Macro_August 2018_Expectation of Raising ETF Rank_20180906

Macroeconomics

• The PMI dropped to 53.7 from 54.9 last month, and was close to the yearly average of 53.6 points (52.9 points average in 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 8 months decreased by 4% over the same period of last year, but disbursed capital increased by 9.2% yoy. The manufacturing and real estate industries are the two leading sectors in attracting FDI.
• IInterbank exchange rates fluctuated between 23,296 - 23,322 VND/USD, increased in comparison to 23,050 - 23,299 VND/USD of July. Interbank interest rate in all terms increased sharply in the first 3 weeks August and decreased in the last 2 weeks of the month in accordance with exchange rate fluctuations.

Stock market

• Both HNX and HSX continued their recovery momentum in August. VN-Index increased 32.2 points compared with last month (3.47% MoM) and HNX-Index increased 6.63 points (6.25% MoM).
• Average liquidity on the both exchanges increased 12.9% compared to July, 1818, and remained at VND 4,931 billion / session and equivalent to USD 212.5 million / session.
• In August, foreigners were net sellers on the HSX with VND -1,558.91 billion, net buying VND 110 billion on HNX. From the beginning of 2018, foreigners net bought VND 29,801.55 billion on the HSX and net sold VND 1,051 billion on the HNX.
• P/E of the VN-Index increased to 17.86, equivalent to 4.9% MoM, but HNX-Index fell to 10.64 corresponding to -2.6% MoM. Compared to July, the P/E of the VN-Index rose two ranks to the fifth position and the HNX-Index stayed at 17th position in Asia.

Outlook for next month
Medium-term accumulation, medium liquidity and strong diversification are expected to resume in September as the VN-Index is facing a strong resistance with risks from the world news. VN-Index is likely to move in the range of 950 - 1,040 points. In September, BSC provided two scenarios for the market as follows:

• In the positive case, after negative fluctuations before the US-China trade war and the carefulness of ETFs in the first half of the month, the market will recover gradually, moving around 1,000 points and waiting for positive news from the third quarter business results. The liquidity remains moderate; the cash flow shows a cautious view on major stocks in the first half of the month and returned at the end of the month. Banking stocks continue to be the market leader.
• In case of negative, VN-Index weakens before resistance and psychology 1,000 points. Negative volatility from the trade war, restructuring portfolio activities from foreign investors and the weakening of major stocks in the ETFs restructuring portfolio periods will limit market recovery in September. The index will have unpredictable fluctuations and create the accumulated area below 950 points.

Recommended stocks:

• Sectors and stock valuations that we consider important - Industry Outlook 2018 (Link) and (Link);
• Banking and finance stocks are attracting cash flow and improving their business results as well as benefiting from the Law on Supporting Restructuring of Credit Institutions and NPLs;
• Leading retail stocks have high growth and dividend yields;
• High defensive stocks in the consumer, pharmaceutical and electricity sectors.