Mr. Do Bao Ngoc, Deputy General Director of Vietnam Construction Securities Joint Stock Company (VNCSI)

How do you assess the stock market outlook in 2023?

VN-Index closed the year at 1,007 points. In 2023, to assess the market outlook, we should identify advantages and disadvantages. First, the advantages may affect the market in 2023, especially high-interest rates. The interest rate in the world and Vietnam is still high to respond to inflation risks after rising many times.

This will not facilitate listed companies. If the high-interest rate remains for a long time in 2023, it will pressure these companies and negatively affect their financial costs. Enterprises with high debt will face risk factors and increased costs, so their revenue and profit will tend to decrease. However, enterprises still operate normally.

The second risk is related to the demand for exported goods and services in some major markets, such as the US or Europe. Currently, the demand has dropped, so many manufacturing sectors for domestic export, such as textiles, footwear, and seafood, have been negatively affected from the end of the fourth quarter of 2022 and may prolong to the first quarter and the second quarter of 2023.

Recently, some industrial parks can no longer maintain the high-production frequency as before. This risk will have impacts on export, processing, and FDI enterprises.

What do you think about the liquidity risk of bonds, as well as the difficulties of the real estate market that will affect the stock market?

Regarding the risks related to bond liquidity, 2023 may be a peak year of maturity for corporate bonds that have been issued in recent years with expected corporate bonds of more than VND300,000 billion. Therefore, the liquidity risk of corporate bonds is still one-factor affecting investors' confidence. Therefore, we should provide solutions to support and remove difficulties for the market and enterprises.

The Ministry of Finance has proposed a draft decree to revise Decree 65/2022/ND-CP to remove shortcomings for businesses and the corporate bond market. When the draft is issued and applied to reality, it may have a more positive impact on the market in dealing with bad debts of bond issuers.

Another risk is related to the real estate market. This is a sector that greatly affects the economy with many supporting sectors. Currently, the difficulties of the real estate industry are very clear. Many project investors have suffered from a delay in project development. These difficulties will affect the construction sector, construction materials, and furniture because the work decreases and the investors can no longer maintain the project development as in previous years.

The Governement has identified and set up a working team to remove difficulties. It is expected that shortly, the Governement may provide more solutions to remove problems for the real estate sector. However, if new solutions are not provided, and the real estate sector still suffers difficulties, the economy will face negative impacts.

The four difficulties and risks will affect listed companies and investor sentiment.

Besides the disadvantages, what advantages will become the driving force for the market to recover and develop in the next year?

Regarding the disadvantages, when the interest rates are high, FED may not raise them, even if it just maintains the current interest rate level. On the other hand, if inflation plunges in the next year, we can expect that the US interest rates may gradually decrease, leading to lower interest rates for other central banks, including Vietnam.

This is expected to happen in the third quarter of 2023. The inflation picture at this time will be improved and gradually decrease after the peak. Hopefully, the gradual decrease in interest rate will help reduce difficulties for the economy, restore the stock market and returning of cash flow to the market.

Besides, the reduction of interest rates and inflation will help the economy to reduce difficulties, and the pressure on the exchange rate of the Vietnam dong will not be great. Therefore, even Vietnam dong may be stable and rise again next year. This is also a positive factor that can help Vietnam attract foreign investment flows. Therefore, foreign investors' transactions next year are expected to be a supportive factor for the stock market.

The third positive factor is promoting cash flow into the economy through public investment. So many public investment projects have been planned, and public investment capital in 2023 is great; this is one of the most important factors supporting economic recovery.

Benefits are enterprises involved in construction, infrastructure development and construction materials. The last factor that may support the market is that the market moves to the low valuation zone and is attractive. When the economy is improved, the low valuation factor is also one of the factors that may boost cash flow to the market, helping the market restore.

Thank Sir!