Macro&Stock Market 2018Q3_3rd Quarter Business Result_20181003

Macroeconomics
• Q3/2018 GDP increased by 6.88% YoY. Industrial and construction sector saw the strongest growth of 8.61% YoY.
• The PMI in September of 2018, falling to 51.7, was only 51.6 points higher than the 51.6 in the third quarter, reducing the average annual decline to 53.3 (2017 is 52.6).
• Total retail sales and services 9M2018 were estimated at VND3,235 trillion, up 11.3% yoy
• Total registered FDI of 9M2018 reached VND 19.67 billion (-7% yoy) but total capital inflows were VND 13.25 billion (+ 6% yoy). The manufacturing and real estate industries are the two leading players in attracting FDI.
• The fluctuation band of the interbank exchange rate in Q3 was higher than Q2 and ranged from 23,050 to 23,349 VND/USD. The interbank rates tended to move in line with exchange rate movements and are rebounding at all terms. This strength and the frequency of SBV's net injecting in Q3 showed that the liquidity of the system continued to decline and under pressure by the exchange rate.

Stock Market
• Both HSX and HNX continued their recovery momentum in September, but the pace slowed down. VN-Index increased 27.6 points, 2.73%, 5.87% QoQ, 32.9 points (3.34% YTD) and the HNX-Index rose 3.49 points or 3.09% MoM, points (9.52% QoQ), -0.58 points (-0.5% Ytd).
• The average liquidity on both exchanges increased 9.03% compared with 8/2018, and remained at VND 5.376 billion/session (~  USD 231.7 million/session). In Q3, the average liquidity on both exchanges decreased -29.92% compared to Q2 and remained at VND 4.891 billion/session (~ USD 210.8 million/session)
• In September, foreigners were net buyers on the HSX VND 474.08 billion, net selling VND -46 billion on the HNX. In the third quarter, foreigners were net sellers on the HSX VND -3648.66 billion, net buying of VND 235 billion on the HNX. Since the beginning of the year, they bought a net of VND 30.3 trillion on the HSX and sold a net of VND 1.097 trillion on the HNX
• The P/E of the VN Index increased to 18.33, equal to 2.39% MoM, 5.09% QoQ, -0.1% YTD and the HNX-Index rose to 11.07%, respectively 4.66% MoM, -19.29% QoQ and -11.44% Ytd. Compared to August, the P/E of the VN-Index kept at 7th place and the HNX-Index stayed at 17th position in Asia.


Market outlook next quarter
VN-Index is likely to maintain over 1,000 points at the end of 2018. The market is expected to increase to 1,050-1,080 points in October thanks to quarterly business results and cash flows before the adjustments at the end of November or early November. The cumulative and divergence trend taking place in November will lay the foundation for the recovery in December or early 2019. In addition, Vietnam was included on FTSE’s monitoring market upgrade list in September. Vietnamese stock market has the opportunity to participate in the large playground of the global stock market. This information not only has a positive psychological effect and short-term cash flow but also marks a turning point. Viet Nam is ready for the big game which is to join and integrate into the global financial market in the long run:

• In the positive case, the world market still does not react strongly to the key information as in September, VN-Index will close above 1,000 points with the central point of 1,080 at the end of the year. Major stocks such as Banking, Petroleum, Consumer, Real Estate, Manufacturing take turns to be the market’s pillar. Liquidity maintains well, cash flow moves positively which gradually push the market.
• In case of negative, the negative information of world spreads, the market sensitivity reacts to these impacts, VN-Index will form the shake waves, these big fluctuations can weaken pillar stocks and cash flow. VN-Index may return to 1,000 points at the end of the year.

Recommended Stocks: 

• Industry sectors and stocks that we are evaluating in the 2018 Industry Outlook (Link) and (Link);
• Banking – finance stocks that have significant business results, Petroleum stocks benefited from oil price and stocks benefited from trade agreements and manufacture transfers from trade war;
• Real Estate-Constrcution stocks are on the profit cycle;
• Leading retails stocks have high growth and dividend yields;
• Stocks recommended by us on BSC website.