20160229_BSC_Vietnam Monthly Review_EN_2016M01_Public

Macro

• PMI increased for the 2nd consecutive month to 51.3 from 51.3 in the previous month. PMI could be more positive in the next month as the industrial production and TPP have positive expectations.

• Registered and disbursed FDI both grew, respectively an increase of 101% and 23% yoy. The manufacturing industry is the most attracting area for FDI inflows.

• The exchange rate is cooling down from the 2nd half month. Interbank rate moved in the range between 22.320 – 22.495 VND/USD, decreasing from the range of 22.470 – 22.547 VND/USD in December. The average rate of the month is 22.407 VND/USD. Stock market

• In January, market created a new bottom and stop at the strong support range of 513-520 points which was formly created in the previous sharp decline, such as the South China Sea dispute, the oil prices fell in 2014 and PBOC yuan devaluation in 2015). At closing in 29/1, VN-Index closed at 545.2 points and the HNX-Index closed at 76.7 points, down 5.83% and down 4% from the previous month.

• Foreign investors sold a net value of VND 1,305 billion on the HSX while sold VND 49 billion on the HNX in January. Along with strong sales activity in the VIC by conversion of bonds, the ETF promoted the sale of VND 406.5 billion that made BCs stocks and the market fell sharply. • 2 indice’s P / E fell to a low for many years, 11.01 and 9.08 for VN-Index and HNX-Index, respectively.

Our recommendation

• The market in February has various positive as well as negative factors. Markets are favorable from the low price level for many years, and information support from earnings year business plan information in 2016, dividend and open room in the upcoming AGM. Conversely, chaotic fluctuations from the stock market, commodities, currencies in the world, and foreign investors capital withdraw are hindering the recovery of the market. However, we assess that the market will rally in February (scenario 1), and Focus rally will take place in late February in the second half of the following scenario:

 Scenario 1: VN-Index breakout resistance at 545 points and reach the point of 555-570 points by the end of Febuary. With the advantage of the low price level, internal capital flows will gradually shift to find investment opportunities ahead of fiscal year earnings expectations and business plan, dividend and open room at the AGM. However, lack of consensus from the market Foreigners do not have the strongest growth and inadequate liquidity.

 Scenario 2: VN-Index is expected to continue to accumulate in the range 535 -555 points. When the world market movements continue to negatively, ETF sold and stock market will continue to accumulate at low prices and wait for support information. The indices are to fluctuate, hammer with low liquidity. • For details, investors can refer to the BSC Vietnam Sector Outlook 2016. In addition, we also note that the full-room stock and companies that have good Q4 earnings would have the mutation good increase.