Macro&Market Oct 2018__Foundation build, Rebound opportunity_20181106

Macroeconomics
• The PMI rebounded to 53.9, up sharply from 51.5 last month, and was 53.4 points higher than the yearly average (52.6 points average in 2017).
• Total retail sales of consumer goods and services in October were estimated at VND378.6 trillion, up 1.3% month on month and up 12.4% on year.
• FDI in 10 months decreased by 8.5% yoy but disbured FDI increased 6.3% yoy. The manufacturing and real estate industries are the two leading players in attracting FDI
• The interbank exchange rate fluctuated between 23,344 and 23,356 VND/USD, increasing by 23,050 - 23,299 VND/USD in September. The interbank rates in all terms increased in the second half of October , especially short-term interest rate

Stock Market
• Both HNX and HNX declined and tested 900 points area. VN-Index officially dropped 102.37 points compared to the end of last month (-10.06% MoM), -69.48 points (-7.06% YTD) and the HNX-Index dropped 10.93 points (-9.4% MoM), -11.51 points (-9.85% Ytd).
• The average liquidity on both exchanges increased 9.45% compared to September, 2018, and maintained at 5.883 billion per session and equivalent to nearly 252.5 million USD per session.
• In October, foreigners net bought VND 9272.54 billion on HSX, net sold VND -30 billion on HNX. Since the beginning of the year, they net bought VND 39.54 trillion on the HSX and net sold VND1.1 billion on the HNX.
• P/E of the VN-Index dropped to 15.97 points, -10.77% MoM, -12.44% YTD and P/E of the HNX-Index fell to 9.19%, -8.85% MoM and -26.49% Ytd. Compared to September, the P / E of the VN Index fell to 9th place and the HNX-Index stayed at 17th position in Asia.

Market outlook next month
The market fluctuations in October did not fully reflect the macro stability and the enterprises' positive performance. the selling force was not large as the securities companies' margin value fell to nearly this year's beginning and fell by more than 20% compared to the peak. The market will be able to form its bottom at the old bottom of 885-900 points and will retest 1,000 points in November, if there are no significant impacts from the global markets.
• In a positive case, VN-Index will form a bottom at 885-900 points and increase again with the expectation of over 1,000 points. The reasonable price level will facilitate cash flows in several sectors and stock groups.
• In the negative case, the negative news from the world and the decline of foreign capital flow will cause a sharp drop far away from the support level of 885 points and will form the recession.

Recommended Stocks:
• Sectors and stock valuations that we consider important – 2018 Sector Outlook and Viet Nam Sector Outlook 4Q2018;
• Banking stocks - highly-improved business results, Petroleum stocks benefiting from oil price and other stocks benefiting from trade agreements and trade shift from trade war;
• Real estate stocks from revenue and profit cycle;
• Highly-defensive stocks such as Electricity, Information and Technology, Consumer and Retail have high growth and dividend;