The era of cheap money is full of charm.

According to SGI Capital, the theme throughout 2024 globally will be interest rate cuts to support the economy. The strength or weakness of this trend will continue to depend on the balance between inflation and unemployment. After nearly two years of tightening, there is considerable room for monetary easing globally as inflation in many countries has fallen below the ceiling of operating interest rates.

Goldman Sachs forecasts that inflation in the US and developed economies will return to the 2-2.5% range by the end of 2024 and there will be no rebound effect. Stock markets often perform well during periods of inflation in the 2-3% range. Therefore, in the trend of falling interest rates and economic recovery, major organizations around the world recommend allocating money to investment channels instead of holding cash in 2024.

For the domestic market, after the 2022 - 2023 period with many major fluctuations, SGI Capital believes that there will be many conditions to believe in the positive stability of Vietnam's macro economy in 2024. The foundation will be low inflation, interest rates falling to record lows, stable exchange rates and clearer growth recovery.

The Government’s efforts will support the economy and the market by focusing on promoting both fiscal policy and monetary easing. Record low interest rates will be a major driving force for money flows to no longer be dormant. The defensive and cautious mentality will gradually be removed when the need to find alternative investment channels to bank deposits will increase along with clearer signs of recovery in the economy, stock market and real estate.

VN-Index enters its highest profitable period

According to Mr. Le Anh Tuan - Director of Dragon Capital Securities, VN-Index is in a recovery cycle when factors such as low interest rates, stable macro and profit growth start to bottom out converge. This is the time when stocks often grow strongly and investors can earn the most outstanding profits.

"With this cycle, investors can have outstanding performance of over 20%. In the recovery cycle, high beta, high volatility industries will have good performance, for example, non-essential consumption, real estate, banking and finance will grow and bring high profits. On the contrary, industry groups such as essential consumption, healthcare, energy, utilities such as electricity and water will likely have lower performance in this cycle" - Mr. Anh Tuan said.

Experts from Dragon Capital emphasized that if corporate profits increase by 20%, stocks will definitely increase by 30%. Stocks will have many bright spots when valuations are currently low, especially the domestic cash flow disbursed into stocks is "very real", not borrowed money to support prices.

"Along with the Government's determination to bring Vietnam into the group of emerging markets in the next 2 years, market liquidity will increase along with the VN-Index. With a general profit growth of 15 - 20% in 2024, the 1,100 point mark, which has been tested many times over the past 17 years, will become a support level with historically cheap valuations of the long-term uptrend" - SGI Capital assessed.