Banks simultaneously cut interest rates is good news, but there is still a “headwind” affecting the stock market

In fact, lower interest rates bring many expectations to the stock market, because many people think that the top of interest rates is the bottom of stocks.

Positive signal from the cooling down trend of interest rates

Since Tet, many banks have simultaneously reduced interest rates. MBS Securities quoted a survey by Bloomberg showing that the overnight interbank interest rate is trading at 3.58%/year, down sharply from 5.9% at the end of last month. Interest rates for other terms are also around 3.98% – 6.0%/year, down more than 2 percentage points compared to the end of last month.

Deposit interest rates of banks continue to show a downward trend. Currently, deposit interest rates are falling sharply with a decrease of about 1-2%/year compared to the peak period.

Notably, the change took place not only in the group of private banks but also in the group of state-owned banks. The online savings interest rate has been reduced to the listed level at the counter, instead of as high as before. According to MBS, currently the highest deposit interest rate of listed commercial banks is about 9.45%/year.

In fact, the cooled interest rate brings many expectations to the stock market, because many people think that the top of interest rates is the bottom of stocks.

Sharing with us, Mr. Tran Duc Anh – Director of Macroeconomics and Securities Market Strategy of KB Securities (KBSV) acknowledged that interest rates have decreased by 0.5-1% depending on the term compared to the peak level set. . The interest rate level is expected to continue its downward trend in the coming time when the interest rate increase trend of central banks in the world gradually cools down. Even if a recession occurs, the Fed could lower interest rates by the end of 2023.

According to experts, one of the key reasons for the market’s deep decline in 2022 is the sharp increase in interest rates. Therefore, the expectation that interest rates will cool down in the near future will be an important driving force for the market’s recovery in 2023. In particular, the stock market always reflects ahead of expectations from 2 – 2. 3 quarters, so this is also the time when investors need to observe to seize opportunities.

Besides, experts said that government bond yields also dropped. After maintaining high deposit interest rates for a long time, most banks have mobilized large capital sources from the population. The State Bank also made a move to buy foreign currencies from the beginning of the year about 3 billion USD, with abundant liquidity again, causing the demand to buy primary bonds to return and helping the yield of Government bonds to decrease significantly. This is also a positive indicator for the stock market.

Source: Algoplatform

In addition to the interest rate story, Mr. Tran Duc Anh believes that the market valuation is still cheap compared to the past with a P/E around 12 times. Although the economic situation in the coming quarters will be somewhat bleak and pull the market valuation higher, this is still a relatively low valuation with a stable and healthy economy compared to other countries in the region. .

The “headwind” affects the market in the short term

Although there are many positive signals, but KBSV expert emphasized that the most notable risk to the market this year will still revolve around the story of corporate bonds with great maturity pressure. Right now, experts say that many businesses are unable to pay bond principal and interest.

This is a factor that, when appearing, will put pressure on market trends, similar to in 2022. However, with the Government and business leaders having identified the problem early and found solutions to solve it. , it can be expected that this factor will gradually be overcome over time.

On the other hand, the ground is still at a high level compared to the past periods, although it has cooled down significantly. Therefore, market valuations cannot be expected to return to past averages anytime soon. The recovering trend will be interwoven with strong fluctuations, increasing/decreasing interwoven depending on many information factors with the focus on corporate bond story.

Especially, after a tumultuous year, many investors still need time to restore confidence. However, if the trend of lowering interest rates continues as a driving force for the market, liquidity will be able to improve markedly.

“I agree with the view that when the general market is depressed, it is a good investment opportunity. As Warren Buffett once said be greedy when people are fearful and fearful when others are greedy. However, when a market panic drags market valuations to a low, it is important to anticipate what the next risk factor might be and whether the market has responded to that risk. If you see the glimmering lights at the end of the tunnel, you should invest, but if you simply rely on the feeling that the market is scared to invest, it is very easy to make mistakes, “said Mr. Tran Duc Anh .

Forecasting the market in the coming time, experts say that in the short term, there are still many risks that cannot be fully controlled. However, if looking at the medium and long term from 1-3 years in terms of valuation and macro outlook, this is a very good investment opportunity. Because, the current low valuation is not much when appearing on the stock market.

Regarding the investment strategy in the coming time, the Macro Director of KBSV suggested 3 attractive opportunities.

First, the group of stocks benefiting from the cooling trend of interest rates combined with low valuations are Banking, Securities and Real Estate. However, this group of industries will need to observe more issues about corporate bonds, especially the two industries that are directly affected are real estate and banking.

Secondly, public investment stocks also benefit when public investment can become a pulling force for the economy in the coming time. Accordingly, groups related to materials and construction will have the opportunity.

Third, the group of stocks related to opening up China such as aviation, export, seafood. However, investors still need to monitor new policies from China before making investment decisions with these groups.

Ha Anh/Market life