BSC_Vietnam Sector Review_2018_EN

To assess the effectiveness of BSC's recommendation in the 2018 Industry Outlook, we consider the following factors: (1) Stock market movements 2018; (2) Industry investment strategy, as follows:

• Accounting to index. BSC forecasted the VN-Index quite exactly in the first and second quarters of 2018 when Vnindex created a new peak in the forecast area of 1,165 points, between the fastest growing stock market in the first half of 2018. However, with our notes on the unknown factors, there were negative impacts, leading to the VN-Index moving down the negative scenario, falling around the level of 900 points.
• Accounting to market movement. Secondly, developments in the market in 3Q2018 are quite similar to the BSC’s forecast for the third quarter. Therefore, in the third quarter, the market has recovered the test of the area of 1,000, then adjusted to check the short-term bottom area as the negative scenario. In addition, the market volatility in the second half of 2018 is relatively strong as our previous forecast thanks to the influence of domestic and foreign macro factors.
• Stocks group. Thirdly, in the fourth quarter Outlook Report 2018, BSC forecasted OUTPERFORM PERFORMANCE of stocks: Bank, Real Estate, Consumer, Manufacturing and defensive stocks: Electricity, Technology, non-life insurance. The market was quite closely to our forecast in 4Q2018, except for the Real estate sector because the progress of projects are slow due to the problems with legal procedures; Seafood, Textile and Cement groups were positive thanks to the EVFTA trade agreements and the effects of the Trade war between US and China.
•  Review on information affecting Vnindex and the stock market in 2018. The stock market is strongly affected by domestic and foreign macroeconomic factors. Macro factors include: (1) US-China trade war; (2) Geopolitical Iran, North Korea; (3) FED raised interest rates to 2.5% which leads the appreciation of USD; (4) The Vietnamese market is included in the list of watching FTSE's emerging markets, (5) The sharp decline of oil prices in the short term due to a sharp increase in supply and decline in demand declined. Some internal factors affecting the market in 2018 include: (1) P/E and P/B VN-Index are higher than the average level of emerging and frontier countries, key stocks have high valuation; (2) The market is distorted by newly listed large stocks with high valuation. (3) Thanks to macroeconomic stability, good growth, Vietnam is aiming to complete and exceed the macroeconomic targets planned in the beginning of the year.