Monthly Report

Monthly Report
Monthly Market Review & Outlook – December 2022: Foreign flow helped sentiment

The Vietnamese equity market experienced an unforgettable month during November as when it drove investors from an extreme fear pitch, which later reversed into a market euphoria. The VN Index dropped like a stone during the first two weeks of the month - breaching the psychological 900 point level to 873.8 points (-41.6% YTD) on the 16th of November. With the government sorting out the issues related to credit growth cap and the corporate bond market, the stock market staged a spectacular rebound of 20% to close the month at 1,048.4 points (+2.0% MoM and -30.0% YTD). Encouraged by momentum at the end of November, the VNIndex extended its rally into the first trading week in December, supported by strong foreign inflows. The YTD deep correction of the VNIndex triggered both active and passive funds to return, pouring capital into the Vietnamese equity markets. Despite a 20% rally since the trough, valuations of Vietnamese equities still look cheap relative to regional peer.

09/12/2022

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Monthly Market Review & Outlook – November 2022: The tunnel looks longer

While the US equity market had an impressive rebound during October, the Vietnamese equity market tanked with the VNIndex losing -9.2%. This marks the second  consecutive month of declines, as interest rate hikes and VND depreciation cast a heavy shadow. With a 31.4% YTD drop in the VNIndex, we believe that the market has largely factored in weaker earnings prospects and macro risks (anti-corruption crackdowns, and headwinds in the corporate bond/real estate sector). In any event, we are hopeful that the market will bottom sometime over the next six months. During the  market downturn between 2011-2012, the VNIndex plummeted 36% with the duration of the bear market lasting 11 months (from Feb 2011 to Jan 2012).

08/11/2022

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Monthly Market Review & Outlook – October 2022: Risks and Opportunities

The ongoing crusade of global central banks against inflation has forged ahead, even at the expense of economic growth. Whisperings of the possibility of a Credit Suisse default has been a contributing factor of the weak stock market. Not being an exception, the Vietnam stock market in September tumbled -11.5% and closed September at 1,132 points. YTD, the VN Index lost -24.4%. The accelerating selloff extended during the first few days of October, as retail investors looked for the exit door, while sharp price declines have triggered margin calls, not to mention net selling by foreign investors.

12/10/2022

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Monthly Market Review & Outlook – September 2022: Waiting for news

While a recession becomes more visible in developed markets, Vietnam’s macroeconomic data tracking August performance continue to illustrate the resilience and recovery of the Vietnamese economy since it officially re-opened during the first quarter of 2022. More specifically, the August data set exhibits double digits growth in exports, industrial production, and retail sales and tamed CPI. With such a welcome upside surprise and the resultant momentum, Vietnam likely will post double digit GDP growth for Q3. The long- awaited credit limit extension for the banking industry has finally been granted by the Vietnamese central bank, which reflect a conservative stance in our view.

12/09/2022

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Monthly Market Review & Outlook – August 2022: A short-term rebound

In H2 2022, the Vietnamese economy likely will continue to be impacted by US inflation; Fed rate hike spillover effects; and a global recession in the context of: (1) weaker export turnover which places pressure on the VND; and (2) weaker domestic demand as a result of high inflation. While 2H22 macro data suggests a promising combination of low CPI and high GDP growth off of a low base 2021, investors are faced with a 2023 riddled with uncertainty. In 1H23, we could witness a pickup in CPI, while GDP growth could decelerate. High CPI could finally appear in late 2022 due to the adjustment of products and services (electricity, tuition fees, and healthcare fees). The Vietnamese government’s priorities are to tackle inflation first, followed by growth as inflation risk fades.

11/08/2022

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Monthly Market Review & Outlook – July 2022: Recession fear built up in global market

Q2 was another challenging quarter for equity markets globally, and Vietnam was no exception. Recession fears in developed markets have intensified during the quarter, causing sell-offs in both the equity and commodity markets. Commodities from metals to soft commodities have rallied impressively, outperforming other asset classes in H1 2022 and started to correct on a weaker demand outlook. Oil prices sliding to near USD 100/bbl at the time of writing has also contributed to recession concerns. After the Federal Reserve’s most aggressive interest rate hike in nearly 30 years, the market is now digesting the just-released FOMC minutes.  Prolonged political tensions and tit-for-tat between the West and Russia renders a financial environment which makes predictions challenging, to say the least. The quick spread of new Covid-19 sub-variants (BA4 and BA5) as well as Monkeypox are showing up further risk to global economies, which are vulnerable post-pandemic.

10/07/2022

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Monthly Market Review & Outlook – June 2022: Time to focus on fundametal

Key global macro risks of the war in Ukraine, tightening monetary policy, the fear of economic recession and Chinese Covid-19 restrictions continue to weigh on the equity market. In Vietnam, higher inflation and interest rates likely will manifest themselves over the medium-term. As such, we see no clear strong catalysts in the short-term to support the equity market. However, as the VNIndex has already dropped 14% YTD and suffer big turbulences in the past 2 monhts, we are of the view that most negative factors mentioned above are at least partially priced in.

Update on SSI Research Top recommendation: This month, we remove DGC from our top call list as the share price reached our target.

08/06/2022

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Monthly Market Review & Outlook - May 2022: Staying patient

April 2022 was the worst month of the Vietnam equity market since March 2020. External factors, such as prolonged the Russia- Ukraine conflict, lockdowns in China, and the prospect of tighter US monetary policy have all weighed on investor sentiment - and Vietnam was no exception. Domestically, ongoing investigations of capital markets activities and the real estate sector misconduct have impacted local investor sentiment. In the context of rising interest rates, investors have shifted to a risk-off stance. Money flow also returns to business activities post-pandemic.  We believe that these factors will continue to cast a shadow on market sentiment through May, especially when the earnings and AGM season ends.

Update on SSI Research Top recommendation: This month, we add VEA and PVT to our top call list and remove VHC as the stock reached our Target price.

10/05/2022

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Monthly Market Review & Outlook – April 2022: Caution in the short-term

The Russia-Ukraine war and Federal Reserve Board’s determination  to combat inflation resulted in a cloud over the equity market. However, the Vietnamese equity market did stabilize during the month due to strong local sentiment for growth-oriented shares and foreign inflows into ETFs which supported large-caps with limited foreign ownership (FOL). Improved liquidity during March suggests that investors’ cautious tone has lifted. While the aforementioned headwinds remain, these factors are well-known and partly priced for.

Update on SSI Research Top recommendation: This month, we add DBD and remove TNH, DXG, KBC, CTG, TCB and VSC from our top call list.

10/04/2022

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Monthly Market Review & Outlook – March 2022: Sailing through choppy waters

Equity markets experienced a difficult month in February, as sudden tension between Russia and Ukraine took hold. In March, this is still a key event to watch, as the evolution of the conflict remains uncertain. Any peaceful resolution would ease the level of volatility in the global equity market. For now, the obvious impact on economies is food and energy price hikes. Whether central banks react to higher energy prices by increasing the magnitude of interest rate hikes to combat inflation or reduce the pace of tightening to support economic growth remains unclear. In Vietnam, rising inflation is expected to come sooner, but the government might still be able to maintain acceptable price levels (the most recent measure is cutting 25% the environmental tax on gasoline). The Fed’s upcoming rate hikes have somewhat been felt in the air, as the US Dollar started to strengthen. However, we do expect Vietnam’s trade balance to improve in the coming months, followed by the full reopening of the economy.

Update on SSI Research Top recommendation: This month, we add HPG to our recommended stocks list.

08/03/2022

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Monthly Market Review & Outlook – February 2022: A season for stockpicking

For full year 2022, a divergence of policy mix is likely to differentiate Vietnam from an increasingly wide swath of countries who’ve their policy pivot set toward tightening. Vietnam, on the other hand, should be amongst a cohort of countries which look to delay monetary policy tightening for another year, while boosting fiscal spend. Combined with a stable currency, we expect inflows to return to Vietnam over the near-term.  Macro data for January continues to exhibit the underlying strength of the Vietnamese economy. Both industrial and service sectors grew well as lockdown restrictions have eased, releasing pent-up consumer spend and a recovery in tourism prior to the Tet holiday. Notably, retail sales of goods and services posted growth of 1.3% YoY, the first time since May 2021. Overall, the 2022-2023 stimulus package approved by the National Assembly stood out as January’s key highlight.

15/02/2022

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Monthly Market Review & Outlook – January 2022: A good beginning makes a good ending

In January, Q4 corporate earnings will come into focus. Based on our estimate, Q4 earnings of companies under  coverage should  grow at 13.6% YoY in Q4, decelerating from the first three quarters of 2021 (Q1: 63.3%, Q2: 54.7%, Q3: 24.3%). However, we might see some companies’ earnings post all-time highs in Q4, such as fertilizer, chemicals, and shipping. Bank earnings should also be more positive than initially expected in Q4 2021.

This month, we add CTR, DXG while remove HPG, TPB and PTB from our top call list.

11/01/2022

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Monthly Market Review & Outlook – December 2021: Market to take healthy consolidation
The equity market gained momentum in November, climbing to an all-time high of 1500.8 points on Nov 25th. However, the Omicron Covid variant clouded the market at the end of the month. Looking toward December, investors are likely to become aggressive with profit taking (especially after strong gains of 34% in the VNIndex during 11M 2021), or risk management (such as reducing margin level or closing NAV for full year reports), and portfolio re-positioning into the new calendar year.
This month, we remove VHM and SAB and add VHC to our top call list.

08/12/2021

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Monthly Market Review & Outlook – November 2021: Corrections should provide accumulation opportunities
The equity market gained momentum during October, with many shares making new highs. This was in line with our positive outlook as discussed in our October monthly report. Share prices were supported by strong net inflows from domestic retail investors, and a strong Q3 earnings season despite strict lockdowns. The VNIndex broke the psychological resistance of 1,400 points and closed the month at a new high: 1,444.3 points. Post lockdown, economic data began exhibiting improvement in October. However, as expected, the recovery was weak and varied across sectors. Retail sales grew 14.5% MoM in October, yet remain below pre-Covid levels ( -13.5% YoY in Oct and Jan-Oct retail sales dropped 4.6%YoY). We do not expect a rapid rebound, as consumer confidence remains weak. Manufacturing is gradually gaining momentum in some provinces; however, HCMC and the southern provinces remain an exception due to temporary labor shortages. Vaccination progress is at good pace (over 1 mn doses per day), with 58% of the population receiving the first dose and 24% of population being fully vaccinated at the end of October.

09/11/2021

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Monthly Market Review & Outlook – October 2021: Looking forward to a brighter month
Q3 macro data reflected the government’s strict lockdown measures. The fourth wave of Covid-19, which has lasted longer than expected, forced us to lower our earnings outlook for banking, consumer & retail, oil&gas, although we were already even more conservative than consensus. Bank profitability could be challenged, as we expect NPLs to be higher than market forecasts. According to the SBV, the ratio of reported NPLs plus inherent NPLs (VAMC, legacy, restructured loans) to total loans is expected to range between 7.1% - 7.7%. During the Aug-Sept period, the VNIndex traded sideways in a tight band, suggesting to us that negative GDP growth rate and a bump in Q3 corporate earnings have mostly been priced for. Despite these risks, investment flows continued but shifted toward mid- and small cap names, especially those with solid Q3 results such as steel, sugar, fertilizer, chemicals, shipping, and export-related companies. In contrast, bank shares, which led the market in H1 2021, have corrected between 10%-30% from their peak. The government’s strategy shift from “zero Covid” to a more flexible approach, should be a catalyst for the VNIndex to break out of its consolidating pattern in October. 

07/10/2021

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