Hanoi (VNS/VNA) - With the expectation that interest rateswill continue to fall in the coming quarters while corporate profits begin torecover, brokerages forecast that the Vietnamese stock market will be upliftedin the second half of 2023.

In a recent report, VNDirect Securities said that the main growth driver for Vietnam'seconomy in the last six months of 2023 is the Government's economic supportpolicies, including loosening monetary and fiscal policies.

VNDirect expects the Vietnamese economy to recover in the second half of 2023with a growth forecast for the second half of this year of 7.1%, therebyraising GDP growth for the whole year of 2023 up to 5.5%.

Regarding interest rates, deposit and lending rates will maintain a downwardtrend in the second half of the year. The average deposit interest rate of 12months will decrease to 6.0-6.5% per year by the end of 2023. Lending interestrates may decrease significantly in the second half of 2023 due to the capitalcost of commercial banks decreasing, thanks to the State Bank cutting theoperating interest rate in the first half of 2023.

However, VNDirect noted that the USD/VND exchange rate will fluctuate morestrongly in the second half of 2023 as the US Fed's operating interest rateremains at its high until the end of 2023 or longer to curb inflation. However,the exchange rate is expected to fluctuate no more than /-2.0% compared to thebeginning of this year.

Solutions from both monetary and fiscal policies will put Vietnam’s economyback on track and start a new growth cycle, VNDirect said.

Regarding the stock market, the analysis team said that the cash flow into themarket started to recover, showing that investors' confidence in the market isgradually improving. “Therefore, VNDirect believes that this is the right timefor investors to return to the market and build investment portfolios andanticipate a new growth cycle.”

“We think the VN-Index could reach 1,300 points in the second half of 2023,corresponding to a P/E in 2023 of 13.3 times", said VNDirect.

KB Securities Vietnam (KBSV) forecasts that deposit interest rates at bankswill continue to decline from now until the end of this year, with the 12-monthaverage deposit interest rate of commercial banks at around 6.7%, down 1.3percentage points compared to the beginning of the year. Lending interest rateswill also decrease compared to the beginning of 2023 by 1 to 1.3 percentagepoints.

One of the biggest risks that Vietnam’s stock market will continue to face inthe second half of the year is that interest rates in the US remain high,increasing the risk of a recession there.

Accordingly, KBSV forecasts that the economy of Vietnam as well as the stockmarket will be negatively affected by the decline in investment inflows, weakexports and poor business results of listed companies.

KBSV forecasts that by the end of 2023, the VN-Index will reach 1,240 points.The company reduced the average profit growth forecast of companies listed onthe Ho Chi Minh Stock Exchange from 5% to 0.5%.

"The domestic macro context will only really improve from the fourthquarter, while the second and third quarters will continue to face potentialrisks,” it said.

KBSV increased its forecast for the VN-Index's reasonable P/E range from 14.3times to 15.5 times./.