Macro & Market May_Testing reality_20200512

Macroeconomics

 •  PMI in May 2020 increased to 42.7 points, recovered positively after falling to 32.7 points in April.
•  Total retail sales of consumer goods and services in May 2020 were estimated at 384.8 trillion VND, up 26.9% over the previous month and down -4.8% over the same period last year.
•  Registered FDI reached USD 10.9 billion, up 19.9% over the same period last year while disbursed FDI reached USD 6.7 billion, down 8.2% compared to last year.
•  The interbank exchange rate in May fluctuated in the range of 23,360 - 23,520 USD / VND, down from the range of 23,510 - 23,650 USD/VND in April. Interbank interest rates for medium-term in May decreased in comparison with the previous month. Interbank interest rates for short-term fell slightly in the first week of the month, before falling sharply in the following weeks.

Stock market
•  As of May 29, 2020, the VN-Index officially increased by 95.36 points compared to the end of the previous month (+ 12.3% MoM, -10.0% Ytd) and HNX-Index only increased by +2.97 points (+ 2.8% MoM. , + 7.1% Ytd).
• Average liquidity on the 2 exchange increased sharply + 31% compared to April 2020, reaching VND 6,237 billion/session, equivalent to nearly USD 268.85 million/session.
• Foreign investors continued to be net sellers in May. They were net sellers on the HSX with the value of VND -558 billion and VND -255 billion on the HNX.
• P/E of VN-Index recovered strongly to 14.29, equivalent to + 20.8% MoM, -7.1% Ytd and HNX-Index fell to 8.27, equivalent to -3.3% MoM, + 14.4% Ytd. Compared to April, the P/E of the VN-Index rose to 13th place and the HNX-Index ranked at the final place of the Asian region.

Market outlook in June
After more than a month of gaining, the price level was near the pre-epidemic price level due to companies '23% profit decline in the first quarter. The market will soon face the actual test of listed companies' business results in the second quarter The rallying factors decreases while the regional risky factor increase and international politics become more unpredictable. Given the current context, we are cautious about short-term market movements and forecast the fluctuation range from 800 to 880 points in June. BSC offers 2 reference scenarios as follows:

• In a positive case, VN-Index kept above 835 points after the expected correction and moved differentially in alignment with topics related to public investment and production recovery.
• In a negative case, VN-Index fell below 800 points when the key economy recovered not as expected, US-China tensions increased and pressure of divestment from foreign investors.

• Recommend stocks:

• Sectors and stocks are evaluated positively in the Sector Outlook Report 2020 , Banking Sector Outlook Report;
• Stocks with improvements and positive outlook such as Banking, Retail, Information Technology - Postal and Telecommunications;
• Stocks benefiting from public investment activities such as Steel, Cement, Construction Materials, and Asphalt;
• Stocks benefiting from decreased raw materials input such as Fertilizers, Tire, Chemicals;
• Highly defensive stocks and stock with high dividend payout;
• In the long-term, BSC's recommended stocks will be mentioned in Sector Outlook Report 2020, stocks with good changes are recommended in the Weekly Report and update report for Sector/Company .