20170705_BSC_Vietnam Marco Market Outlook_EN_Second half 2017

Macroeconomics
•  GDP in Q2/2017 increased by 6.17% over the same period. Service sector grew most strongly with 6.85%
•  The PMI rebounded to 52.6. Industrial production rose positively thanks to increased orders, improved inventories and improved labor size.
•  Total retail sales of consumer goods and services in June were estimated at VND326.6 trillion, up 0.96% over the previous month and up 11.6% YoY.
•  Foreign investment as of 20/06/2017 increased by 14.51% MoM compared to last month and 4.92% YoY. Investments focus mainly on manufacturing and distribution of electricity, gas, hot water , steam and air conditioning.
•  The current USD/VND interbank  exchange rate in June, 2017 fluctuated in the band of VND22,660 – 22,705/USD. In June, interest rate for all terms declined. The State Bank of Vietnam (SBV) continued to net out via OMO

Stock market
•  The market activities on both exchanges showed a strong increase in scores but decreased in liquidity in June. The VN Index and HNX-Index increased by 5.24% and 5.56%, respectively, up 7.5% and 9.04% respectively compared to the end of last quarter. Market indicators maintained their upward momentum from the beginning of the year and continued to conquer the new resistance levels.
•  The average liquidity on both exchanges decreased by 12.53% compared to May 2017 and remained at VND 4,404 billion per session. Foreigners had a net purchasese on HSX and a net sold on  HNX.
•  P/E of VN-Index and HNX-Index reached 16.55 and 11.98 respectively. The current P/E of HNX-Index is in the second position, P/E of VN-Index is in the second position, P/E of VN-Index lowered to 10th.

Market outlook next quarter
•  VN-Index will continue to move in the range of 740-800 points in the third quarter, and may reach 820-850 by the end of the year, the suggested scenarios are as follows:

• In the positive case, VN-Index will continue to conquer the new peak with the support of Blue-Chip stocks and the rotation between groups with highly weighted capitalization such as Banking, Consumer, Manufacturing. The market rallied well in July and the first half of August when it received business information in the second quarter.
• In the negative case, VN-Index will returrn to below 770 points when there are unexpected geopolitical factors and foreign investors turned to be net sellers.

•  Recommended stocks:

• Leading stocks, state-owned stocks divested, widen-room stocks, new listed stocks;
• Basic stocks have a low estimated value, a slow growth or not keep up with the general growth of the market;
•  Stocks that are defensive, or are undergoing changes and are expected to improve profitability such as Consumer, Pharmaceuticals, Power, Technology;
• Group of stocks benefited from domestic support policies (anti-dumping, interest rate subsidy package).

•  In long term, BSC’s recommended stocks that will be included in the industry outlook for 2017 (Link), stocks with improving performance are recommended in the Investment Consultant Weekly Report (Link) Company/Sector Update (link).