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Stock market steps into the recovery phase

07:45 | 18/09/2022

VCN - After a period of strong volatility, the stock market has officially entered the recovery phase along with positive information from domestic and foreign macroeconomics, and profitable business results of enterprises. Along with that, there are many positive factors that will support the market’s recovery in the future.

there are many positive factors that will support the market’s recovery in the future. Source: Internet
There are many positive factors that will support the market’s recovery in the future. Source: Internet

Cash flow more confident

Assessing the prospects of the stock market, Mr. Le Duc Khanh, Analysis Director, VPS Securities Joint Stock Company, said: “In the first half of the year, the market had a relatively large correction. In the last period, the market made a bottom in July but it recovered again. The cash flow was starting to become more confident although the liquidity has not really exploded compared to 2021, investors’ confidence, the disbursement, basic stock groups and bluechip stocks have prospered. Therefore, the market is in an uptrend to recover again, approaching the 1,300 point area, possibly 1,350 points further and close to 1,400 points from now until the end of 2022.”

Analyzing more positive factors affecting the stock market, Mr. Nguyen Trieu Vinh, Deputy Chief Investment Officer, Vietcombank Fund Management (VCBF), said that the Vietnamese Government is implementing policies to control inflation, along with the price of oil and some commodities in the world has also cooled down recently.

Regarding the valuation of the stock market, Mr. Nguyen Trieu Vinh stressed that, currently, the P/E index of the VN-Index was 12.3 times and there was a divergence between industry groups. Accordingly, with the leading group like the banking industry, the P/E ratio of this industry group was currently very low which was only about 7-8 times.

“Regarding the growth expectations of businesses, in the first six months of the year, listed companies achieved a growth rate of nearly 17%, the expectation in 2022 was about 20% and for the next year was about 19% according to Bloomberg's survey. With such profit growth, the P/E ratio of the market in 2023 would be even lower, about 10.2 times. It can be seen that the above factors are very favorable for the stock market in the current period," Mr. Vinh said.

According to experts, although the world still has many macro challenges in the short term, the Vietnam economy still has growth potential and there are many opportunities for investment in the long term.

Many supporting factors

According to experts, during the recovery period, the stock market recorded many positive supporting factors, when the payment time was officially shortened to T+2, HoSE returned to odd lot transactions from September 12, the KRX system will also be put into use in the near future.

In particular, with the payment time officially shortened to T+2 from August 29, the market liquidity is forecasted to increase, and investors have more conditions to restructure the portfolio and allocate in the investment process.

In the period of market recovery, an effective investment strategy is what is being paid great attention to by investors. An expert from VPS Securities Joint Stock Company said that the vast majority of investors would choose stocks that were undervalued compared to the prospects, book value and free cash flow. With more experienced investors, they can grasp which stocks can rise in the short term. During the recovery period, they can choose stocks such as chemicals, steel or oil and gas, energy, industrial real estate, etc.

Mr. Vinh noted that stock investment could create good opportunities in the long term, but if it was a short-term investment, the price to pay for wrong decisions was very expensive and the market's movements in the second quarter of this year have proven this.

“Therefore, before investors made a decision to enter the market, they should also equip themselves with the necessary knowledge, macro analysis skills, and company valuation analysis skills, and spent a certain amount of time researching and learning about the company before making an investment decision. If you have not prepared these skills, I think that investors should not invest on their own, if they want to invest, they can learn about investment products designed for investors who do not have the time or investment skills, provided by professional management companies such as open-end fund products,” Mr. Vinh recommended.

To support investors, there are currently a number of securities companies that have implemented many solutions, especially for individual investors who are new to the market and are inexperienced and need more knowledge.

Besides creating communities to exchange and share with investors, businesses also set up trading software to update information about enterprises and industries, P/E ratios of the market, transactions, business prospects of industry groups, which stocks are of interest, which stocks are undervalued or are showing signs to buy.

By Hoài Anh/Thanh Thuy