What prospects for the Vietnam stock market in October?

However, it is quite difficult to locate equities to invest in at this time. As a result, many investors may employ a "swing trading" approach in which they seek information on a regular basis.

Difficult to spread the impact from China

Last week, the Vietnam stock market may have been entirely focused on China, as a number of stock indices in that country climbed to new heights. This trend is attributed to China's new stimulus strategy following years of tightening, and investors believe that a new large-scale easing program has been developed. This appears to have a good influence on the mindset of Vietnamese investors, as the VN-Index rose substantially on the first trading day of October, reaching 1,300 points. However, profit-taking pressure pushed the VN-Index back down, with banking stocks being the focus point and driving major trade value.

Investors are quite optimistic about the policies just revealed by the People's Bank of China, and they expect Vietnam will soon follow suit. However, the truth is not fully as described since the situations in Vietnam and China differ. First, China has long tightened the real estate market, forcing many other industry sectors into recession. Second, the Chinese economy has slipped into a perilous zone, with low growth of around 4%, which may be the cause for China's monetary easing strategy.

On the contrary, Vietnam is moving toward tighter real estate market management with the implementation of the Real Estate Business Law, Housing Law, and Land Law in 2023. Some have recommended applying taxes to the second and subsequent homes. Furthermore, despite the negative effects of the recent Yagi typhoon, Vietnam is anticipated to grow by more than 6%. As a result, it is very unlikely that Vietnam would continue to loosen monetary policy or undertake a new economic stimulus package.

The global economy is weak

The world economy is currently experiencing a harsh slump. The Eurozone economy is showing indications of a recession, with the PMI falling to 48.9 points in September from 51 points in August, the first time it has gone below 50 points since February. The German economy has faced several challenges, as activity in the German economy declined substantially in September, the most in seven months, raising the possibility that the country's GDP growth could fall for the second straight quarter, implying a technical recession.

On the contrary, numerous commodities gained shortly after the FED cut rates, since investors anticipated that their prices would increase. This was bolstered by China's stimulus policy on September 28. Iron, steel, copper, and other commodities have all surged to new highs, with steel prices rising by about 10% in only a few sessions. All of these present conditions are uncommon, with the sluggish economy driving a shift in capital flow to investment and speculation.  

Another crucial piece of information that investors should be aware of is the strike by over 75,000 dockworkers at US ports, which began on October 1 and is now blocking US import and export activity. Their expectations present a new challenge for companies, which may last for a long time. If this occurs, Vietnam's exports will be impacted.

Meanwhile, the Middle Eastern conflict will grow when Iran formally launched numerous missiles at Israel following the latter's invasion on Lebanon on October 1st night. Certainly, if the battle continues, the prices of numerous raw materials for production will rise, with oil prices potentially skyrocketing, further harming the global economy.

Season for third-quarter earnings reports

The VN-Index has rebounded to 1,300 points. The driving reason behind this rally cannot be discussed without including bank equities like ACB and STB, which have climbed by roughly 10-15%. A few investors anticipate that this increasing trend may propel the VN-Index to 1,350 points. According to Nguyen Huu Bình, a stock market expert, bank stocks have been stagnant in recent sessions. This raises the issue of whether Q3 earnings results will be a driving force for their further rise. Furthermore, there is no longer much space for growth in banking stocks, thus their prices are close to the values indicated by major securities firms.

"For the VN-Index to break through, a new factor having a big influence on the Vietnam stock market, such as China's stimulus measures, is required, although this is highly unlikely to occur. Meanwhile, numerous adverse causes continue to emerge, and the Chinese stock market may soon reverse its current exuberant advance," said Nguyen Huu Bình, adding the VN-Index will go below 1,300 for the sixth consecutive time due to selling pressure.

Despite net sales from foreign investors, Nguyen Huu Bình believes the VN-Index will remain steady at 1,200 - 1,300 points in 2024.The VN-Index may continue in the 1,250-1,300 point range in October, as this is the time for third-quarter earnings to be released. Investment highlights will be determined by global commodity price variations, which have a beneficial influence on listed companies' business success.