Macro_July 2018_Divergence after 2nd Quarter Bussinesses' report_20180806

Macroeconomics
•    The PMI rose to 54.9, slightly lower than the previous month's level of 55.7, but still higher than the 53.5 average for the year (52.9 points average for 2017).
•    Total retail sales of consumer goods and services reached VND 371.5 trillion, up 1.6% over the previous month and up 13.3% over the same period last year.
•    FDI in 7 months decreased by 3.5% yoy, but disbursed capital increased 8.8% yoy, thanks to billion USD FDI projects in the since June. Manufacturing and real estate business are the two leading industries in attracting FDI.
•    Interbank exchange rates fluctuated between 22,790 - 22,845 VND/USD, increasing in comparison to the range 22,765 - 22,990 VND/USD in June. Interbank interest rate in all terms increased sharply in July.

Stock market
•    Both HNX and HNX shook sharply and bottomed out in July. VN-Index lost 4.4 points as compared to the previous month (-0.46% MoM) and HNX-Index lost -0.01 points (0.01% MoM).
•    Average liquidity on both exchanges decreased -20.9% compared to July 2018, and remained at VND 4,367.24 bn per session and equivalent to USD 188.24 mil per session.
•    Foreigners were net sellers on the HSX with a value of VND 2,563.83 bn and net-buying on the HNX with VND 172 bn. From the beginning of 2018, foreigners net bought VND 31,360.5 bn on the HSX and net sold VND 1,160 bn on the HNX.
•    P/E of VN-Index decreased to 16.96, equal to -2.13% of Mom, but HNX-Index increased to 10.66%, equivalent to 0.16% MoM, because of the business results of the two exchanges are different. Compared to June, the P/E of the VN Index fell two places to 8th and the HNX-Index fell two places to the 18th position in Asia.

Market outlook
The market has a chance to return to psychological test 1,000 points in August, however, market movements are heavily dependent on external news after the season of business results in the second quarter basically ended in 1-2 weeks of August. Improved cash flow remained at average level and the market movement was strongly differentiated after the recovery. In August, BSC predicted two possible scenarios for the market as follows:
    -    In positive case, after the recovery period of the first half of August, the trend of division and moving in groups of stocks with positive business results do not increasing prices and acquire information support. The less fluctuating global market will support the cumulative index around 980-1,000 points.
    -    In negative case, VN-Index do not overcome the psychological threshold 1,000 points, the index weakens quickly due to selling pressure due to selling pressure from decreasing positions order. Negative scenario occurs when the index falls below 900 points before the negative movement of the world and foreigners increased net selling. The focus level for this scenario is 850 points.
•    Recommended stocks:
    -    Industries and stocks that we consider important in the Sector Outlook 2018;
    -    Banking and finance stocks are well valuated and have improved dramatically in business results as well as benefited from the law on supporting the restructure of credit institutions and dealing with NPLs;
    -    Leading stocks in the retail sector have high growth rates and high dividends;
    -    High defensive stocks in the consumer, pharmaceutical and electricity sectors.