20160603_BSC_Vietnam Monthly Review_EN_2016M05

Macroeconomy
•           May PMI rose slightly to 52.7 pts from 52.3 pts in April. Implemented FDI was $1.16bil; new registered FDI in first five months reached $10.16bil, up 136.4%
•           CPI went up 0.54% MoM and 2.28% YoY due to the rise in oil and gas price lifted cost of transportation and materials.  USD exchange rate was slightly up because of the possibility of rate hike from FED, and trade deficit was $400mil in May.
•           Interbank rate fell sharply due to surplus supply, lending rates deceased moderately in some banks. Circular 06/SB/2016 amending Circular 36/2014 less strictly than the previous draft (Report). Government implemented rate control policy appropriate to the macroeconomics conditions, inflations and money market, seeking to lower rate.

Stock market
•           Major markets such as US and Europe continues their rallies while emerging markets declined, led by 9.4% drop in Brazil.
•           In May, VN-Index climbed 3.3% to 618.4 pts closed to BSC forecast the second months in a row (Vietnam macro and market outlook 2016, page 40); HNX-Index up 1.3%. Bluechips led the rally. Average liquidity in May reached VND 2.870bil/ session, down 5.9% than April.
•           Foreigner boosted buying VND 926bil on two exchanges, despite 2 ETFs have sold to reduce size and net - selling put-throught transactions in VIC and HPG. In our opinion, the net-buying volumes from P-Notes was noteworthy (Report 1, Report 2), sizable net-buying transactions were in oil and gas as well as bank stocks.  Seafood sector was traded quite well as we expected (Report on trading opportunirty in seafood sector).
•           P/E of VN-Index and HNX-Index went up to 13.59 (from 13.03) and 11.29 (from 10.52) respectively last month. Trades on Upcom became exciting as HNX might build Upcom premium index

Recomendations
•           VN-Index will be traded possitively in the first week of June thanks to the buying from foreigners and might test 625 pts and 638 pts. However, in general, market might correct moderately and continue trade in the range of 580 - 615 pts. The positive cumulation waits for macro-economics policies to take effects and be absorbed into the market. High-light for June: (1) the market was further driven by foreign investors, (2) Liquidity improved by active ETF structure but remain moderate and (3) Stock breadth is expected wider before the second quarter earnings results. Stocks benefited from rising commodity prices move into less predictable stage than 2 months ago.

•           Recommended stocks:
Large - caps which were net - bought by foreigners;
Stocks with positive expected Q2 results and high - dividend;
Upcom stocks might be allowed for margin trading under implementing timeline 1/7.