The strong correction of the market will be an opportunity for active investors to disburse, the index will fluctuate around 900-1000 points. There are always separate opportunities in a gloomy market, and therefore stock selection is the most important thing in 2019.
In the context of geopolitical and trade tensions still inadequate, most analysts agree that the global economy is entering the end of the growth cycle and 2019 may be a relatively difficult year. scarf for the stock market. Not to mention, the gradual reduction of monetary easing and fiscal stimulus packages is happening globally, the possibility of foreign cash flow into marginal markets like Vietnam will not be as high as in previous years.
The market continued to be difficult in 2019
Thus, in 2019, it will continue to be difficult for securities investors, however, opportunities will always exist in the market, “winning and losing” at this time depends on the choice of investment portfolio. The strategic report of Vietnamese Dragon Securities (VDSC) noted that 2019 will not be an easy year for global stocks. In this context, it is difficult for Vietnam to go against the trend, and investors need to be very careful. However, it should not be too pessimistic, VDSC said that the biggest wave of foreign capital withdrawal took place in 2018. The VN-Index’s valuation has also decreased, though it has not reached a low level. In parallel, profit growth of businesses is likely to slow down in 2019, but there will still be opportunities worth paying attention to.
First of all, review the factors that impact negatively on the market in 2019. Including the monetary tightening policy taking place globally, the risk of risk aversion has caused investors to withdraw capital from markets. emerging about developed markets … In terms of valuation, the VN-Index’s P / E slipped down (currently 16x) reflecting decelerating profit growth in 2019. Based on growth estimates profit and evolution of capital flows, VDSC does not expect a P / E increase in 2019.
Moreover, the risk of Vietnam dong devaluation will still recur in 2019. In the strong EUR scenario, investors should be cautious with businesses with high loan outstanding in EUR. In addition, with interest rates continuing to rise, allocating a portion of the portfolio to bonds or term deposits is also worth considering.
However, analysts believe that the process of withdrawing capital from stock market, especially from emerging markets, took place in 2018. Recent announcement from FED reinforces the belief that interest rates will be difficult. may increase sharply, this may help improve market sentiment. Capital flows may return to Vietnam’s stock market, but it will take time because investors need to recover after a 2018 “storm”.
Capital flows of securities companies will support liquidity
Another bright spot, new capital flows from securities companies help support liquidity. Statistics show that there were 30 businesses and organizations changed their charter capital in the three quarters of 2018, including 22 organizations to increase charter capital. Total net capital increased to VND 7,146 billion, this move is expected to support market liquidity through self-trading or margin lending activities.
Or the story of promoting Vietnam stock market to emerging markets is also a positive point to attract the interest of investors at some time of the year. This will cause market price and liquidity to fluctuate more. This is the factor that domestic investors should pay attention to.
The economy still has plenty of room for growth
In addition, the business sector in the economy still has room for long-term growth, VDSC said. Vietnam is in the process of restructuring and changing the growth model. The current stage is focusing on the main topics such as:
- Anti-corruption and institutional reforms;
- Macroeconomic stability and FDI inflows;
- Encourage the development of the private sector as well as the start-up movement.
In the baseline scenario, the Government advisory group expects Vietnam’s GDP growth to remain at 6.8-6.9% per year during 2018-2020. The expansion of the middle class and the golden population structure will be a development opportunity for many industries.
With the above points, VDSC thinks that the strong corrections of the market will be an opportunity for active investors to disburse, the index will fluctuate around 900-1000 points. There are always separate opportunities in a gloomy market, and therefore stock selection is the most important thing in 2019. A good base stock will be able to withstand a shock drop of market when hot money flows withdraw.