Macro Market Quarter II.2020 - Segmenting, creating market foundation and waiting for speculative cash flow_20200707

Macroeconomics
•    Gross domestic product (GDP) in the second quarter of 2020 is estimated to increase by 0.36% over the same period last year, the lowest increase for the second quarter in the period of 2011-2020.
•    Manufacturing PMI index continued to increase sharply from 42.7 points in May, to 51.1 points in June 2020
•    In the second quarter of 2020, total retail sales of consumer goods and services were estimated at VND 1,154.9 trillion, down 5.8% QoQ and 4.6% YoY
•    For first half of 2020, total newly and additionally registered FDI capital reached USD 12.2 billion (+ 17.5% YoY). In the first six months of 2020, the production and distribution of gas and electricity, attracted the largest foreign direct investment
•    The interbank exchange rate in QII/2020 fluctuated around 23,280 - 23,970 VND / USD. Interbank interest rates fell sharply in both medium and short term, reaching a record low in the past month.

Stock Market
•    As of June 30, 2020, the VN-Index decreased by -4.6% MoM, + 24.5% QoQ, –14.1% YTD while the HNX-Index was almost unchanged from the previous month, + 18.5 %% QoQ, + 7.1% Ytd.
•    Average liquidity on 2 exchanges increased by + 21.2% compared to May 2020, and maintained at 7,596 billion dong / session and equivalent to nearly 327 million USD / session.
•    In June, foreign investors net bought 14,742 billion dong on the HSX and net sold -211 billion dong on the HNX. In 6M2020, foreign investors net sold -648 billion dong on the HSX and -2,150 billion dong on the HNX.
•    P/E of VN-Index dropped to 13.65, equivalent to -4.53% MoM, +24.6% QoQ, -9.9% Ytd and HNX-Index also returned to 8.12, equivalent to -2.62% MoM, +10.2% QoQ, +9.1% YTD. P/E of the VN-Index fell to 14th place in Asia.

Market outlook in 2nd half of 2020
Based on the evaluation of domestic and foreign impact factors, as well as using the weighting methodology from financial institutions' analysis (Appendix 10), VN-Index can be forecast to be around 832 ± 70 points, with a focus area of 795 to 900 points in the last 6 months of 2020. Among two following reference scenarios, we considered the positive scenario the highest possibility:
-    In a positive case, VN-Index created a consolidate platform around 800 points and closed around 900 points by the end of the year. After the differentiation in July, the market had a strong fluctuation thanks to speculative cash flow and the return of foreign capital flows.
-     In a negative case, VN-Index may drop below 800 points and have a negative fluctuation direction to check the short-term bottom at 650 points when there is much adverse information from the world as foreign investors pushed up the net withdrawal.
•    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 public investment activities such as Steel, Cement, Construction Materials, and Asphalt;
-    Stocks benefiting from decreased raw materials input such as Fertilizers, Tire, Chemicals;
-    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).