Macro&Market July 2019__Not much room to rally_20190708

Macroeconomics
•    PMI increased slightly from 52.5 in June to 52.6 in July, and lower than the average of 2018 of 53.7 points.
•    Total retail sales of consumer goods and services in 7M2019 were estimated at VND 2,804.8 trillion, up 12.5% compared to the same period last year, if excluding price factor, it increased by 8.74%
•    In 7M2019, registered FDI decreased by 35.6% compared to the same period last year while disbursed FDI increased by 7.1% compared to last year. FDI capital mainly focuses on processing and manufacturing industries.
•    The interbank USD exchange rate fluctuated in the range of 23,260 - 23,330 VND/USD, slightly lower than the margin of 23,350 - 23,475 VND/USD in June. The interbank short-term interbank interest rate began to decline at the end of the 2nd quarter  while the medium-term interest rate is flat.

Stock market
•    HSX and HNX had positive movements. VN-Index officially increased by 41.7 points compared to the end of last month (+ 4.39% MoM), (+ 8.9% YtD) and HNX-Index increased 0.92 points (+ 0.89% MoM), (+ 1.51% YtD)..
•    Average liquidity on 2 exchanges increased by 2.91% compared to June 2019, and reached 4,206 billion VND/session and equivalent to nearly 180.5 million USD/session.
•    In July, foreign investors net bought on the HSX with VND 2,245 billion, net sold VND 170 billion on the HNX.
•    VN-Index's P/E increased to 16.70, +4.19% MoM, +8.77% YtD and HNX-Index increased to 7.57, respectively +0.90% MoM, -10.69% YtD. Compared to June 2019, the P/E of the VN-Index dropped to the 10th position and the HNX-Index continued to hold the 20th position in Asia.

Market outlook in August
Although VN-Index has a chance to surpass 1,000 points in August thanks to the movement of large stocks, we believe that the factors supporting the sustainable growth of the market are quite vague. VN-Index is likely to have a correction to 965 points, creating a price base and wait for support information. VN-Index price movement will range from 965 points to 1,015 points in August. BSC gives two scenarios as follows:
•    In positive case, VN-Index kept above 965 points in the correction sessions after checking or exceeding 1,000 points. Liquidity remained weak.
•    In negative case, the VN-Index may drop below 950 points if there are unfavorable information from the global market.

Recommended stocks:
•    Industry and stocks are evaluated positively in the Sector Outlook Report 2019  and Quarter II Industry Outlook ;
•    Stocks with improvement and positive outlook such as Banking, Retail, leading stocks;
•    Stocks benefited from recovering material prices and oil prices;
•    Defensive stocks such as Electricity, Information Technology - Post, Retail consumption have high growth and dividends;
•    In the long-term, BSC's recommended stocks will be mentioned in the sector strategic reports for the third quarter, stocks with good changes are recommended in the Weekly Report and update report for sector/company.