Three scenarios for the VN-Index in 2024

Investors should avoid chasing high-priced stocks and instead focus on stock selection.

>> VN-Index to trade in range of 1,200-1,250 points at year end

This was one of the topics discussed by FIDTanalysts at a recent seminar co-hosted by this unit and FiinGroup's FiinTrade. Mr. Huynh Hoang Phuong, Head of Research and Analysis at FIDT, presented three potential scenarios for the VN-Index in 2024 during the seminar.

First, assume the VN-Index reaches 1,300 points, with a fluctuation range of /- 20 points and preconditions such as: Vietnam's economy recovers well in 2024; the US economy "soft landings"; corporate bond and real estate market risks are minimized; and foreign capital flows resume by the end of 2Q24.

Second, a positive scenario with the VN-Index reaching 1,420 points, with a fluctuation range of /- 30 points, with preconditions such as: the Vietnamese economy recovering well and exports growing strongly; the US economy growing near its long-term potential; the Government and the State Bank of Vietnam handling legal issues in the real estate market and the quality of assets in the banking system improving; and foreign capital flows returning strongly for upgrade prospects.

Third, a negative scenario with the VN-Index reaching 1,150 points, with a fluctuation range of /- 20 points and preconditions such as: the Vietnamese economy will recover but remain "uncertain"; the US economy will experience a mild recession; real estate legal issues and corporate bond risks; banking system asset quality will not improve significantly; and foreign capital flows will continue to concentrate in developed markets.

Mr. Phuong indicated that FIDT believes there is a 65% chance of falling into the first scenario, a 20% chance of falling into the second scenario, and a 15% chance of going into the negative scenario.

Ms. Truong Minh Trang, Managing Director of Financial Information Services - FiinGroup Vietnam, stated during an online poll via app to gather investors' viewpoints on which scenario the VN-Index will fall into: More than half of the investors at the Seminar agreed with the basic possibility (ie, the first scenario in which the VN-Index reaches 1,300 points), nearly 30% chose the positive scenario in which the VN-Index reaches 1,420 points, and the remaining percentage chose "Other options," or negative scenarios in which the VN-Index falls.

>> Industries with low P/B values in the Vietnam stock market

As a result, it is clear that investors remain wary of Vietnam's stock market in 2024.

Analysts said that recognizing expectations in 2024 is one thing; what is more essential is how investors should behave. Mr. Huynh Hoang Phuong believes that next year will continue to be a year of equities, each with their own story to tell, such as public investment, infrastructure development, power planning (construction, energy), seafood, real estate, and so on. However, investors should avoid chasing high-priced stocks and instead focus on stock selection.

According to Ms. Do Hong Van, Head of FiinTrade Data Analytics, the idea of selecting stocks based on risk tolerance must be founded on a business basis, including profit forecasts, cash flow, and valuation. FiinTrade's alternatives include businesses with increased income, such as those in the industries of seafood, infrastructure, industrial park real estate, seaports, information technology, and chemicals.

Ms. Van also stated the prospects from other stocks in the case that hurdles in policy rules connected to banking, corporate bonds, and real estate are removed and the stock market upgrade is supported.