The profit growth of listed companies is forecast to cool down in 2023 but experts said there are still many positive factors to support the market in the near future.

Vietnam's economy in 2023 still faces many challenges, affected by slowing exports and increased unemployment, Nguyen Hoai Phuong, Investment Director of VinaCapital, said at a Talkshow organised by Dau tu (Investment) newspaper last week.

Retail growth will slow down from the recovery in 2022, she said.

“Another risk to watch out for is the maturity of real estate corporate bonds, up to 7.2 billion USD. This partly affects the profit picture of two big sectors of the stock market, namely real estate and banking.”

Currently, many organisations forecast that the profit growth of listed companies will cool down in 2023. However, experts said that this is not the focus of the stock market this year. Instead, investors are paying attention to a number of supporting factors.

First is the disbursement of public investment. Along with the Government's determination and progress for key projects, the disbursement rate of public investment in 2023 is forecast to increase compared to 2022, thereby also promoting economic growth, and at the same time pressure from construction costs will be significantly reduced.

Second, China will open its economy. Currently, there is no specific time for China to officially open its economy. However, the move to relax social distancing regulations also showed a change in the strategy of this country. Reopening China's economy will have a positive impact on many fields of Vietnam's economy such as import and export, tourism, and raw materials.

Third, the exchange rate and interest rate cooled down. This will help some businesses to access capital flow and liquidity will be under less pressure than in 2022.

Fourth, exports to the US or EU may recover in the second half of 2023. Profits are growing against a low base in 2022 as exports have slowed. In addition, a number of factors such as falling transportation costs, falling petrol prices and declining commodity prices, also contribute to the profit growth of enterprises.

Better 2023

Nguyen Hoai Phuong said that the market is no longer at risk of a sharp drop. Recently, the stock market still fluctuated in a narrow range and amid weak sentiment. Therefore, there will be room for the market to recover when the supporting factors of the economy and the market are more obvious in the coming months, respectively.

According to Hoang Viet Phuong, Director of SSI Research, the internal factors of the stock market recently stem from the inadequacies of the corporate bond market and the real estate market. These two markets are closely related to the banking system, so it has had a large impact on the economy.

In 2023, SSI Research forecasts that interest rates are likely to cool down, but we need to wait until that interest rate becomes lower and attractive enough to stimulate demand in the real estate market, she said.

“Bond maturity creates pressure in 2023, so we need to wait for the draft amendment to Decree 65 to be approved to help alleviate these pressures,” she added.

For example, the amendment of Decree 65 will be passed, interest rates’ upward momentum will slow down and reverse to decrease, the exchange rate will be stable and public investment disbursement will become stronger. Those are the factors that support the market. In the positive scenario, the market is still likely to grow by 5-10% in 2023./.