A woman performs a transaction on mobile phone at Bao Viet Securities' office. — VNA/VNS Photo

The stock market is expected to see more investment opportunities for the medium and long term in the second quarter of 2023, according to analysts.

In its latest report, BSC Securities Company said that the market witnessed strong divergence among industry groups in the first quarter of the year. Particularly, the financial, material, and energy sectors all posted better performances than the benchmark VN-Index.

The securities firm also lowers its GDP growth forecast to 5.8 per cent in the positive scenario, compared to 6.7 per cent in early 2023, and to 5.3 per cent in the negative scenario, the report said.

Many signs show that production activity is weakening while the real estate industry is still facing many challenges. In the first four months of the year, import and export value growth also declined.

However, the macro situation has shown some positive signs, as inflation was controlled stably with the CPI data in April only up 2.84 per cent, the benchmark exchange rate was under control, and FDI capital inflows improved.

The macro factors will create favourable conditions for the central bank to continue lowering the policy rates to support the economy.

The State Bank of Vietnam on Tuesday announced another rate cut of half a percentage point. And the decision is expected to have a positive impact on the stock market in the long term, Nguyen Minh Hoang, director of the Analysis Department at VietFirst Securities, told Viet Nam News.

"As the central bank cut interest rates as expected for the third time, it is already priced in. So in the near term, the market will not show a strong response," Hoang said.

"However, the move helps reduce the borrowing cost for businesses, increasing the credit cycle and supporting the economy. So it will have a long term impact on the market."

The expert also said that given the lower interest rate environment, flows of cash running to savings in 2022, when interest rates were high, are now likely to find other investment channels, including the stock market.

"It will also create expectations even for industries which are now weak in the market. For example, the manufacturing, retail, import-export groups are the groups seeing better prospects in the second half of 2023," Hoang added.

Activities to boost disbursement of the State budget and accelerate disbursement of public investment in the second half of 2023 will be the driving force behind the economic recovery and growth plan in the period of 2023-25, according to BSC Securities.

In the first four months, disbursement of budget capital is estimated at VND131.2 trillion (US$5.59 billion), up 18 per cent over last year and equal to 19 per cent of the year plan.

The Government is making considerable efforts to promote public investment. BSC expects that directly affected industries such as infrastructure construction, building materials, and indirectly affected groups, including commercial real estate, industrial parks, and seaports, will benefit.

BSC also expects foreign investors to maintain their net buying position in the second half of 2023 when corporate profits will gradually improve compared to the first quarter and monetary and fiscal policies help the economy grow.

Meanwhile, the issues related to bonds and the real estate market have been gradually resolved.

In the long term, foreign investors still show considerable interest in the Vietnamese market as it continues to receive some additional capital flows from the Fubon ETF and the China Trust Vietnam Opportunity Fund from Taiwan.

In terms of industry valuation, some groups show more attractive valuations than in the past, such as banking, real estate, industry, fisheries, oil and gas, and retail.

On the contrary, some industry groups with higher valuations than in the past, such as textiles and garments, basic resources, seaports, and aviation services, will be strongly affected by profit prospects this year. — VNS