Last week, the market showed signs of bottoming out at the 1,240 point area with an explosive trading value, the highest in 3 months. Many investors continue to be hopeful that the market will return to the 1,280-1,300 point area in December.
VN-Index is currently trading in the range of 1,200-1,300 points, liquidity is gradually decreasing after a period of strong net selling from foreign investors. Therefore, the explosive session following last week's momentum is necessary and comes at the right time for the market to continue to confirm the uptrend in December.
Currently, the P/E valuation of VN-Index is attractive at a discount of 10.3% compared to the 5-year average; experts from VNDirect Research expect EPS growth to continue to improve strongly in Q4/2024.
In the recently published market assessment report, experts from VNDirect Research believe that the Fed will continue to cut interest rates at its December meeting, thereby cooling the DXY index, reducing pressure on the VND exchange rate and creating conditions for the State Bank to focus more on supporting system liquidity and credit growth.
These factors can positively impact stock market liquidity and investor sentiment, thereby pushing the market's P/E ratio higher by the end of the year.
Although economic growth and the profit picture of listed companies have improved, these positives have not been fully reflected in market valuations, due to record net selling from foreign investors, along with exchange rate pressure and greater liquidity stress in the final months of this year compared to the same period in 2023.
VNDirect Research expects exchange rate pressure to be controlled in December thanks to the improvement in USD supply from the high trade surplus and export enterprises often selling foreign currency to banks at the end of the year to meet domestic shopping needs and pay salaries and bonuses. In addition, it also relies on positive growth in realized FDI capital and December being the peak month for remittances flowing into Vietnam.
With current valuations and the macroeconomic context, this is the right time for long-term investors to proactively allocate capital and accumulate stocks to build a portfolio for 2025.
VNDirect Research believes that the VN-Index will fluctuate around 1,250-1,270 points by the end of 2024.
However, the market has not yet established a solid upward trend, and excessive use of financial leverage can be counterproductive and increase risks. Investors are advised to adopt a cautious capital allocation strategy.
