Unlike previous concerns, the stock market is witnessing quite positive movements in the first half of May 2023, with the VN-Index increasing slightly by 1.5%. Liquidity also showed better signs of improvement, with trading volume increasing gradually in the second week of the month, showing that cash flow seems to be participating more actively.
In particular, although the market was still in a state of tension and traded in a narrow range during the past three months, the cash flow showed a flexible movement across industries, from tourism, agriculture, information technology, retail, seafood processing, energy, to raw materials, etc., so it still brings quite a big opportunity for investors who are quick and have good surfing ability.
As for foreign investors, after net selling of nearly VND 2,780 billion on HOSE in April, this group continued to net sell more than VND 1,022 billion in the first half of May, mainly due to the fact that cash flow through ETFs continued to be net withdrawn. The selling force of foreign investors is one of the factors that partly influenced the psychology of domestic investors and contributed to restraining the market in recent months.
Most of the previous forecasts of securities companies were quite cautious with the market movements in May, despite the fact that the market movements so far have not had a big shock. A series of positive macro-policy news released recently, although not yet stimulating the market to rise sharply, has clearly become an important support for the market.
The nearest resistance zone of VN-Index is located near 1,090 points, corresponding to the 200-day moving average (MA 200). Previously, at the end of January and the beginning of April 2023, the VN-Index also declined again when approaching this MA 200. Therefore, it is likely that many investors will sell stocks in mass when the index approaches near MA200 again. On the contrary, in case VN-Index can break out and maintain firmly above this resistance line, cash flow will confidently participate more strongly.
The more important thing that investors need to pay attention to is that the monetary policy is gradually loosened again. After two reductions in operating interest rates in the second half of March, the State Bank of Vietnam (SBV) recently signaled that it may continue to reduce the operating interest rate again in the near future. Meanwhile, deposit interest rates at many banks reacted earlier when they continued to be adjusted down from the beginning of May until now.
The US Federal Reserve (Fed) or some other central banks, after tightening monetary policy for more than a year now, still have to keep interest rates at a high level to cope with high inflation, even though it may bring recession risks to the economy.
In contrast, Vietnam seems to have reversed policy earlier, seeing how high interest rates can wreak havoc on the economy and businesses. This was achieved thanks to the fact that Vietnam's inflation, after great pressures in 2022, have cooled down significantly in the first months of 2023, along with the exchange rate being stable again and system liquidity becoming more abundant.
Other markets that have struggled in recent times like the corporate bond market or the real estate market have also been recently supported by many policies. In addition, a number of large real estate projects in many localities have gradually been cleared of legal obstacles so that they can continue to be implemented.
Now, with interest rates falling again, it is easy to understand why many forecasters believe that business results will start to recover from the second quarter, before growing higher in the second half of 2023. Profits of many businesses hit the bottom in the first quarter, with a sharp decline, even loss.
In particular, the recently issued Circular 02/2023/TT-NHNN not only helps banks reduce the pressure of bad debt transfer and provisioning, but also creates favorable conditions for businesses to access financial resources and improve cash flow. Therefore, it is reasonable to expect that banking stocks will perform better in the near future and be an important driver leading the market. The securities group can also benefit from the positive outlook of the market.
In a recent assessment report, Dragon Capital Fund said that although bad debt is still a concern, systemic risk has been significantly reduced. While the recovery of the real estate industry depends on small and medium-sized stocks, stocks of private banks, which benefit more from this policy than state-owned banks, also have better price increase.
In addition, the group of electricity stocks is also receiving attention when the power plan VIII was officially approved by the Government on May 15. In particular, renewable power businesses will benefit when there is a plan that prioritizes the development of renewable energy, making it account for about 31-39% by 2030, equivalent to 5,000-10,000 MW. The figure can increase to 47% with the conditions of commitment under the political declaration on establishing a just energy transition partnership (JETP). The proportion of this power source in the system is expected to increase to 67.5-71.5% by 2050.
Compiled by VietnamCredit