An investor monitors the stock market. — Photo laodong.vn

The Vietnamese stock market is anticipated to show positive momentum following the Lunar New Year (Tết) holiday, according to statistics from VPBank Securities (VPBankS).

The firm’s analysis of trading patterns over recent years indicates that if market liquidity is lacklustre in the month leading up to Tết, it tends to improve significantly afterward. Conversely, when pre-Tết trading is active, liquidity tends to taper off post-holiday.

Đào Hồng Dương, Director of Sector and Equity Analysis at VPBankS, explained that the market often trends down with low liquidity before Tết but rebounds strongly afterward. Over the past five years, market liquidity has been relatively subdued around the Lunar New Year compared to other months, particularly in the second and third quarters.

Currently, the VN-Index is fluctuating within a wide range of 1,200 to 1,300 points. Without a decisive breakout in either direction, this level of liquidity remains typical.

However, Dương noted that trading activity appears to be driven by anticipation of fourth-quarter earnings results, with strong performance observed in the banking and securities sectors.

In the Year of the Rat (2020), the market gained 3.3 per cent in the month leading up to Tết but dropped 8.9 per cent afterward due to the onset of the COVID-19 pandemic. By contrast, in 2021 and 2022, the market declined before Tết but rebounded significantly after the holiday, with gains exceeding 4 per cent in some instances. Over the past five years, the market has risen post-Tết in three out of five years, often fuelled by improved investor sentiment and robust earnings results.

According to Dương, several factors explain this phenomenon. First, ahead of the long holiday, investors tend to shift funds into fixed deposits to secure returns. After Tết, sentiment typically improves, bolstered by the announcement of corporate earnings and the onset of annual general meetings from February to May, which provide fresh market drivers.

Looking at liquidity trends, VPBankS data shows that if pre-Tết trading activity is lively, post-Tết liquidity tends to decrease. However, if pre-Tết trading is weak, post-Tết trading usually recovers.

"When the market is in a state of low liquidity and lacking direction, investors may become discouraged, whether they hold stocks or are looking for entry points," Dương said.

"However, markets always reward patience. Identifying the right moment, whether through fundamental, technical, or market flow analysis, can lead to substantial rewards."

Dương predicts that after Tết, the VN-Index will be led by sectors with strong earnings growth and attractive valuations, particularly banking stocks. The banking sector is projected to achieve a profit growth of approximately 15 per cent in 2024 and over 17 per cent in 2025.

The banking sector's price-to-book (P/B) ratio, currently averaging 1.5 times, remains appealing. With double-digit return on equity (ROE) growth expected in 2024, Dương believes that valuations will reflect this performance.

Other sectors with strong growth potential include steel, retail, food and beverage, and securities. Residential real estate, however, is expected to see modest growth in 2024 compared to the previous year, with stronger performance anticipated in 2025 and beyond.