Macro & Market Quarter III_Create a solid foundation, waiting for large cash flows_20191003

Macroeconomics
• GDP of Q3.2019 increased by 7.31% YoY. Industry and construction sector had the strongest growth with 10.05% YoY.
•  PMI in September 2019 decreased to 50.5 from 51.4 in August, making the annual average return to 51.8 (2018 was 53.7).
•  Total retail sales of goods and services in 9M2019 were estimated at VND 3,634 trillion, up 11.6% over the same period last year.
•  The total registered FDI capital in 9M2019 reached USD 15.76 billion (- 19.9% YoY) but the total realized FDI capital reached VND 14.2 billion (+ 7.3% YoY). The manufacturing and processing sector is the main contribution of Vietnam’s FDI.
•  The fluctuation range of the interbank exchange rate is 23,250 - 23,350 USD/VND in the third quarter of 2019. Interbank interest rates for short and mid-terms dropped sharply in September thanks to the impact of Decision No. 1870 .

Stock Market
•    The VN-Index officially increased by 12.5 points compared to the end of last month (+1.27% MoM, +11.65% ytd) and HNX-Index increased 2.73 points (+2.67% MoM, +0.79% ytd). In the third quarter, the VN-Index increased by 46.62 points (+4.91% QoQ), the HNX-Index increased 1.54 points (+1.49% QoQ).
•    Average liquidity on both exchanges decreased by -8.3% compared to August 2019, and maintained at VND 4,381 billion/session and equivalent to nearly USD 188 million/session. In Q3, the average liquidity on the 2 exchanges increased +8.5% compared to Q2 and maintained at VND 4,463 billion/session and equivalent to USD 191.5 million/session.
•    In September, foreign investors were net sellers on the HSX with VND -378.9 billion, and -28.4 billion on the HNX. In Q3, foreign investors net bought VND 162.5 billion on the HSX, and net sold VND -413.3 billion on the HNX.
•    P/E of VN-Index increased to 17.00, equivalent to +1.53% MoM, +5.37% QoQ, +13.02% Ytd and HNX-Index increased to 7.54, equivalent to +2.75% MoM, +1.33% QoQ and -13.38% Ytd. Compared to August, the P/E of the VN-Index is at 10th and the HNX-Index is at 20 in Asia.

Market outlook of QIV.2019
Based on the evaluation of domestic and foreign impact factors, the VN-Index can range from 940 to 1,050 points, of which the key price area is around 980 points. We forecast that the VN-Index will rebound up to 1,015 - 1,025 points in October. If this short-term peak is not reached, the VN-Index is likely return to accumulate around 980 points in November and recover gradually in December. In the fourth quarter, BSC proposed two scenarios as follows:

• In a positive case, VN-Index closed above 1,000 points at the end of the year (an increase compared to 980 points in the 6-month report). The trend is still moving around large-cap stocks, stocks that had full Foreign ownership in the new index are expected to attract new foreign capital inflows.
• VN-Index may drop below 960 points when encountering unfavorable news from the world and international capital flows are not strong enough to spread to markets.

• Recommended stocks:

• We see positive industry and stocks in 2019 Sector Outlook Report;
• Stocks with strong improvements and positive outlook such as Banking, Retail, information technology, leading stocks;
• Stocks benefiting from rebounding price material and oil prices;
• Highly defensive stocks such as Electricity, Information Technology - Post, Retail consumption have high growth rates and dividends;
• In the long term, the recommended shares of BSC will be mentioned in the fourth quarter sector  outlook report, the stocks with good changes are recommended in the weekly report on and our sector / company update report.