Vietnam’s economy and stock market will see many bright spots in 2024, Mr. Le Anh Tuan, Director of the Securities Division at Dragon Capital, told the “Investor Day” event, the integrated investment platform held on January 6 in Hanoi.

The macro-economic context will be shaped by three important factors during the year, he went on.

Regarding monetary policy, though lending and deposit interest rates have both reached lower levels than during the Covid-19 period, this record low may still be broken again.

“In October, Dragon Capital predicted that interest rates would continue to decrease, and we still believe there will be an interest rate cut within the next 4-5 months,” Mr. Tuan said. “Interest rates and inflation always have a certain correlation. With the current relatively weak economic recovery, inflation is not a worrying issue. What is important is growth. Therefore, there is still room to loosen monetary policy to promote growth.”

Regarding macro-economic stability, Mr. Tuan emphasized that the exchange rate in 2024 is forecast to fluctuate within a range of 3-4 per cent.

Finally, there is corporate growth in profits and real economic activity. Mr. Tuan told the gathering that consumer production has bottomed out and is now heading upwards, but the recovery model remains unclear. Real estate is gradually “warming up” once more, as seen from improvements in land use tax data.

Regarding the economic outlook for 2024, he said monetary policy will continue to be absolutely loosened to aim for economic growth, and the permeability of interest rates will usually be from 9-12 months. The macro context will maintains its stability, with flexible exchange rates of about 3 per cent.

Dragon Capital offered four main cycles for the stock market, including recovery, prosperity, deceleration, and recession.

In the recovery cycle, stocks often grow strongly and this is the time when investors can make the most outstanding profits.

Stock returns in boom cycles are lower, industry turnover is fast, and profits between industries are not overly different.

Deceleration cycles often have high volatility, and investors often prioritize defensive stocks and energy stocks.

Similarly, during a recession, defensive stocks also outperform growth stocks.

According to Mr. Tuan, Vietnam’s economy is currently starting a recovery cycle. Dragon Capital’s domestic and world historical data statistics show that, in this cycle, investors can earn profits of about 20 per cent from the stock market. This level of performance is higher than during a period of economic prosperity.

In the recovery cycle, highly-volatile industries such as goods and financial services, real estate, discretionary consumption, information technology, industry, and materials are often the beneficiaries. In contrast, essential consumer industries, healthcare, energy, communications, and utilities (such as electricity and water) are not prioritized.