Macro&Market October 2019__Fly High with Largecap stocks_20191005

Macroeconomics

•         PMI index decreased from 50.5 in September to 50 in October, which ended the 46-month PMI rising period.

•         Total estimated retail sales of consumer goods and services in 10M2019 reached VND 4,059 trillion, up 11.8% compared to the same period last year, if excluding the price factor, the price increase were 9.4%.

•         In 10M2019, registered FDI decreased by 16.4% compared to the same period last year while disbursed FDI increased by 7.4% compared to last year. FDI capital mainly focused on processing and manufacturing sectors.

•         The interbank USD/VND exchange rate fluctuated in the range 23,260-23,270 USD/VND, more stable than the amplitude in September. Interbank interest rates of all terms decreased in October.

Stock market

•         As of October 31, 2019, the VN-Index officially increased by 2.3 points compared to the end of last month (+ 0.23% MoM) and HNX-Index increased by 0.14 points (+ 0.13% MoM). Since the beginning of 2019, the VN-Index has increased by 106.28 points (+ 11.91% ytd) and the HNX-Index has increased by 0.96 points (+ 0.92% ytd).

•         The average liquidity on the both exchanges decreased by -1.98% compared to September 2019, and maintained at VND 4,294 billion/session and equivalent to nearly USD 184.3 million/session.

•         In October, foreign investors continued to net sell strongly on both HSX and HNX.   Foreigners net sold - VND1,661 billion on the HSX, net sold -28.4 billion on the HNX.

•         P/E of VN-Index decreased to 16.42, equivalent to -2.97% MoM, +9.03% Ytd and HNX-Index increased to 7.59 respectively +0.23% MoM, -12.84% Ytd. Compared to September, the P/E of the VN-Index is at 10th and the HNX-Index is at 20 in Asia.

Market outlook in October

With positive progress from Q3 business results and effect of buying treasury stock of some large stocks, VN-Index has surpassed the psychological level of 1,000 points and is approaching the threshold of 1,050 points as mentioned in the fourth quarter report. Large stocks play a leading role, forming a new price level before spreading to stocks with improved earnings and positive prospects. VN-Index fluctuated in October from 983 points to 1,050 points. BSC gives two scenarios as follows:

·         In a positive scenario, VN-Index increased to 1,050 points and maintained above 1,000 points. Liquidity improved gradually, cash flow rotation amongst industries became more pronounced

·         In a negative scenario, VN-Index may drop below 983 points if there are adverse information on global economy and pressure of divesting continued by foreign investors

Recommended stocks:

·         Industry and stocks are evaluated positively in the Sector Outlook Report 2019 and Quarter 4 Sector Outlook ;

·         Stocks with improvements and positive outlook such as Banking, Retail, Information Technology - Postal and Telecommunications;

·         Stocks with positive prospect such as Industry Park Real Estate, Textiles, Electricity and Aviation;

·         Highly defensive stocks and stock with high dividend payout;

·         In the long-term, BSC's recommended stocks will be mentioned in the sector strategic reports for the third quarter, stocks with good changes