Investors making transactions at a trading floor in Hà Nội. — VNA/VNS Photo

By Ly Ly Cao

HÀ NỘI — The Vietnamese stock market has witnessed choppy weeks since the beginning of the fourth quarter. Business results of the third and fourth quarters, as well as economic recovery factors, will be drivers of the market in the last months of the year, according to experts.

After growing strongly in the first eight months of the year, the VN-Index has made significant adjustments recently. Before closing the last session above the threshold of 1,060 points, the benchmark even fell close to 1,037 points.

It had lost more than 210 points from the peak hit on September 7 at 1,248 points and only increased by 5.32 per cent from the beginning of the year.

Some experts believe that market corrections in recent sessions are inevitable and necessary to reevaluate stocks more in line with expectations.

Over the past two months, investing at the current time entails lower risk compared to when the VN-Index was above the 1,200 point threshold. Many stocks have been strongly discounted by up to 30-40 per cent compared to the peak.

“From the second half of September to the beginning of October, the stock market experienced a significant decline. The VN-Index at times lost more than 10 per cent from its peak, which means many stocks decreased by tens of percentage points, with real estate stocks being particularly affected,” Lê Xuân, a HCM-based independent trader, told Việt Nam News.

“The market downturn occurred amid the State Bank's issuance of bonds. This event has raised concerns among market participants about the potential impact of exchange rate factors on limiting the scope of monetary policy easing. Additionally, I think that the long monthly gaining streak and the signs of business recovery that did not meet the expectations of listed companies are contributing to the down risks.”

Given the current domestic economic situation, things will get better when export activities really recover, she said.

“This is the most feasible area that can create momentum for the overall economic recovery. And naturally, I also expect that this development will serve as a foundation for the price movements of stocks in the stock market.”

Meanwhile, Nguyễn Minh Hoàng, director of the Analysis Department at VietFirst Securities, said that business results of the third quarter and expectation of listed enterprises’ performance in the fourth quarter will influence the market’s movements in the last months of the year.

Key economic data, such as credit growth, export activities, index of industrial production (IIP), manufacturing purchasing managers’ index (PMI), public investments, and tax support will affect the market sentiment.

“There is not much room left for monetary policy to support the economy, as the central bank hardly further cut discount rates and refinance rates because VNĐ interest rates are currently lower than US interest rates. As a result, fiscal policies are factors influencing the market,” Hoàng said.

Furthermore, the operation plan of the KRX is expected to be implemented soon. The system is anticipated to provide new products, and trading and settlement solutions such as intraday trading (T+0), short selling, shortened settlement periods, and option contracts.

The KRX also serves as a precursor to the advancement of the stock market. The State Securities Commission (SSC) has been continuously working with relevant parties to promote and meticulously prepare for the upgrading goal.

“I still expect the VN-Index to trade at 1,200-1,250 points at the end of this year”, he said.

Lower expectations

Given the current developments, many securities have lowered their forecasts for the VN-Index at the end of the year.

KB Securities Vietnam JSC recently adjusted its expectation for the benchmark to 1,160 points at the end of 2023, down from the previous projection of 1,240 points at the beginning of the year and in the latest quarterly strategic report.

Considering the risk factors from exchange rate pressures and potential interest rate hikes by the US Federal Reserve, MBS Securities has lowered its forecast for the VN-Index in the last months of the year from the range of 1,280-1,340 points previously to 1,260-1,280 points, which corresponds to the price to earnings ratio (P/E) of 13.7 - 14 times.

Similarly, Vietcap Securities reduced the VN-Index’s forecast from 1,300 to 1,250 points by the end of 2023. — VNS