Riding the stock market waves

Sideways Trend

The VN-Index has struggled around the 1,100-point mark in recent months, particularly in the fourth quarter of 2023. Money enters the market only amid substantial market drops, reflecting investors' reluctance to enter the market at high prices. The market is going sideways, which makes trading difficult for investors since buying stocks might result in temporary losses even before they reach their accounts. So, how long will the "loss-cutting" period last?

In actuality, this movement appears to be nearing a distinct black-and-white phase. The sideways pattern may come to an end if the market swiftly increases after closing the quarterly NAV until the beginning of 2024, followed by a strong decrease. If the market continues in a narrow range, as it is today, the "reducing losses" scenario might last until the second quarter of 2024. As a result, this is a difficult year for investors to oversee.

To establish a new upward trend, the VN-Index must confirm breaking over resistance levels with strong capital inflows in the near future. As a result, long-term investors can take the opportunity to accumulate equities during the downturn from late December 2023 to January 2024. Short-term investors, on the other hand, should wait for clearer market signs before investing cash. As a result, as investors wait for a fresh wave in the market, the "cutting losses" strategy will gain primacy.

Market Support

Interest rates have fallen lower than during the Covid-19 period in the fourth quarter of 2023. Low interest rates are a major driver of market value in 2024. However, the Vietnamese economy still faces dangers, such as a temporary stop in monetary policy easing if local and global buying power, as well as Vietnam's capital demand, do not improve. Rising commodity prices and global geopolitical tensions might have a detrimental influence on Vietnam's economic growth.

In this setting, the mid-term stock market will see alternating ups and downs, with substantial distinction between top businesses with steady business prospects and high resilience. Long term, Vietnam will lead the area in terms of economic growth and will continue to draw large foreign investment, including FDI and FII.

Overall, the VN-Index trajectory since the Covid-19 period has been correlated with interest rate swings. As a result, investors' primary goal at the moment is to select stocks from the strongest industrial groupings.

How to pick stocks

Military Bank's (MBB) stock is an option in the banking industry. MBB offers unique benefits because it is part of the Military group. MBB earned VND 35,556 billion in total operating revenue and VND 20,019 billion in pre-tax profit in the first nine months of 2023, owing to greater interest income, lower operating expenses, and provisions. MBB may attain a credit growth rate of more than 20% in 2024 and will continue to be prioritized for 1.5-2 times greater credit growth than the industry average. As a result, long-term investors might consider purchasing MBB at a price range of VND 16,000-18,000 per share.

Investors interested in industrial real estate equities might explore IDICO Corporation's (IDC) shares. IDC is involved in a variety of industries, including industrial zones, residential real estate, power production and distribution, and infrastructure building. IDC announced net sales of VND 4,998 billion and after-tax profit of VND 1,032 billion in the first nine months of 2023. IDC has a wide area available for leasing, totaling 677 hectares. Their industrial zones have vast land reserves and attract considerable capital with attractive rental prices ranging from USD 125-135 per square meter, which are concentrated in major economic sectors in the North and South.

Investors might consider purchasing IDC in a price range of VND 45,000-50,000 per share. If investors have previously acquired IDC over VND 50,000 per share, they may continue the "reducing losses" approach, with a mid-term aim of VND 52,000-55,000 per share in mind.

Nam Long Group (NLG) stock is a good choice for a residential real estate investment portfolio. NLG is a key participant in the mid-range and low-income housing markets. NLG is one of the few real estate organizations with the financial strength to weather the most difficult market conditions.

NLG often sells roughly 50% of its projects to foreign partners such as Japan in order to construct projects and generate quick cash flow. Akari City, Mizuki Park, and Paragon Dai Phuoc are examples of projects that have been implemented in this manner. Investors might consider purchasing NLG in a price range of VND 34,000-36,000 per share. If investors have previously acquired this stock at a higher price, they may choose to reduce their investment and hold for a long-term aim of VND 40,000-45,000 per share.