Week 27_High volatility due to restructuring VN30 and future contract expire_TA_HVN, GVR, VEA, HDG, DGW_20190715

Next week stratergy                           
VN-Index struggled before the resistance of 985 points. This situation may continue as VN30 restructuring and the 1907 future contract expire. VN-Index returned to a struggling state in the resistance zone when large stocks lacked consensus and declined liquidity. Banking stocks maintained positive growth but large stocks VHM, VIC, VNM, and MSN reduced, delaying the index's gain. The market was strongly differentiated with 10/18 Sectors increased, stocks with positive second quarter's business result had a postitive price movements. The world stock market gained positively and foreign net cash flow has not yet created a strong effect on cash flow attraction. Q2 business results are still the main motivation for the market next week, however, the indexes may be interfered with the new VN30's structure as well as the trading strategy when the 1907 future contract matures.
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Stock markets rose after FED Chairman's Congressional hearing. USD price dropped while goods increased. The opinion of the FED Chairman in Congressional hearing was said by the market that the interest rate cut was coming near. This information supported US markets to set a record peak while USD Index declined compared to most currencies with a decrease of -0.4%. VND also increased by 0.2% last week to the beginning of 2019. Bcomp commodity index increased by 2.1%, mainly from the 5.5% increase of oil price. Metal and Agricultural products are also recovering, however, Café and Rubber plummeted over 6%. The markets are swinging between psychological concerns about the prospects of the world economy and expectations of lowering FED interest rates. Any sensitive information at this time has a significant impact on markets in the short term.

Exchange rates and interest rates continued to fall, the SBV increased the size of issuing bills after two consecutive weeks of decline. Central exchange rate dropped 5 dong to 23,059 in 12/7 session. The exchange rate of USD/VND in some banks is around 23,140 VND/USD and 23,260 VND/USD in 2 directions, nearly equal to the exchange rate recorded at the beginning of the year. The interest rate level continued to decrease slightly in the 2, 8, 9 percentage points in the overnight, 1 week, and 1 month terms respectively. SBV issued 49,998 billion dong of 7-day bills with 3% interest rate, 14 trillion dong higher than last week and there was no transaction on the open market. It means that market liquidity has been much better than the end of June due to seasonal factors.

Liquidity remained at a high level, future contracts's price movements closely following VN30. The future contracts will widen the volatility band when the VN30 changes its composition and the 1907 future contract expires next week. Except for the 1907 Contract, the future contracts followed VN30 closely with the differentation was -0.2%, 0.6%, 1.1% and 1.1% at all terms. The average trading value per session reached VND 9,677 billion, down 8% compared to the previous week. Open interest dropped 7% to 26,804 dong. VN30 is forming a consolidation zone above the new support level at 873 points as well as the movement in the bottom 2 model which was mentioned last week. The HOSE will update the new VN30 portfolio at the beginning of next week while the 1907 future contract will expire on Thursday, which will create more fluctuations in the coming week. Long position continues to maintain, however investors may choose a fast trading solution to take advantage of unexpected fluctuations of the index next week.

Short-term trading recommendation: Cautious against the resistance of 985 - 1,000 points, reduce the proportion when stocks increase strongly in the movement of rotation.
Mid and long-term trading recommendaton: Increase the proportion of basic stocks thanks to the second quarter business results.

Stocks technical analysis
Positive stocks: HVN, VEA
Consolidate stocks: DGW, GVR
Negative stocks: HDG

Next week highlights                               

• Q2 business result reports of listed companies.
• HOSE publishes the adjusted VN30 on 15/7.
• Chairman and members of FOMC will have a speech, strengthen the possibility of lowering interest rate in policy meeting on 30 - 31/7.
• On 16/7, US Retail Revenue Index, FED Chairman and a member of FOMC have a speech. 17/7, EU, England and Canada publish CPI Index; Australia's Unemployment and labour change index. 18/7, England's Revenue Retail; USS Unemployment benefits and Production index. 19/7, Revenue Retail in Canada, Speech of FOMC's 2 members.