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H2 2024 Investment Strategy Update: Obstacles remain on the path to recover

TVS Research revises downward the profit growth forecast for listed companies on HOSE to 16.2% YoY (our previous forecast: 20.5% YoY) due to lower profit forecasts for the Banking and Real Estate sectors. TVS Research maintains a POSITIVE view on long-term investment themes and investment themes for 2024 recommended in the Q1 2024 Investment Strategy Update, including: Technology, Industrial Parks, Seaports, Retail, Import-Export and Oil and Gas. Meanwhile, we downgrade the outlook to NEUTRAL for the Banking and Real Estate sectors: • For the Banking sector, we have revised our forecast for the banking sector, anticipating a steeper increase in the cost of funds and higher provisioning costs due to rising bad debts. These challenges will likely constrain profit growth for the sector in 2024 • For the Real Estate sector, we perceive that the progress of legal approval of projects after the new Law takes effect will be slower than expected, which will not help solving the problem of supply shortage (especially in the mid-range segment). Therefore, the recovery prospect of Real Estate companies should be till 2025 Regarding tactical strategies, we recommend short-term investment in Hydropower stocks in H2 2024. The likelihood of a La Nina event this fall (September-November) is estimated at 60-70%, which could significantly boost power generation and profitability for hydropower companies. Conversely, we are discontinuing recommendations for tactical strategies mentioned in previous strategy reports due to the realization of previously anticipated favorable factors.

H2 Macro Strategy Update - Vietnam could maintain QE if FED starts cutting rate from September

Global economy – We believe that the FED will cut interest rates in September 2024. If this happens, the rate cut will provide room for other countries, including Vietnam, to ease their monetary policies. TVS Research updates our view that the FED will implement two interest rate cuts of 0.25% each, expected to start in September 2024. The main reason is the rapidly deteriorating condition of the US labor market, with a significant increase in the unemployment rate, and the country potentially entering a recession by the end of 2024 to early 2025. In Europe, TVS Research continues to believe that the region's economy will remain weak in the latter part of the year, further impacted by geopolitical volatility in the Middle East. For China, the central bank cut the MLF rate in July 2024 after GDP growth in Q2 reached only 4.7%. TVS Research maintains our view from the Q1 2024 Macroeconomic update report, with a full-year 2024 GDP target of 5%, supported by interest rate cuts taking place in the second half of 2024. Vietnam Macroeconomics – Continued economic growth driven primarily by exports Vietnam's GDP growth reached 6.4% YoY in H1 2024. The main driver of this growth was exports (+16% YoY), led by FDI sectors. Vietnam continues to maintain its position as an attractive destination for foreign direct investment (FDI), with registered FDI increasing by 11% YoY. Meanwhile, the exchange rate was stabilized at the end of Q2 after the State Bank of Vietnam sold over USD 6 billion to commercial banks and maintained a net withdrawal position in the open market operations (OMO) to keep interbank interest rates above 4%. In H2 2024, we maintain our GDP growth forecast at 6.3-6.5%, driven by exports. We also expect improved incomes to boost retail growth stronger than in H1. Meanwhile, the exchange rate is expected to cool down in the final months of the year after the FED cuts interest rates

Q1 2024 Investment strategy update report - Raising VN-Index earnings growth projection for 2024_16052024

TVS Research raises our profit growth forecast for listed companies on HOSE to 20.5% YoY due to higher profit projections in the Tourism and Entertainment, Retail, and Basic Resources sectors. We maintain our investment strategy as outlined in 2024 Investment Strategy Report published earlier this year. Our investment strategy focuses on: • Industries with positive long-term growth potential in our Vietnam’s new growth economy including Technology, Industrial Park, and Marine Ports • Sectors are expected to grow in 2024 such as Banking, Retail, Export-Import, Oil & Gas, and Real Estate. Beside long-term investment themes throughout 2024, we maintain recommendations for some short-term investment themes based on market cash flows for the Steel and High Dividend stock groups in H1 2024. TVS Research also maintains the view that the Securities group will continue to attract investor cash flows due to strong profit growth from a low base (H1 2024) and positive sentiment from the progress of KRX system implementation in 2024 and market upgrade in the medium term. Additionally, we introduce a new short-term investment theme for coal-fired power stocks in Q2 2024, expecting the mobilization output from these enterprises to increase in the near future to ensure electricity supply during the hot season.

Investment Strategy Report 2024