years is certain."/.