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2024 Invesment Strategy Report: A pivotal year preparing for a breakthrough

The stock market is expected to fluctuate strongly with many short waves 
•    The scenario in which the FED will start to lower the fed funds rate from Q2 or Q3/2024 will reduce the pressure on SBV to conduct monetary policy. Accordingly, we believe that Vietnam's interest rate and exchange rate risks may exist at certain time, yet not be a serious problem. There is not much room for further fiscal and monetary expansion in 2024. Instead, we expect a positive, stable policy environment that will keep interest rates in the economy at a low level. This factor will increase the attractiveness of investment asset classes, including the equity market.
•    The most intense pressures have passed, yet the path to economic recovery remains challenging. Unlike 2023, which began with numerous bottlenecks in the domestic financial market and headwinds from the global macroeconomic environment, 2024 is anticipated to be 'easier' in most respects. The macroeconomy is poised to rebound from the low base of 2023, owing to: (1) the beneficial spillover effects of fiscal and monetary policies starting to resonate positively across other economic sectors; (2) a recovery in global order demand after a reduction in inventories in 2023; and (3) a surge in consumer confidence that is expected to stimulate consumer spending and retail sales.
•    Some macroeconomic variables may turn into 'headwinds' for the market, including: (1) heightened inflationary pressures in 2024 due to both domestic and international factors; (2) a real estate market that is languishing at trough, suffering from a lack of liquidity, which in turn exerts pressure on corporate cash flows needed for debt repayment; and (3) a global economic downturn, which dampens the anticipated recovery in the import and export sectors. Given these conditions, Vietnam's economy may not be able to avoid a downturn.
From a more optimistic perspective, a shift in monetary policy by the world's central banks, along with a reallocation of investment flows between markets, could drive a strong recovery in the stock market after many months of stagnation and decline.
•    We expect the VNIndex to fluctuate within the range of 1080 to 1390, and the average trading value will be maintained at VND 15 to 20 Tn per session.
•    In the absence of compelling stories to attract foreign investors, the cash flow from individual investors will likely be the primary driver of the market. Historically speaking Vietnam tends to draw foreign investment when (1) the economy exhibits high growth and market valuations are appealing, especially during times of significant economic milestones (like WTO accession, state capital divestment, or market upgrades), or (2) when more developed markets implement foreign investment-friendly policies. In the short term, we have not observed many positive shifts in these conditions. However, we anticipate that the second half of 2024 may bring a change, as major central banks could adopt more accommodating monetary policies, and stock market valuations in developed markets may lose their luster. This could result in a reallocation of capital flows, partially towards emerging and frontier markets, including Vietnam.”