The stock market recorded an adjustment in July with the VN-Index decreasing by 0.3% in July (as of July 26, 2024). Meanwhile, the HNX-Index and UPCOM-Index decreased by 0.4% and 2.5%, respectively. Cash flow cautiously stood on the sidelines and observed with the average trading value decreasing by 24.7% compared to the previous month to VND 19.9 trillion/session.

According to experts from VNDIRECT Securities Company, the above adjustment has helped to value the P/E of VN-Index, which is currently trading at a reasonable level when discounted by 7.1% compared to the average P/E of 5 years. EPS growth is expected to improve further in the second half of 2024. This will support market valuation. VNDIRECT forecasts the projected P/E of VN-Index in 2024 to be around 13.2 times, EPS growth of 18% for companies listed on HOSE. Moreover, the FED's expected interest rate cut in the second half of 2024 will open up more space for Vietnam's monetary policy and reduce pressure on domestic interest rate increases in the final months of the year.

"The valuation of VN-Index is quite reasonable compared to other emerging markets. VN-Index's P/E is trading at a 1.1% premium to emerging markets (MSCI EM), while P/B is trading at 1.7 times, equal to emerging markets (MSCI EM). However, VN-Index's ROE has always been higher than MSCI EM over the past 5 years" - VNDIRECT assessed.

Experts from KB Securities Company (KBSV) are inclined to the scenario that in August, VN-Index will continue to suffer from the inertia of falling points and may start to react to recover when the index retreats to the near support zone around 1,150 points (+-10). In the negative scenario, the index continues to decline and breaks this support zone. VN-Index will lose its medium-term uptrend and may establish a sideways state on the monthly chart in a triangle pattern from the peak in early 2022, down to a stronger/deeper support zone around 1,080 points (+-15) before having a chance to recover again.

Regarding investment opportunities in the stock market, VNDIRECT is seeing increasing potential due to the short-term correction, making valuations more attractive. Better-than-expected corporate profits in the second quarter also support valuations. Exchange rate pressure has cooled down. The FED is expected to cut interest rates, which will help the State Bank have more open monetary policy space to support economic growth. This is an opportunity for investors to increase their stock holdings when the VN-Index is trading in the 1,180 (+/- 20 points) range.

Some investment opportunities for the August market, VNDIRECT points out, include banking, real estate and industrial park real estate.

On the other hand, investors should also be aware of the rising geopolitical risks in the Middle East and the negative impact of global markets on domestic sentiment. Factors that could help the market increase more strongly than expected include a sharper-than-expected decrease in inflation in August and improved liquidity in the system, helping to cool down interbank interest rates.

KBSV expects businesses to record recovering business results, FDI capital, public investment and the approaching La Nina phase. The market is entering a short-term adjustment phase that will open up good disbursement opportunities for investors who do not have a position, or increase the proportion for investors who already hold.