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Stock focus: Why is the market so volatile, and has it reached a bottom?

According to experts, the root cause of the market's strong fluctuations last week was due to the unstable psychology of the majority of individual investors, which accounts for a large proportion.

Mr. Truong Hien Phuong (left) and Mr. Dang Tran Phuc

Last week, VN-Index had 2 sessions of strong decrease and 3 sessions of increase, of which 2 sessions increased strongly. Closing the week, VN-Index recorded another weekly gain with an increase of 1.52%.

Why does the market have such a wide fluctuation range? Has the market bottomed? And which stock groups should investors pay attention to in the current period? We received comments from the following experts:

The current point area can be considered the bottom area.

Mr. Truong Hien Phuong, Senior Director, KIS Vietnam Securities Company

The market fluctuated strongly last week, primarily due to the impact of some macro information. Investors are concerned that the US Federal Reserve Bank (FED) maintains high interest rates to fight inflation. Domestically, the exchange rate several times increased dramatically, leading to the State Bank (SBV) taking action to issue T-bills to attract money, indirectly pushing up open market interest rates.

In terms of effectiveness, the SBV's actions are reasonable and timely. However, investors are concerned, as the momentum of interest rate reduction has slowed down, even inched up slightly in the interbank market. Investors are also worried about whether the issuance of T-bills will affect the currency market, especially related to the stock market. These are just concerns, nothing concrete.

Read more: Interest rate cut expected to pump economy up » Vietnam News - Latest Updates and World Insights |

Next, the reason why the market decreased also came from rumours. These rumours are also interpreted in a negative sense, leading to a shock in the market. In addition, foreign investors are still net sellers in large volumes, making investors afraid.

But then the market reversed sharply when the above problems were resolved. That's when the FED temporarily did not raise interest rates, creating a positive signal for the market. The State Bank of Vietnam controlled the increase in exchange rates, keeping the currency market quite stable.

The companies involved in the rumour quickly provided information to investors to correct and confirm the untrue information, helping to stabilize investor psychology. In addition, the net selling momentum of foreign investors decreased...

So, has the market bottomed or not? No one can point out which is the bottom and which is the top. However, the current point area can be considered the bottom area. Overall, based on basic analysis factors, we see little negative information that can affect businesses and the market. Meanwhile, there is much positive information supporting the economy and the market.

Regarding the world, the FED's action to raise interest rates has almost reached its peak. If there is an increase, it will only be 0.25%, less of a concern than before.

Domestically, interest rates are maintained at a low and fairly stable level, supporting businesses in accessing lower capital costs and increasing profit margins. Although there were times of unusual increases, the basic exchange rate was kept stable, showing that the State Bank of Vietnam is determined to ensure a stable monetary market and has good handling tools.

Establishing a special working group to support real estate businesses in overcoming difficulties shows its effectiveness. Real estate is an industry that can spread to many other industries. The Government also promoted disbursement of public investment, creating a spillover effect in many industries.

It must be mentioned that after the US President visited Vietnam, many leading American businesses explored business opportunities in Vietnam. After that, many other businesses also explored investment opportunities in Vietnam.

Or the KRX trading system is about to run, expected next December officially. When this system operates, it will create conditions for investors to trade more smoothly. The new system will also support regulatory agencies such as the Securities Commission and the Exchange to develop new products to increase the supply of new stocks for base market and derivative marketsThese demonstrate the determination of the management agency to upgrade the market. It is expected that from the beginning of 2025, the ranking can be considered for upgrade, so 2024 is the last year of momentum. If officially upgraded, the Vietnamese market will attract many foreign investors on a much larger scale than today...

The above factors will attract investors to return, eliminating the cautious mentality. The market will soon recover well.

Before worrying about choosing stocks today, investors can refer to analytical reports from reputable investment funds, securities companies, and specialized financial media. Investors should be cautious with rumours, avoid being psychologically manipulated, enticed, and sold off when the market drops deeply, and then buy after it increases again.

Investors can consider industrial park real estate stocks. Currently, developing an industrial park takes a lot of time and money. Therefore, businesses holding clean land funds and established industrial parks will benefit when foreign corporations move their production and supply chains to Vietnam.

Also read: Da Nang cancels suspended projects to attract investors: Land reservation in focus » Vietnam News - Latest Updates and World Insights |

The second is the public investment industry group, specializing in construction or providing raw materials, including iron, steel, cement, and stone.

Third are securities industry businesses. Currently, although there are strong falling sessions, the market is still worried, but liquidity has increased better than before, and VN-Index is forecast to recover soon by the end of the year. Entering 2024, if no information affects the market too much, 2024 is forecast to recover well, and securities companies will benefit.

Fourth are oil and gas industry enterprises. Geopolitical conflicts lead to high oil prices, which may increase shortly when the conflict issue is not resolved overnight. At least from now until the end of the year, oil prices will remain high, thereby benefiting companies specializing in providing oil and gas services.

There are also green or renewable energy stocks thanks to supportive policies from the Government.

Finally, there is the group of residential real estate businesses. The most difficult period has hit bottom; real estate has received much support from the Special Working Group, removing many problems. The real estate industry may not be attractive, but the industry's stock price is currently at a heavily discounted level with potential. Besides, there are also banking groups…

Attractive market valuation, low-risk, long-term investment

Mr. Dang Tran Phuc, Chairman of AzFin

The Vietnamese stock market has recently been one of the most volatile markets in the world. The reason is that the market is decided by 80-90% of individual investors.

Recently, the stock market has had too many rumours related to large businesses, closely related to many other businesses, which play a big role in the economy. When rumours related to this business appear, the stock market fluctuates strongly.

After the market dropped sharply, market valuations dropped to low levels. P/B is 1.46 times, which is a level that only appears in less than 4% of the market, meaning that out of 100 sessions, only 4 sessions appear at low prices. Accordingly, attracting a lot of money is still waiting for outside parties to participate. Because savings interest rates are currently low, the amount of money waiting outside is large. When they participate strongly, it pushes the market to have strong price increases.

Whether the market has bottomed or not is not too important. It depends on many unexpected events and developments. If there are no surprises, there is a high possibility that a bottom has been created, but if there are unexpected events, it is unpredictable. But one thing is certain: current stock market valuations are attractive. If you invest long-term, the risk is low at this time.

It's important for investors not to guess the market but to prepare action scenarios, what to do if they decrease and when they increase. The second should focus on businesses. Currently, good and strong businesses are gaining more market share than weak and difficult businesses. Accordingly, it is better to focus on good businesses rather than market forecasts.

Currently, foreign investors are mainly investment funds. They do not decide their capital sources but depend on fund certificate investors who are also individual investors abroad. Net buying or selling depends on whether they can mobilize capital from foreign individual investors. Currently, in the context of a relatively difficult world economy, capital mobilization from foreign funds could be better. In the coming time, foreign investors will not net buy much and may even net sell. Only when the world economy is clearer and better will foreign funds invest more in Vietnam.

Regarding evaluating the stock group, the attractive group is stocks related to industrial park real estate. This group benefits greatly from the sharp increase in FDI in Vietnam, is a group with good financial health, and pays high dividends.

Also read: Nikkei: Vietnam could welcome the fourth FDI boom » Vietnam News - Latest Updates and World Insights |

Group two is the thermoelectric group. It is expected that from the fourth quarter, when the economy returns, this group will mobilize more electricity, resulting in positive business results. This group's dividends are high, over 10-13%, more than 2 times higher than savings interest.

Third is the banking group, which is one of the strongest groups in the market. When the economy is difficult, business results continue. Credit is forecast to grow over 10%, and from 2024 onwards, many banks pay cash dividends at a rate higher than bank interest rates...

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