Challenges surround the stock market: Which industry codes should you invest in?

Lack of supporting information

Despite a series of positive information about the business results reports for the third quarter of 2024 of listed companies or the latest Circular 68/2024/TT-BTC officially being applied, allowing foreign institutional investors to buy stocks without requiring sufficient funds, it could not stop the market's decline, but the VN-Index still fluctuated continuously.

Opening the trading session on November 6, VN-Index returned to the 1,240-point price range, corresponding to the lowest price range of September 2024. Liquidity ended the most recent session in a "gloomy afternoon market" scene, down 40.1% compared to the average of 20 trading sessions and down to the lowest level since the beginning of the year. Foreign investors were net sellers for the 9th consecutive session on the HSX floor with a transaction value of VND 853 billion.

Most experts say the market is facing many challenges, the uptrend cannot be confirmed soon and the market will move sideways or even have fluctuations.

Regarding the impact from the world , CEO of Ho Chi Minh City branch, DSC Securities Company Bui Van Huy analyzed: the world context has strong and relatively negative fluctuations. For the US market, US government bond yields continue to increase sharply and the USD index (DXY) is similar. Especially the potential surrounding the US election on November 5 and the Fed meeting on November 6-7. Accordingly, the world financial market will have strong fluctuations (in both positive and negative directions). Prolonged vote counting can increase short-term fluctuations for the market.

The yield on the 10-year US Treasury bond has reached its highest level in the past three months, indicating that the Fed is unlikely to cut interest rates in the short term. This may cause investors to seek bonds as a safe haven, putting pressure on stock markets, including Vietnam. The increase in yields has partly caused net capital flows in some Southeast Asian stock markets, including Vietnam, as the USD strengthens.

Domestically, the market in November is in a state of lacking supporting information after the third quarter business results announcement season, stories of expectations such as market upgrades are also gradually shifting expectations for next year, while foreign investors continue to net sell. In that context, the large number of bonds maturing in November and December may cause concerns. There is a high possibility that there will not be a chain effect like in 2022, but the impact on market liquidity is more or less undeniable. Circular 02 will also expire at the end of 2024, when banks will have to face the accounting of bad debts in 2025.

Which basket to put your eggs in?

Despite many challenges, however, in a low-interest-rate environment, securities are still considered an attractive investment channel. Specifically, VPBankS's strategic report informs that Vietnam's economy is recording many positive signals. Vietnam's manufacturing purchasing managers' index (PMI) has returned to above 50, reaching 51.2 points in October after being affected by unfavorable factors such as storms and inflation. This shows a slight recovery sign in the manufacturing sector, supporting the prospects of domestic industries.

In that context, VPBankS forecasts that the Vietnamese stock market will continue to make slight adjustments this week and will likely experience strong fluctuations at important support levels.

Regarding investment recommendations, analysts say investors should trade cautiously. Short-term investors should limit disbursements; long-term investors can take advantage of selling sessions to seek opportunities.

Investment Consulting Director, Maybank Securities Company Phan Dung Khanh said: The stock market is still difficult at the moment, but buying stocks with the expectation that the future still has some promising fields such as technology, artificial intelligence (AI), semiconductors, clean energy... The number of stocks in this industry on the stock exchange is not much and has increased sharply, so if you buy, you need to wait for the price to adjust down. Real estate stocks can also be considered after having decreased sharply and fluctuated negatively in the past time, but when accumulated for a long enough time, there will be a chance to increase again.

According to Head of Macro and Market Strategy Department, VNDrect Securities Dinh Quang Hinh, exchange rate pressure may cool down in the second half of the fourth quarter when the Fed continues to cut operating interest rates and foreign currency supply increases at the end of the year thanks to positive FDI and remittance flows.

“We maintain our view that the 1,240-1,250 point zone will be a strong support zone for the VN-Index. Long-term investors can consider increasing their stock holdings if the VN-Index corrects to the above support zone. Prioritize stock groups with positive business prospects in the last two quarters of the year, including banks, residential real estate, and import-export groups such as textiles, seafood, and wooden products,” Mr. Dinh Quang Hinh advised.

Source: https://doanhnghiepvn.vn/kinh-te/thach-thuc-bua-vay-thi-truong-chung-khoan-xuong-tien-ma-nganh-nao/20241106112225100