20160613_BSC_Vietnam Daily Review_EN_Leaders wanted

Brexit

After oil prices had attracted the attention of global markets last week, the focus turned to the UK’s EU referendum in the context of high possibility that Fed will not raise interest rates in this week meeting. In 23/6, we will find out that the British people would like to stay or not? Till now, Brexit supporters hold the majority in referendum but the gap was minimal so that the voting results are not predictable and the unpredictable will cause volatility in the market. Brexit - if it happens - will raises the risk of disintegration of the EU. For the UK economy, there are not many positive things after leaving the union. Investors are quite pessimistic about EU and UK economy if the departure occurs. Not only stocks, euro and GBP will weaken relative to other currencies, including USD. When securities and other types of risky assets in the UK and the EU will be affected, the impact will be spread to other stock markets like the US and Asia. In short, the money likely will look to the safe - haven such as gold, commodities or low-risk government bonds of countries with high credit ratings. Vietnam stock market is likely to under Brexit impact because foreign capital inflows, though accounting for a relatively smaller part of total trading value, has played leader role to the domestic capital. In the recent period, the period of net buying from foreign investors has supported the market well to reach the 8-year high at 640.

Recommendation

The market experienced quite a correction while trading volume remained fairly. As we expected, the WTI oil price correction has negatively impacted oil and gas stocks, indirectly influenced other sectors, especially banking stocks as these stocks contributed mainly to the decline of VN-Index. Oil price further negative development may cause petrol and gas stocks correct further and VN-Index continued to decline in the next session. Though the technical signals are somewhat deteriorated, VN-Index has been moving in a safe zone, the current support levels are located at 619 and 615.