20170905_BSC_Vietnam Monthly Review_EN_2017M08

Macroeconomic
• The PMI rose marginally from 51.7 to 51.8. Industrial production recovered slightly thanks to improvement in processing and manufacturing industry while mining sector continued to diminish and inventory index increased.
• Total retail sales of consumer goods and services in August 2017 reached VND 330 trillion, up 11.7% over the same period last year.
• Foreign investment in August only continued to decline (-43.4% mom & -60% yoy). Electricity, gas, hot water and air-conditioner distribution & Processing and manufacturing are the two leading industries in attracting FDI.
• The VND/USD interbank exchange rate fell slightly compared to the previous month, fluctuating around 22,670 VND/USD. The short-term interbank rates began increasing, revealing less abundant in system liquidity.
 

Stock market
• VN-Index fluctuated sharply while HNX-Index maintained its uptrend. The VN Index dropped 0.79 points, down 0.1%; and HNX-Index increased by 2,699 points compared to the previous month, up 2.7%.
• The average liquidity on the two exchanges decreased by 4.7% compared to July 2017 and remained at the level of VND 4,419 billion per session. Foreigners were net buyers on the HSX and HNX, respectively at VND 2,653 billion and VND 25 billion.
• P/E of VN-Index and HNX-Index reached 16.55 and 11.98 respectively. P/E HNX-Index lowered to the third bottom rank; P/E of VN-Index rose to 9th position.
Market Outlook next month
• The VN-Index is fluctuating in the range of 760-800 points and having a chance to surpass 800 points when bluechips have a high consensus, the following reference scenarios are proposed as follows:

•  In positive case, VN-Index can reach for the new highs in the year with the leading of Bluechips, focusing on banking stocks. The action of rotating between Bluechips and trading ETFs will improve the liquidity. Foreigners continue having stable net purchase trend, focusing on newly listed stocks.
•  In negative case, VN-Index reverses to fall below 760 points due to negative information at home and abroad. This possibility is very difficult though because the cash flow is still quite positive.

•    Recommended stocks:

• Stocks and sectors that were rated as outperform in our 3rd Quarter Sector Outlook report.
• Banks - finance stocks are backed by high credit growth, bad debt treatment and Circular 36 adjustment.
• Group of divested shares or full room stocks that announced  new divestment plan or when more room is opened;
•  Industry leading stocks in the retail sector have high growth rates and high dividends.

Fertilizer stocks can benefits from the amendment of the VAT Law at the October National Assembly meeting.
In the long – term, BSC’s recommended stock is included in the 2017 Sector Outlook Report (Link), 3rd quarter updated report (Link), stocks with good performance will be recommended in the Weekly Reports  (Link) and Sector/Company Update Reports.