Credit and cash flow create a foundation for banking waves
The increase of banking stocks in the second and early third quarters is considered the main pillar of the Vietnamese stock market. Continuously high liquidity, strong cash flow, along with technical indicators supporting the uptrend are creating a positive psychology for investors.
Mr. Tran Tanh - Head of Research and Analysis, Organizing Customers, Yuanta Vietnam Securities Company - commented that the strong increase of banking stocks in recent times has been driven by many factors, in which credit growth in the second quarter is an important highlight.
According to Mr. Tanh, credit acts as a catalyst, boosting expectations for profit growth in the banking sector. In addition, income from foreign exchange trading activities is also a bright spot, as many businesses proactively prevent exchange rate risks, bringing benefits to banks. At the same time, stock investment activities, especially bonds, have contributed positively to the business results of the last quarter. "However, the main driving force still comes from strong cash flow spreading throughout the market, leading to a breakthrough in banking stocks" - Mr. Tanh emphasized.
Profit leads stock price
In addition to a favorable macro foundation, the positive business results of many banks and large enterprises are a core factor helping the market maintain growth momentum.
Mr. Tran Hoang Son - Director of Market Strategy, VPBank Securities Joint Stock Company (VPBankS) said that the bright profit picture in both the financial and non-financial groups, in which the financial group accounts for a very high proportion of capitalization and liquidity in the market.
With profit growth of up to 18% in the second quarter compared to the same period, the market has discovered many financial stocks with good profit growth, thereby opening up investment opportunities in the coming period - Mr. Son assessed.
Citing actual evidence, Mr. Son said: "CTG recorded 6-month profit increasing by 46.5%, stock price also increased by 23.4% in 3 months and 43.4% in a year. MBB had a profit increase of 18%, stocks increased by nearly 17% in 3 months and 29.4% in a year. In particular, VPB increased by more than 39% in one month and 60% in 3 months, thanks to the second quarter profit increasing by 35.6% and the 6 months increasing by over 30%".
According to Mr. Son, stocks with a good business results foundation will be able to increase prices sustainably, because profits are the factor leading the price trend in the medium and long term. In contrast, some stocks have not had business results but prices have increased sharply, which may include speculative factors or reflect unsustainable expectations.
Mr. Son shared: "I have a heartfelt saying: When choosing stocks, the buying time gives us a good price advantage, but if we buy the right stocks, we will have a fortune".
Waiting for the boost from upgrading and policies
The domestic market also welcomed further upgrading expectations from FTSE Russell in September, which is considered a factor that could create more momentum for the VN-Index.
According to Mr. Tran Hoang Son, Vietnam's official upgrading by FTSE Russell will create a very strong boost for the next increase of the VN-Index in 2025. With large foreign capital observing the market, upgrading can lead to new cash flow, especially in large-cap stocks with high liquidity and information transparency.
Sharing the same view on policy motivation, Mr. Nguyen Quang Huy - CEO of the Faculty of Finance - Banking, Nguyen Trai University, said that banking stocks are returning to the market's "backbone" thanks to the resonance of macro, policy and internal strength. He compared the economy to a "compressed spring" ready to bounce strongly, creating a big boost for the banking industry.
According to Mr. Huy, the policy of expanding credit room is also being considered, helping banks have a solid foundation to flexibly allocate capital, increase competitiveness and improve asset quality. Along with that, public investment promotes credit demand in the fields of construction - infrastructure, real estate recovers, helping to reduce bad debt pressure and increase consumption, contributing to expanding personal credit.
