MAR 2025 MONTHLY MARKET MONITOR : GO WITH THE FLOW
As of now, the market has largely priced in Q4/2024 earnings results. We forecast that the positive momentum and market re-rating trend will continue in March, with a target P/E of 13.3x, a reasonable valuation level we outlined in our 2025 strategy report.Key factors supporting this trend include: 1) Expectations for Vietnam’s market upgrade by FTSE in March, as the country has met all required criteria; 2) Progress in the KRX trading system implementation, with HoSE issuing an official notice on February 26, 2025, instructing securities firms to prepare data for system testing. We believe the April 30 - May 1 holiday period (5 days) provides a sufficient window for final testing before the go-live phase; 3) the government’s strong commitment to 8% GDP growth in 2025 will support an accommodative credit environment and streamlined administrative procedures, fostering private sector investment. The AGM season for listed companies will also bring fresh insights into expansion plans, business outlooks, and dividend policies, potentially driving stock prices higher.
We maintain our cautious view on the escalating US-China trade war and tensions with long-standing US allies, which could impact global markets, particularly in inflation expectations, economic growth, and monetary policy decisions. Compared to last month, trade tensions have intensified, with new tariff rounds between US, Canada, Mexico, and China now taking effect. The global market may witness heightened volatility, tensions, 2018, when trade negotiations stalled. However, Vietnam’s stock market is expected to be more resilient than global markets, supported by attractive valuation levels and superior growth prospects relative to regional and global peers, as well as the low probability of US-imposed tariffs on Vietnam in 2025, positioning the country as a potential beneficiary of global superpower competition.
We expect VN-Index to trade within 1.280 – 1.350 range. The above-mentioned catalysts should help the market achieve a P/E target of 13,3x, but risks related to trade tensions, or a delayed FTSE market upgrade could trigger market corrections. With the current P/E at 12,7x, we believe that the investment accumulation opportunity outweighs downside risks. However, investors should diversify their portfolios, focus on sectors with strong growth prospects, and select stocks with reasonable valuations to mitigate risks during potential volatility.
For investment ideas, we increase exposure to the Banking sector, adding VCB (GMT: VND 114.100, +22%) to our strategic portfolio. We also highlight PHR (GMT: VND 80.000, +21%) as the top stock pick of the month, given its compelling land conversion story, making it an attractive medium-to-long-term investment.
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