BSC_Daily report 22.01.2015_Investors may restructure the portfolio in the short-term declines_DHG Update

The rise of bank stocks today was quite unexpected, but it partly reflected the positive returns of the banks and the investors’ expectations on the accelerating of the banking system restructure in 2015. It was undeniably that the breakup of the bank stocks today had posed great supportive impact on investors’ sentiment, when both exchanges seemed to be “gradually exhausted" after their too long accumulation. However, the liquidity has not improved enough and therefore this signal will need to be observed more the next days. We believe the most positive scenario can occur is that the bank group will continue to help the VN-Index exceed the 580 pts resistance, then causes spillover effects on other stocks to attract more cash flows, then the volume will be improved. In the less positive scenario, the bank stocks will cease their rallies; this can make it hard for the other stocks to rally in the short term. The market may then return to its accumulation zone around 570-575 pts.

Recommendation

Generally, in the mid-term, we remain optimistic view on the stock market outlook. The foreign institutions also get positive assessment on Vietnam's stock market. The Bloomberg’s analyst survey has given an average forecast that the VN-Index will rise to about 655 pts at the end of 2015. Therefore, we recommend mid and long term investors to accumulate stocks with good fundamentals. In short term, we believe that investors should maintain a medium stock/cash ratio, taking advantage of corrections to restructure the portfolio and can increase the stock ratio if the VN-Index breaks 580 pts with increasing volume.