How to pick stocks by end-year?

The Vietnam stock market showed two extremes and fluctuating investor sentiment in November. Photo: Quoc Tuan

>> The VN-Index is under downward pressure

The VN-Index has been rising steadily since early December, occasionally exceeding 1,099 points with a lot of trading activity.

A medium-term bottom

The Vietnam stock market showed two extremes and fluctuating investor sentiment in November. The VN-Index fell precipitously to a range of 875–880 points before rebounding to a range of 1,000–1,050 points.

Investors should take precautions to avoid dangers while the stock market is ecstatic since a sharp correction could occur at any time. When investors were the most gloomy, the stock indexes dropped the most, but many stocks would recover quickly, as they did in late November and early December, when numerous major stocks and fundamental stocks like STB, SSI, HPG, CTG, and PVS climbed by 15-20% or even 50% or more.

The Vietnam stock market has formed a short-term bottom, and in December, particularly before the Lunar New Year, investors may find new possibilities. In VN30 stocks, including banking stocks, securities stocks, energy stocks, rubber stocks, chemicals stocks, and construction stocks, the wave of speculation persisted.

With a value of around VND 8,000 billion, ETFs, particularly foreign ones, were net buyers in November and even the first few weeks of December. The amount of net buying has increased to about 20 trillion VND so far, making this the strongest net buying month since the start of 2022. This fact occurred at the precise moment when the stock market had its steepest decline, with the market's P/E at 10x being extremely low by historical standards.

Statistics from the Securities Commission show that foreign institutional investors, active investment funds, and ETFs have all experienced strong net buying trends over the past two months, as evidenced by the sudden trading value of foreign investors on all three exchanges. This in part reflects the optimism of foreign ETFs regarding the future of the Vietnamese stock market.

>> What the Vietnam stock market swings in 2022 tell us?

Which strategy to choose?

Many of the top stocks in the banking, securities, construction, oil and gas, utilities, retail, and other industries will rise once the stock recovery has been verified with an anticipated gain of 150–200 points in the average index. Although bottom-fishing at 900–950 points promises to give investors the chance to earn substantial profits, not all investors are able to make disbursements because the stock market is susceptible to correction.

The VN-Index might range from 1,080 to 1,100, and even from 1,200 to 1,250. The choice of stocks that have soared and plunged precipitously in the recent past, particularly those that must be the top stocks of the groups, sectors, and VN30, must also be carefully considered by investors who closely monitor the market and have experience in doing so.

For the vast majority of investors, accumulation or value investments with a long-term perspective will likewise be more suitable when the stock market as a whole and many individual stocks have fallen to significant discounts. Several retail, consumer, oil and gas, financial, chemical, and insurance stocks, including FRT, DDV, STB, VNM, and BVH, offer great value investing opportunities...

Opportunities still remain, regardless of how the stock market performs at the end of this year and early in the following year. Investors can select stocks that fulfill their criteria for investments, such as those in the energy, technology, retail, insurance, and other sectors that profit from macroeconomics, while exercising caution when it comes to stocks of real estate companies and companies with a lot of short-term debt.

Additionally, proper portfolio management is required, as is the cumulative acquisition of equities. The proportion and duration of stock holdings can be taken into consideration if you decide to invest during the current period. Before making an investment, it may be important to contact financial consultants regarding stock selection and short-term trading.