Macro & Market February 2020_ Opportunities in risk_20200303

Macroeconomics
•    The PMI index declined to 49.0, down from 50.6 in previous month, and lower than 2019 average of 51.5 points.
•    Total retail sales of consumer goods and services in February were estimated at 414.1 trillion VND, down 7.9% over previous month and up 6% over same period last year.
•    Registered FDI increased to 5.64 billion USD, up 70.9% over same period last year, while disbursed FDI reached 0.9 billion USD, down 12.6% compared to last year.
•    Interbank exchange rate in February fluctuated in the range of 23,190 - 23,350 USD/VND, up from the range of 23,180 - 23,230 USD/VND in January. Interbank interest rates for medium term continued to decline.

Stock market
•    As of February 28, 2020, VN-Index officially decreased by -54.4 points compared to the end of last month (-6.2% MoM) and HNX-Index increased by +7.22 points (+ 7.0% MoM).
•    The average liquidity on the 2 exchange increased by 15.8% compared to January 2019, and reached VND 4,793 billion/session and equivalent to nearly USD 206.9 million/session.
•    Foreign investors turned to be net sellers again in February. Foreigners were net sellers VND -2.813 billion and VND -242 billion on HNX.
•    P/ E of VN-Index fell to 13.73, equivalent to -8.1% MoM and HNX-Index increased again to 7.87, respectively + 9.0% MoM. Compared to January, the P/E of the VN-Index dropped to 14th place and HNX-Index held the 20th position in Asia.

Market outlook in March
Despite complicated and unpredictable movements of the epidemic, VN-Index in general and some stocks in particular are showing signs of oversold due to psychological factors. Based on the history of the stock market reacting to past disease movements (Link), considering the internal economic and market factors, we hold the view that this decline is opening a great opportunity for mid-term investment activities. Information about policy support, if any, will determine the intensity and severity of the recovery phase. VN-Index fluctuated in December from 860 points to 970 points. BSC offers 2 scenarios in March as follows:

• In a positive case, VN-Index recovered after a sell-off, accumulating over 925 points and may increase gradually above 950 by the end of the month when there is supportive information.
• In a negative case, VN-Index may close below 873 points if the disease situation is negative and the pressure to divest from foreign investors.

•    Recommended stocks:

• Sectors and stocks are evaluated positively in the Sector Outlook Report 2020 (Link), Banking Sector Outlook Report (Link);
• Stocks with improvements and positive outlook such as Banking, Retail, Information Technology - Postal and Telecommunications;
• Stocks benefiting from diseases such as Healthcare, Pharmaceutical;
• Highly defensive stocks and stock with high dividend payout;
• In the long-term, BSC's recommended stocks will be mentioned in Sector Outlook Report 2020, stocks with good changes are recommended in the Weekly Report (Link) and update report for Sector/Company (link).