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Special Report: Preliminary 2H2023 Outlook - THE BULL MARKET HAS COME BACK

Market valuation is re-rated following the Government’s solutions to stabilize the macro environment and boost economic recovery

• Most of our concerns at the beginning of the year were basically addressed in the first half of the year: (1) The governors has issued Decrees and Circulars to amend, supplement and suspend a number of articles of Decree 65, Decree 153, Circular 06 on corporate bonds, (2) Money supply improved, interest rates cooled down after a series of decisions from the governors such as a/ Issuing a circular amending Circular 22 on how to calculate LDR, b/ Four consecutive times of reducing the operating interest rates, and c/ Net pumping in the OMO market and buying foreign currency to supplement foreign exchange reserves.
• In the first half of 2023, we recommended that investors take a defensive strategy by limiting the use of financial leverage in securities trading as much as possible. We believe that this is a reasonable strategy for the time being, given that there are still many unpredictable factors in macroeconomic developments both domestically and globally. In addition to allocating part of the portfolio to short-term transactions, we expect investors to have boldly accumulated favorite stocks for long-term investment goals, as recommended in the 2023 strategy report.
• Along with monetary policy, we expect fiscal policy, including increasing basic wages, reducing taxes and fees, and boosting infrastructure investment, will continue to exert positive effects in the second half of the year. Following deposit rates, we expect lending rates will also decrease in the second half of the year. When the risks decrease, the VNIndex will be traded at a premium multiple valuation. Given our assumption that the market's profit growth in 2023 is 0%, the risk-free interest rate is in the range of 6.3 - 7.0%, the reasonable range of VN Index will be in the range of 1,180 – 1,320 points.

When short-term risks are temporarily eliminated, investors may consider using margin lending at an appropriate leverage ratio maximum performance of their portfolio.

• The profitability of buying stocks for long-term investment (holding time of more than one year) has decreased significantly compared to the beginning of the year. In other words, we think that the good stock picking and timing are two factors that are more crucial for achieving a decent return.
• In the past, in the bull market where investor sentiment is over-excited and almost no defenses, VN Index may trade at a P/E multiple above 16.x , which is over 1320 points at this time. However, data indicates that the stock market's long-term return will gradually reduce to 0% while the index moves to this range. As a result, we believe that investors should consider increase cash and reduce stocks in your portfolio.