Despite positive inflation trends, the counter-cyclical monetary policies of major central banks relative to the Fed in June intensified exchange rate pressures, weighing on investor sentiment in the equity market and erasing market gains in the second half of June.

Moving into July, we expect the Q2 earnings season to bring excitement to the stock market. Accordingly, we believe that Q2 business results will continue to be positive in line with the economic growth trend and gradually improving credit growth from the end of Q1 2024. According to our estimates, market-wide revenue will begin to recover compared to the previous quarter, although the growth may be lower than the same period last year. Meanwhile, NPAT growth is estimated to reach 13% YoY, implying an improvement in net profit margins for listed companies.

Conversely, exchange rate pressure and interest rate issues will continue to burden the market. Our statistics show that deposit interest rates have increased by 30-50 basis points compared to the end of March 2024 but remain lower than at the end of 2023. Prolonged exchange rate pressure due to the strength of the USD and high foreign currency demand increases the risk of the State Bank raising policy interest rates in Q3 2024. Simultaneously, we expect the economy's capital absorption capacity to gradually increase, especially in the latter part of the year, leading to a continued rise in interest rates during this period. An additional increase of 50-100 basis points to pre-pandemic levels is reasonable in our view.

With these two factors having opposing effects, we think that market will remain volatile overall, just like it has been the past two months: the Q2 earnings season set for July, VNIndex still has the potential to retest the 1300 threshold. However, given the exchange rate and the risk of SBV adjusting the operating interest rates, the index could potentially retreat to the 1240 range or even 1180-1220 points in Q3. Within this range of index fluctuation, we expect sectors to alternate in gaining points, offering short-term investment opportunities. Investors could actively allocate investment portfolios for both short-term and long-term goals, maintaining a reasonable balance between stocks and cash. It's noteworthy that a 5% fluctuation in VNIndex can significantly impact the profitability of portfolios with different stock/cash ratios. Hence, we recommend that investors limit excessive leverage and keep cash on hand in order to seize chances during significant market corrections.

We suggest two investment ideas focused on the theme of Q2 2024 profit recovery in July.  Regarding stock calls for the month, we recommend VPB and DPR.