Monthly Market Outlook

The VN Index has tapered off its annual gains for three months in a row at present, losing 9.94 points or -1.04% MoM. YTD, it had still increased 6.43%. Lacking earnings news, investors shifted their attention to global stock markets, of which had mixed signals in June. On one hand, the US-China trade war has still accelerated (only with positive development on the last day of June), and concerns on global economic slowdown lingered. On the other hand, the Fed seemed to be more dovish toward more accommodative monetary policy in the future, and market participants expect a rate cut in July 2019, which will support both the stock and bond markets. In H1 2019, VND lost merely -0.45% in value, with most of this slight depreciation occurring mostly in Q2. The lending interest rate also did not increase in H1 2019.

Given the absence of supporting news when the earnings season had ended, the VN Index continued to decline in May, losing 19.76 points or -2.02% MoM. The Index lost ground in May, as local investors followed the global stock markets. Increased volatility was due to further escalation in the US-China trade war, as the two global powers locked horns in a process to find a sense of diplomatic and market equilibrium (or at least détente). Although global investors came to the consensus conclusion that Vietnam is indeed poised to be one of the prime beneficiaries from US-China trade tensions, concerns of a possibility of a global recession combined with an inverted yield curve and global trade tensions sent the market on a tumble. Trading value was almost unchanged in May compared with that of April, maintaining a low level of $138 mn USD (vs. $232 mn USD on average in 2018). Based on SSI Research coverage, 2019 net profit growth of Vietnam listed companies is estimated to continue its upward growth spiral, at 15% YoY. As of May 31^st 2019, the Vietnam stock market was trading at metrics of 14.2x 2019 PER.

The VN Index got off to a good start in the first month of 2019, adding 2.03% (18.11 points) to close out the month at 910.65 points. Liquidity was a bit absent before the long Lunar New Year holiday (from 2 Feb to 10 Feb), with the average daily trading value during this time just at $106.5 mn USD (-30.5% MoM) across the 3 domestic stock exchanges. Foreign investors maintained a net buying position into the holiday of $67 mn USD (vs. $15 mn USD in December 2018). Top net-buying stocks included VNM, MWG, VCB, VRE, STB, MSN, and PVS. Based on SSI Research coverage, 2019 net profit growth of Vietnam listed companies is estimated to be at 13.3% YoY. As of 31 Jan 2019, the Vietnam stock market was trading at metrics of 13.5x 2019 PER.

The VN Index declined throughout the month of December, closing out the month at 892.54 points (-3.67% MoM). During 2018, the VN Index significantly fluctuated, and resulted in shedding -9.32% by year end. Liquidity improved compared to November, with an average daily trading value reaching $153.4mn USD (+12.3% MoM) on 3 domestic stock exchanges. Foreign investors maintained a net buying position, albeit at a lower level of $15 mn USD (vs. $60.4 mn USD in November). Foreign investors net sold amongst the 2 main boards ($21 mn USD), creating heavy selling pressure across some large caps including VCG, CTG, HPG, VJC, VIC, NVL, and VHC. However, foreign investors ended up as net buyers on the Upcom ($36mn USD), mainly thanks to a one-off transaction event in which a foreign investor purchased ~2.96 mn shares of VTP, with a total value of $15.83 mn USD on 20th Dec 2018. Based on SSI Research coverage, 2018 & 2019 net profit growth of Vietnam listed companies is estimated to be at 20.3% YoY and 18.3% YoY. On 28 Dec 2018, the Vietnam stock market is trading at metrics of 14.8x 2018 PER and 12.5x 2019 PER.