The second panel session "Pursuing unparalleled opportunities" in the Vietnam Wealth Advisor Summit 2023

Spotting opportunities in the financial market can often be about catching companies on the upswing, and not necessarily about those performing optimally. This sentiment was succinctly put forward by Le Duc Khanh, director of Analysis at VPS Securities, when he said, "Stock market investment opportunities lie not in currently thriving businesses but in those rebounding from a low point."

Speaking at the second panel session on pursuing investment opportunities at the 2023 Vietnam Wealth Advisor Summit, co-organised by Vietnam Investment Review (VIR) and the Vietnam Wealth Advisor (VWA) community, Khanh said, "In comparison to other investment channels, equities in Vietnam are becoming increasingly appealing."

"Given the low interest rates, investments like deposits, savings, and bonds have become less enticing. Additionally, the foreign currency and gold markets are showing little volatility, while the real estate sector, after facing a crisis, has yet to demonstrate a strong recovery due to low demand," Khanh added.

Khanh went on to discuss the broader economic situation, indicating that many businesses have yet to fully rebound. Consequently, capital is moving towards avenues promising growth, with stocks being at the forefront.

"The stock market typically precedes the broader economy," he said.

Le Duc Khanh, director of Analysis at VPS Securities

Nguyen Hoai Phuong, investment director at VinaCapital, revealed that the VN-Index has risen by approximately 23 per cent from the beginning of the year, whilst the profits of listed companies have declined by about 10 per cent. Projections indicate lacklustre or stagnant corporate profitability.

Meanwhile, the market's price-to-earnings (P/E) ratio currently hovers at around 15 - 16 times, approaching the average of recent years. These elements create inherent risks for newcomers.

“New investors, often driven by speculative capital, are at risk if they chase stocks showing substantial increases without solid fundamentals,” Phuong warned.

Investors should be aware that the market continually revalues stocks. For example, in 2018, FPT's P/E ratio was valued at 9–10 times but shot up to 15–18 times by 2020 due to steady profit growth and increased individual investment. In contrast, the valuation of the banking and real estate sectors seems relatively undervalued, making them attractive for discerning investors.

On corporate recovery, Phuong said, “Although businesses themselves remain uncertain about the future, a clear differentiation will emerge during recovery. Manufacturing and export-oriented sectors are rebounding as orders begin to pick up. However, some of these businesses have had to reduce labour or shut down sections. How they intend to handle new orders remains a question.”

Nguyen Hoai Phuong, investment director at VinaCapital

On the other hand, recent data from Viet Dragon Securities Company suggests that while large enterprises' growth rates trail behind the nation's GDP, they seem to synchronise with sectors showing signs of bottoming out in 2023.

"We're seeing stark divergences." said Nguyen Thi Phuong Lam, head of Research at Viet Dragon, "Industries like financial services, industrial zones, and the insurance sector are rebounding better than others."

On the flip side, sectors like retail distribution, automotive parts, and durable consumer goods including textiles remain in a sluggish phase. "This trend aligns with the prevailing consumer confidence and spending behaviour we're witnessing," Lam said.

One salient point is that many sectors currently boast a P/E ratio substantially higher than their respective three-year averages and median P/E ratios. "This indicates investors are willing to pay a premium based on their growth expectations, particularly given the government's supportive economic measures," Lam pointed out.

Nguyen Thi Phuong Lam, head of Research at Viet Dragon Securities Company

For high-net-worth clients, banks offer comprehensive asset management services, providing more than traditional avenues and adding value through a suite of services, including inheritance and asset transfer assistance.

“Financial advisors are gradually becoming pivotal in banking, especially for managing unique assets like real estate, tax optimisation, and estate management. However, there's a need to enhance the capability of these advisors,” said Pham Thi Thanh, deputy director of Retail Banking Department, head of Senior Customer Department, BIDV.

As central banks around the world increasingly seek to expand their balance sheets, there is an enduring demand for capital to flow between continents and a diverse range of assets.

According to a forecast from trading platform Exness, the global economy should grow between 2.8 and 3 per cent. Major economies, like the US, UK, and China, are anticipated to witness more significant downturns, with a possible recession on the horizon. Particularly, Q3 is set to mark the peak of interest rate hikes, followed by reductions in Q4 to stimulate economic revival.

Vietnam's Q2 GDP stands at 4.1 per cent, surpassing expectations, and setting a favourable backdrop for the securities market for the second half of the year. Monetary and interest rate policies are receiving positive market feedback. Liquidity is on the upswing, and exports, particularly electronics to China, have seen considerable uplift.

Thai Viet Dung, director of Exness Vietnam

Thai Viet Dung, director of Exness Vietnam, also underscored that during favourable market conditions, new investment channels and asset classes are often created to capture a fraction of this shifting capital from varied markets.

The amount of liquid funds ready for investment has been swelling globally. This amplification, however, is met with a challenge – traditional investment assets can only absorb a certain amount of this capital. This has led to a burgeoning need for the inception of fresh investment avenues.

“Consequently, this signifies an innate demand among investors for the continual emergence of novel investment channels and asset classes. Cutting-edge investment tools such as derivatives, cryptocurrencies, and new fund management products are gaining substantial traction in the prevailing trends of 2023,” Dung noted.

As the investment landscape undergoes rapid evolution, spurred by both demand and innovation, investors are being presented with an increasingly diverse array of options. This, in turn, offers an opportunity to diversify, hedge, and potentially garner greater returns.

Attention now turns to how financial markets, regulators, and investors will adapt to this shifting paradigm, ensuring the integration of these new assets is both seamless and secure. As always, while opportunities abound, so do challenges, making it imperative for investors to remain vigilant and informed.

Trinh Quynh Giao, CEO of PVI Asset Management, noted that economies cycle through growth and recession phases.

“For our team, true success is not just about monthly or yearly growth but involves deep, strategic financial planning. This approach should be adopted not only by corporations but by individuals for major life choices,” Giao said.

Their tailored strategy understands that different phases call for distinct profit objectives, and businesses like insurance companies need high liquidity. To achieve financial stability, understanding and managing debt is critical before delving into investments.