Entering the month with the highest probability of gaining in the year, what is waiting for stock investors?

With a rate of more than 72%, March is the month that Vietnam’s stock market has the highest probability of gaining in the year, although the margin is usually not large.

After a turbulent February, the VN-Index almost lost all of its gains since the beginning of 2023. The stock market entered March again with a “mess” as the liquidity became increasingly “shrinkly” “. However, historical data can help investors somewhat less worried because March every year is usually a “breathable” period for the stock market.

According to statistics, in its 22 years of history, the VN-Index has 16 times increased in March. With a rate of more than 72%, March is the month the stock market has the highest probability of increasing in the year, although the margin is usually not large. . Over the past decade, the VN-Index’s gains in March were no more than 5%.

On the other hand, although the probability of a decrease is not high, most of the times the VN-Index lost points in March were very significant. Especially in March 2020, the index dropped by nearly 25% amid the outbreak of the Covid pandemic in Vietnam. However, Covid-19 is essentially a “black swan” event and is not cyclical every year.

Or like the period 2007-08, the market had a long period of continuous decline after the tsunami of divestment and equitization pushed the P/E of VN-Index up to 4x. Even with a very strong decrease, this number at the time of March 2008 was still high at about 15-17 times. Therefore, the market is under strong selling pressure is not too difficult to understand.

Meanwhile, the current market P/E is only 11.x. This number is not really attractive but not necessarily expensive either. However, it should be noted that the market valuation may be more expensive if the profit decline of listed companies is taken into account in the first quarter of 2023 on a very high basis of comparison with the same period last year.

What to expect in March?

In fact, March every year is a time full of information on the stock market when the season of the General Meeting of Shareholders approaches. Business and production plans, investment plans, dividend payment plans, capital increases, etc. will also be gradually revealed in the meeting documents. This year, these information flows can be a headwind for the market because many businesses are cautious about the risks of inflation and global recession.

Besides, the important meeting of the Fed taking place on March 21-22 will decide to increase/decrease/maintain interest rates and regulate money supply through open market operations (OMO). In addition, the next meeting will also have a summary of the US economic forecast after the meeting. This will help suggest the Fed’s view on monetary policy in the near future.

The Fed’s move will have a certain impact on capital flows in global financial markets. A looser monetary policy, or at least not too tight, can help stimulate money flow into emerging markets, in which Vietnamese stocks are no exception. This is important information, especially in a sensitive period when foreign capital inflows are showing signs of “turning around” after a period of massive net buying.

In the immediate future, VanEck Vietnam ETF (VNM ETF) is expected to pour another 100 million USD to buy Vietnamese shares after changing the reference index from MVIS Vietnam Index to MarketVector Vietnam Local Index from March 17, 2023. In addition, the Fubon FTSE ETF is also rumored to raise more funds to invest in Vietnam, expected in March. However, up to now, there has been no official announcement from this ETF and all its assets. The number just stopped at “rumor”.

With mixed information flows, it is difficult to predict exactly how the market will move in March, even for leading experts. Commenting on the market after losing results from the beginning of the year after February, Mr. Petri Deryng – founder and manager of Pyn Elite Fund said that inflation expectations and interest rate decisions in the US lead the mind. general investor management in the world, but in Vietnam, many other issues play a more important role.

“Vietnam’s stock market is unpredictable in the short term and investors need to be patient at this time,” said Mr. Pyn Elite.

Ha Linh/Market Lifestyle