What sectors are expected to be in a positive stock basket in 2024?

According to FinnGroup specialists, the market outlook for the Vietnam Stock Exchange (VSE) in 2024 shows a "portfolio" of 6 sectors, business groupings with strong profit potential.

First, the information technology (IT) sector, with an emphasis on potential coming from the digital transformation process and the AI trend encouraging spending on software and IT services, particularly those connected to the Cloud. Domestic IT businesses benefit from reduced costs and a diversified product portfolio.

Unfavorable macroeconomic conditions might lead to a worldwide economic slowdown and lower investment and spending on IT.

In 2023, the globe continues to witness central banks' relentless war against inflation, and major economies confronting recessionary worries, resulting in restricting general investment and, in particular, in IT, accompanied by large layoffs. However, the possibility of a worldwide economic slump is still regarded as remote. The IMF predicts that the global economy will continue to contract until 2024, but the likelihood of a recession has decreased, and that full recovery will occur only after then.

The IT sector's stocks of interest for the coming year are highlighted by FiinGroup, with industry leader FPT utilizing a "whale hunting" approach (focused on clients with huge sales volumes surpassing $5 million) delivering promising results.

The second sector is industrial real estate (IRE). Despite the positive downgrade for the real estate sector, industrial real estate is still expected to have positive profit prospects in 2024 as a result of expected improvements in Foreign Direct Investment (FDI) in Vietnam, driven by capital shifts from China and the recovery of capital inflows from traditional countries such as Singapore, South Korea, and Japan. Rising rents as a result of limit ed new supply present prospects for the business.

However, dangers in this industry include poor capital recovery from leading countries as a result of sustained high interest rates and worse-than-expected economic prospects. Additional issues include legal barriers in the creation of new industrial zones, a scarcity of high-quality workers, and an insufficient supply of power.

According to FiinGroup, stocks of interest include VGC (the second-largest IRE developer in the North), SIP, and GVR in the South.

Third, the oil and gas industry is showing indications of improvement. Predictions for high oil prices in 2024 are ascribed to a resurgence in industrial production, mostly led by China's efforts to ease policies to stimulate growth, as well as a tighter supply owing to persistent geopolitical concerns.

The primary concern is a delayed rebound in Chinese manufacturing and a weakening of global GDP.

PVD and PVS (stock prices sensitive to oil prices and strong profit expectations owing to high oil prices) are stocks of interest.

Fourth, there are exports, particularly in the fisheries and textile industries. As consumer demand in major export markets (the United States, Europe, and China) progressively improves and retailers boost imports, opportunities will emerge for businesses in these two critical export sectors.

Forecasted hazards to be cautious of include a slower-than-expected rebound in demand and competition from low-cost sources such as Ecuador, India, and Bangladesh. Political concerns, as well as the corresponding risk of supply chain disruptions, must also be considered.

According to FiinGroup, equities of interest in the fish business include IDI and ANV, and in the textile industry, TNG and MSH.

Fifth, the steel industry is expected to have positive profit prospects in 2024, with opportunities arising from export recovery and profit growth due to improved margins as (i) selling prices rise while raw material prices (iron ore, coke) fluctuate slightly or remain stable, and (ii) inventory is optimized.

The threats for the steel sector include extended real estate stagnation and rising power prices. HSG and HPG are two industry-recommended stocks.

Sixth, the chemical industry is featured in the group of industries that are expected to grow and is the "conclusion" of this list.

According to FiinGroup, opportunities for the chemical industry stem from the expected 20.2% increase in global semiconductor equipment consumption in 2024 (10% previously forecasted) due to the growing use of AI products, and computer/phone inventory will return to normal levels in the second half of 2024. On the contrary, the danger is that the semiconductor industry's recovery will be slower than predicted, and raw material prices (apatite ore, coal, energy, and so on) will rise. DGC of Duc Giang Chemical is a stock of interest in the industry.

Banking, residential real estate, retail (ICT), and fertilizers are four industrial groupings with poor profit expectations in the projection.

However, there are still stocks of interest within these industries, such as ACB and VIB in the banking sector, which have (1) sustained credit growth, (2) a low proportion of real estate loans, and (3) stable Net Interest Margin (NIM); NLG and KDH in residential real estate, which have ready-to-sell reasonably priced housing projects, low debt pressure, and clean land reserves for new projects; and FRT in retail, which has deployed new business segments and attractive stocks for foreign capital.