The VN-Index finally increased by 11 percent by the end of 2023 to exceed the 1,100 point threshold.

Le Quang Tri, broker manager of Nhat Viet Securities, commented that 2023 was the year of heavy fluctuations and complicated developments, which followed a year of sharp decline in 2022. 

Meanwhile, there were many factors in the world that affected Vietnam’s stock market, including the decline in large economies’ growth, high inflation rates, monetary policy tightening and geopolitical tensions in many places.

In the first half of 2023, the stock market was quiet with liquidity decreasing sharply compared with 2022. The liquidity increased again in the third quarter 2023, but then decreased again in the fourth quarter.

The capitalization value of the stock market rose compared to 2022.

In 2023, foreign investors sold more securities than they bought with net sale of $1 billion. Net sales seem to be the trend among foreign investors, except in 2022 when foreign investors bought more than sold as stock prices fell to the bottom. Foreign investors’ net sales have reached $3 billion since 2020.

According to Tri, net sales by foreign investors may be due to worries about possible impacts of international events, including the monetary policy of the US FED, exchange rate fluctuations and crude oil prices.

In 2023, Vietnam went against the world in interest rate policy regulation. This could be a reason that foreign investment become more cautious. Moreover, the stock market experienced a period of rise which lasted from late 2022 to the first months in 2023. The last months of 2023 were also time for funds to restructure their portfolios.

However, accounting for less than 10 percent of the total transaction value of the entire market, the foreign investors’ net sales in 2023 had an impact on investors’ sentiments.

Tri said that there are reasons to hope that foreign investors will increase the disbursement again, especially if the FED cuts prime interest rates, starting in early the first quarter of 2024.

There was bad news that the Vietnamese stock market once again failed to apply KRX, the transaction system using South Korean technology.

However, analysts believe that the tardiness in putting KRX into use won’t impact the market. The impact, if any, will be seen only in securities companies’ stocks, which had considerable  increases before.

The other bad news is that Vietnam still cannot see signs of its stock market being upgraded from a frontier to secondary emerging market.

The reasons behind this are anticipated. There are two problems, including the requirement for prefunding and the foreign ownership ratio limit.

Also, state management agencies need to focus on upgrading the information technology system for smooth transactions, increase market capitalization, and pay higher attention to the quality of products available in the market.

One of the most outstanding things done in 2023 was the ‘cleaning’ of information about the stock market with many stock manipulation cases discovered facing legal proceedings, and inactive accounts removed. The moves taken by the watchdog agency have been praised and the transparency will help upgrade the Vietnamese stock market.

Great opportunities in 2024

Analysts have note that some bluechips have attracted cash flow recently, while shares of many small and medium enterprises have also increased in price.

Many business fields expect positive prospects in 2024, including manufacturing, export, infrastructure development and public investment. Also, securities, steel, IT, chemicals and oil and gas promise great opportunities.

“2024 will be the year with more opportunities for investors than 2023,” Tri said.

Bank, securities and real estate are believed to catch investors’ attention.

The profits of banks and real estate firms won’t increase sharply. Putting capital flow through is a headache for managers and policymakers. However, the situation will be better in the second half and the real estate firms with land and good project implementation will attract more attention from investors.

Meanwhile, banks may see their profits grow slowly as a result of the low credit growth rate which began in 2023 and possible increase in bad debts.

As for securities firms’ stocks, 2024 may be a prosperous year if banks’ lending interest rates fall and stock market liquidity increases when KRX becomes operational.

Manh Ha