Macro 2018M5_Recovery from value investment activities_20180604

Macroeconomics
•    PMI in May increased to 53.9 points, up 2.3% MoM and up 4.5% YoY.
•   Total retail sales of consumer goods and services in May 2018 were estimated at VND 354 trillion, increased 1.5% MoM and up 9.5% YoY.
•   Total registered FDI in May 2018 only declined 30.8% YoY, and the implemented FDI rose by 9.8% YoY, showing improvements in both of the registered and disbursed FDI. The sector of processing & manufacturing, and distributing and manufacturing electricity, gas, hot water, air conditioner are the two leading industries in attracting FDI.
•   The interbank rate in May fluctuated between 22,790-22,845 VND/USD, stable compared to the last month’s level of 22,785 – 23,850 VND/USD. The interbank rate increased fast in the second half of May.
Stock market
•   Both the HSX and HNX exchanges fluctuated sharply in May, the stocks fell deeply and formed bottom. VN-Index and HNX-Index decreased -7.5% MoM and -6.3% MoM, respectively.
•   The average liquidity on the bourse decreased 15.43% compared to April 2018, and remained at VND 7,065 billion per session and equivalent to nearly VND 310.6 million per session.
•   Foreigners were net buyers on the HSX with a net value of VND 22,884 billion and net-selling on the HNX with VND 219 billion.
•  The VN-Index and HNX-Index reached 18.38 and 14.7, respectively, -1.6% mom and -6% mom respectively. P/E of the HNX-Index stayed at 14th position, P/E of the VN-Index stayed at the 5th position in the region.
Market outlook
The market was active at the end of May, the VN Index has a chance to surpass 1,000 points in June, however, the cash flow is not expected to be strong and the market will be diversified after this rebound. Therefore, Investments should be directed towards the good stocks at good price. In June, BSC provided two scenarios for the market as follows:
  - In positive case, foreign investors stopped selling and returned to net buy due to the effect of FED’s increasing interest rates. The market will be diversified, large caps still help to hold the market, and the cash flow waits for information about Q2 results. The liquidity is medium, index is gradually stable to create area over 1,000 points and recover when support information is released.
  - In negative case, VN-Index continued to follow V-D-V pattern and decreased below 900 points. Negative movements from the world market, margin reduction and foreign selling are factors affecting psychology and cash flow into the market.
•    Stock recommendation:
  - Industry sector and stocks that we consider positive in the industry report of 2018 (Link) and (Link);
  - Banking and Finance stocks have strongly improved business results and are benefited from the Law on Supporting Restructure of Credit Institutions and NPLs.
  - Real estate and construction stocks are benefited from the economic recovery cycle.
  - Leading retail stocks have high growth and dividend yields.
  - High defensive stocks in consumer, pharmaceutical and electricity sectors.