Investment Strategy Report – October 2023: THE SIDEWAYS TREND TO BEGIN
“The fact that SBV started issuing T-bills last month in the context of rapidly increasing exchange rates was a notable event and had a significant impact on the market afterward. Although we do not think this is a signal of policy reversal when economic growth is still low (GDP growth 9M-2023: 4.24%) and inflation is still under control, this move also implies that the room for easier monetary policy is relatively limited, and this is not positive news for the stock market in coming months.
Regarding Q3/2023 earnings outlook, we expect the growth rate over the same period to improve compared to the previous quarter, but the level of improvement is quite limited. Therefore, the room for improvement in market valuation is expected to be insignificant.
These factors cement our view that the market's broad uptrend on the policy easing effects since May will give way to a sideways movement.
We expect the VN Index to fluctuate in the range of 1,100 - 1,180, corresponding to a P/E valuation range of 13.2x-14.2x and an implied return of 7.0%-7.6%, relatively more attractive than the 12-month savings deposit interest rate, which is currently below 6%.
In October, with the expectation that the market is unlikely to see an upbeat earnings season and the level of recovery will be highly varied across industries and enterprises, stock picking will play a more important role than in the previous uptrend. Some investment ideas that we would like to introduce include QNS, PVD, NKG and KDH
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