20160506_BSC_Vietnam Monthly Review_EN_2016M04

Macro

• The manufacturing sector has recovered: industrial production index increased by + 7.9% YoY, PMI hit the highest at 52.3 points in the last 9 months.

• CPI continued to increase due to higher price pressure from oil, health services and education.

• Disbursed FDI stayed at $ 1.2 billion in April; registered FDI increased to $ 2.8 billion.

• Trade surplus of US $ 100 million in April has raised total accumulated trade surplus since the beginning of the year to US $ 1.46 billion.

• Exchange rate remained stable, long-term lending rates fell slightly at some banks.

Stock market

• After overcoming strong resistance at 580 points, VN-Index is approaching the psychological resistance level of 600 points. The close of trading sessions on March 31, VN-Index and HNX-Index closed at 598.37 points and 80.68 points points, up 6.6% and 2.1% from the previous month.

• Foreign investors traded in the different direction on two floors in April. Specifically, they are net sellers on the HSX 1532 billion and net buyers 282 billion on the HNX.

• P/E of VN-Index and HNX-Index reached 13.03 and 10.52, respectively, slightly higher than the value P / E of the previous month and remained at a low level compared to other countries in the region.

Our recommendation

• May also began with the hypothesis about Sell effect in May. Statistics of May movement in the period 2004-2015 (please see the statistics at the end of the report)

- VN-Index only rose by 4 times (an average increase of 13.9% / year), while it decreased by 8 times (an average decline of 8.3%/year)

- VN-Index had growth by 2 times after May in the last 3 years (2013-2015);

- VN-Index has never increased in May in 2 consecutive years.

• On the basis of evaluation of market information, the VN-Index script is proposed consultancy in May:

 Due to foreign investors continued buying in April, VN-Index can exceed 600 points in the first week in May. Please note about the possibility of adjusting at strong resistance level of 615-620 points and the cumulative reduction of 580 point. The buy of foreign investors and the recovery of world commodities will be the driving force for the VN-Index which will test and exceed psychological level of 600 points. Information on the visit of US President Barack Obama can warm TPP agreement and bring positive psychological factors. Current liquidity does not incresea correspondingly with the growth of price, so the market increases unsustainably. If the market does not have new elements, the adjustment process will take place with support level at 580 points.

• For details, investors can refer our following reports:

o Vietnam Sector Outlook 2016Q2;

o Vietnam Weekly Review;

o Other Sector & Company Reports.