SCB CIO believes that Vietnam's economy will continue to grow this year, driven by three main factors: the recovery of the export sector, a continuous increase in foreign direct investment (FDI), and domestic consumption. Additionally, financial and fiscal easing measures are supporting Vietnam's economic growth. The government aims for a GDP growth of 6.0 - 6.5% this year. SCB CIO has revised its outlook for the Vietnamese stock market from Neutral to Slightly Positive, recommending gradual accumulation as it anticipates that listed companies have already passed their lowest profit points and there is potential for an upgrade to emerging market status. Investment in the Vietnamese stock market should be categorized under an Opportunistic Portfolio, as it is an additional portfolio that invests according to the situation. Given the high volatility of the Vietnamese stock market, it is advised to invest in proportions that align with the investor's risk tolerance.

Dr. Kampol Adireksombat, Senior Director and Head of the SCB Chief Investment Office (SCB CIO) at Siam Commercial Bank, revealed that in 2024, Vietnam's economy is expected to expand, supported by the export sector and ongoing positive foreign direct investment (FDI). The Vietnamese government targets a GDP growth of 6.0% - 6.5% and an inflation rate of 4.0% - 4.5%. SCB CIO sees that this year, Vietnam's economy is likely to benefit from three factors: 1) the recovery of the export sector, 2) a continuous increase in foreign direct investment (FDI), with the Vietnamese authorities likely to introduce measures to assist companies following the implementation of the Global Minimum Tax (GMT), alleviating concerns for foreign companies, and 3) an upward trend in domestic consumption. Furthermore, financial and fiscal easing measures are significant support for the continuous growth of Vietnam's economy.

In the real estate sector, a gradual recovery is anticipated, although there are still risks of bond defaults. Following government assistance measures, including a reduction in policy interest rates and a two-year extension for real estate bond repayments, we believe that activities in the real estate sector have likely passed their lowest point. Additionally, the Vietnamese legislature passed the Land Law on January 18, 2024, earlier than the market expected in June 2024. This law will take effect on January 1, 2025, allowing property developers to negotiate land purchase prices directly with landowners without government-set compensation, which will enhance the development atmosphere in Vietnam's real estate sector moving forward.

As for the banking sector, it is expected to benefit from the recovering economy. The State Bank of Vietnam (SBV) aims for a 15% growth in credit this year, reflecting confidence in the economic outlook. Although the ratio of non-performing loans (NPL) remains high, the formation of stage 2 loans (loans showing early signs of repayment weakness but not yet classified as NPL) appears to have passed its peak, leading to a likely decrease in future provisions and supporting bank performance in the upcoming period.

Dr. Kampol further stated that SCB CIO has adjusted its outlook for the Vietnamese stock market from Neutral to Slightly Positive due to the anticipated recovery in profits for listed companies, which have already passed their lowest points, alongside expected improvements in exports and FDI. The real estate sector is expected to recover gradually, and the government’s passage of the Land Law will enhance liquidity in the real estate sector. The banking business is also likely to benefit from the recovering economy. Meanwhile, the valuation of the Vietnamese stock market remains attractive, with a price-to-earnings (P/E) ratio of 10.1x, which is below the five-year average by approximately -1 standard deviation. Additionally, there is potential for the Vietnamese stock market to be upgraded to emerging market status and to be included in the FTSE index. If the pre-funding system, which requires foreign investors to have 100% cash of the transaction value one day before the transaction is completed, can be lifted, it will increase the chances of being included in the FTSE Emerging Market index by 2024.

SCB CIO recommends investing in the Vietnamese stock market through funds with a bottom-up strategy while maintaining investment proportions in the portfolio under the condition that the Vietnamese stock market remains a frontier market with high volatility. Investment in the Vietnamese stock market should be categorized under an Opportunistic Portfolio, which is an additional portfolio that invests according to the situation, comprising 20% - 40% of the total portfolio. Given the high volatility of the Vietnamese stock market, it is advised to invest in proportions that align with the investor's risk tolerance, so that in the event of negative outcomes, the impact on the Core Portfolio, which is the main investment portfolio for the long term, will not be significant.