In a strategy report for 2024, Maybank Investment Bank forecasts steady economic recovery throughout 2024 with consumption regaining the spotlight thanks to a re-strengthening of exports, healthier household balance sheets and gradual revival of the real estate sector.
"Unlike the bumpy road in 2023, we forecast steadier economic growth in 2024. We forecast Vietnam’s GDP growth to accelerate to 5.8% year-on-year in 2024 from 5.05% in 2023,” Maybank said.
For the stock market, Maybank laid out two scenarios for the VN-Index with 11% or 26% upside potential based on 19.8% year-on-year earnings growth and the potential upgrade of Vietnam to emerging market status as the key transition to a bull scenario.
In both cases, the bank projects the market will see notable volatility in the first half of 2024 amid mixed views in the market about the pace of recovery and worries about the banking and property sectors. The market should then speed up in the second half, fueled by higher confidence of a recovery.
“We like cyclical sectors, especially consumption related, and upgrade our real estate sector view from negative to neutral,” it said.
The bank’s stock picks for its base case in 2024 are MWG, PNJ, VEA, FPT, MBB, STB, PVD, VNM and NLG.
According to Maybank, a corporate earnings recovery will drive market returns with a potential liquidity boost from a market upgrade.
“We forecast corporate earnings to grow 19.8% year-on-year in fiscal year 2024 from a 3.4% year-on-year drop in fiscal year 2023. Thanks to a low base and steadier economic recovery in 2024, we expect corporate earnings to grow smoothly throughout FY24E, driven by retail, steel, IT and banks,” said Maybank.
The bank forecasts that market liquidity is likely to remain good thanks to the accommodative stance of the central bank, while a potential upgrade of Vietnam’s market status by FTSE would be a game changer that supports a significant re-rating.
Given recovery in the economy and the broader stock market, Maybank is bullish on cyclical sectors, especially consumption-related ones.
“Under our base-case scenario, we like companies that can deliver solid and/or outstanding earnings growth. We also select more defensive stocks that have net cash positions and a track record of regular dividend payments. In the bull case, we like more large caps and high-beta stocks, especially those that still have room for foreigners,” it said./.