Investors look at digital boards displaying stock price movements at a securities company. (Photo: VNA) His latest report Looking ahead at 2024 said last year, the stockmarket was driven higher - and then lower - by monetary policy, but the VN-Indexfinished the year up 12.2% in VND terms and 9.3% in US dollar terms.
“In 2024 we expect interest rates to remain stable and forinvestors to refocus on earnings growth and valuations, both of which shouldsupport an increase in stock prices.
“Specifically, we expect the earnings of Vietnam’s listedcompanies to recover from no growth in 2023 to 10-15% earnings growth in 2024,and our 2024 forecast is slightly below the current market consensus.
“Additionally, the market’s valuation is cheap and there are a fewcatalysts that could push it higher in early 2024.”
Installation of the new KRX trading system by the stock exchangein Q1 would help resolve certain technical problems, which in turn could leadto Vietnam being upgraded from a frontier market to an emerging market byFTSE-Russell later in the year.
Hopes were also high that a special session of the NationalAssembly in January would help fix some of the issues currently impeding realestate development.
The country’s economic growth and corporate earnings in H1, 2024,would both be flattered by the very low base last year.
GDP growth accelerated steadily throughout 2023, doubling from 3.3%year-on-year growth in Q1 to 6.7% in Q4.
“That acceleration is encouraging because the country’s economicrecovery is gaining momentum and low growth numbers in early 2023 will alsolikely lead to encouraging news headlines about companies’ surging earnings,attracting investors’ attention to the stock market.”
Wide variation between sectors
VinaCapital expected a fairly wide dispersion in the performanceof individual stocks and sectors.
For example, listed consumer companies’ earnings dropped by around20% last year and were expected to surge by more than 30% in 2024 with theongoing rebound in consumer spending.
“Likewise, the earnings of listed real estate developers (excludingVinhomes) fell by around 50% last year, but we expect those companies’ earningsto surge by more than 100% this year driven by a modest pick-up in real estatedevelopment activity.”
Kokalari pointed out that the market’s overall valuation wasalready attractive at 10x forward P/E and 10-15% EPS growth.
Outperforming the overall stock market entailed savvy selection ofsectors and individual stocks, and the company’s current preferred sectorsincluded IT, selected banks, real estate developers (ex-Vinhomes), consumerdiscretionary companies, and securities companies.
After a challenging 2023 all indications are that 2024 should be astronger year for Vietnam’s economy, driven by a rebound in manufacturing andimprovement in consumer sentiment.
Besides, the steady fall in interest rates through 2023 shouldhelp boost the real estate market after having helped support the stock marketlast year.
The country’s GDP growth was expected to increase to 6-6.5% in 2024from 5.1% last year.
The demand for “Made in Vietnam” products – especially consumerelectronics – in the US/EU had already started to recover, and was likely toaccelerate through 2024./.
VNA
