Mirae Asset: cpressure may last until the Fed lowers interest rates, VN-Index has potential adjustment risks in April

According to Mirae Asset, the State Bank is gradually preparing further plans to reduce exchange rate pressure, likely starting with the sale of forward contracts for the USD.

Exchange rate pressure may last until the Fed officially lowers interest rates

In a recent strategy report, Mirae Asset said that despite the State Bank's (SBV) efforts to attract money, the free exchange rate still increased to over 25,000 on April 3, marking a devaluation of approximately 2%. .87% compared to the beginning of the year. 

Similarly, the selling exchange rate listed by Vietcombank also showed an unusual spike to 25,130 VND on the same day, recording a devaluation of 2.91% compared to the beginning of the year (a sharp increase compared to the devaluation of 2.25 VND). % on March 29).

Looking back at the overall landscape of the first quarter of 2024, Mirae Asset believes that the context in 2024 will continue to be significantly different from the previous two years, when the first quarter of 2024 was affected by the prolonged impact of increased interest rates. of the Fed before and the general sentiment about the Fed maintaining higher and longer interest rates.

Pressure on exchange rates is expected to continue until the Fed officially begins cutting interest rates. However, the actual impact will be different from two years ago as the current economic context has seen significant improvement, combined with the SBV's early intervention measures through the amendment of Circular 02/ 2021/TT-NHNN, aims to expand the scope of intervention by controlling swap gaps.

"In general, the reduction in the scale of T-bill issuance by the State Bank, along with the adjustment of the issuance interest rate in recent sessions, reflects the flexibility and measured approach of the State Bank in intervening. Instead of rushing to act, we believe that the SBV is gradually preparing further options to reduce exchange rate pressure, potentially starting with the sale of forward contracts for foreign exchange rates. against the USD," the Mirae Asset report stated.

The market has potential risks

With the first quarter macroeconomic data, Mirae Asset maintains an optimistic view on Vietnam's economic growth for 2024. This optimism is reinforced by some positive policy changes, but the weeks of gains Recent points have somewhat narrowed the room for the upcoming uptrend as VN-Index approaches the 1,300 point mark, corresponding to the average P/E level of the last 10 years.

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At the same time, the analysis team noted policy changes such as promoting public investment disbursement, and the Government's determination to upgrade the stock market to meet FTSE's upgrade criteria in 2019. 2025. 

These moves have pushed the value of the Financial Services industry past the P/E quartile over the most recent 10 years, reflecting investors' expectations of profit growth prospects. in the future, because this will be one of the main beneficiary industry groups.

Furthermore, the positive developments of the market in recent months have largely come from the banking industry. However, Mirae Asset also noted that price increases in the last 3 months have placed the majority of stocks in the Banking group in the VN30 basket trading around the average P/B value plus one standard deviation compared to with an average P/B ratio of 5 to 10 years. 

This increases the risk of corrections to return to balance in these stocks as investors try to realize profits after previous significant price increases.

Therefore, this is potentially a potential risk, as any period of adjustment in the banking group could put downward pressure on the VN-Index in April, due to the significant capitalization proportion of the banking sector. branch.

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