Macro & Market July_Adapting to the second outbreak_20200807

• July 2020 PMI fell to 47.6 points, returning to negative after a positive recovery to the 51.1 point growth area in June. 

• Total retail sales of consumer goods and services in July 2020 were estimated at 431.9 trillion dongs, up 3.33% over the previous month and up 4.3% over the same period last year.

• Registered FDI reached 14.2 billion USD, up 21.2% over the same period last year while disbursed FDI reached 10.1 billion USD, down 4.1% from last year.

• The interbank exchange rate in July fluctuated in the range of 23,270 - 23,300 USD / VND, down from the range of 23,280 - 23,570 USD / VND in June. Interbank interest rates in the medium term increased slightly. Interbank interest rates in the short term maintained at low levels

 

• July 2020 was a period of market decline after a sideways pace in June 2020. As of July 31, 2020, VN-Index decreased by -3.24% MoM, –16.9% Ytd while HNX-Index decreased by -2.05% MoM, + 4.88% Ytd.

• Market capitalization on both exchanges reached VND 3,016 trillion, equivalent to USD 131 billion, down -2.63% MoM, -11.2% Ytd. Upcom dropped -2.89% MoM, reaching 807 trillion at the end of July. 

• Average liquidity on both bourses decreased sharply by -34.32% compared to June 2020, and maintained at VND 4,989 billion / session and equivalent to nearly US $ 217 million / session.   

• P / E of VN-Index dropped to 13.15, equivalent to -3.66% MoM, -14.5% Ytd and HNX-Index also returned to 7.87, equivalent to -3.08% MoM, + 8.85% YTD.  

 

The shift back into the community and uncontrolled is negative macroeconomic information in general and stock market in particular. Movements of the stock market will fluctuate unpredictably, complicatedly and depend heavily on the ability to control diseases. However, we believe that with the current fundamentals, the market will soon stabilize with a higher price level than the sharp decline due to the impact of Covid-19 in the first quarter. VN-Index is forecast to move. with the focus price range of 750 - 825 points in August. BSC offers 2 reference scenarios as follows:

- In positive case, VN-Index closed above 800 points, liquidity and recovering trend. Mobilize markets on topics related to public investment and business activities that are not affected by the disease.

- In a negative case, the VN-Index fell below 750 points when the world market movements were negative, the domestic epidemic situation was serious and foreign investors withdrew capital.

• Recommended stocks:

- Sectors and stocks are evaluated positively in the Sector Outlook Report 2020 (Link), Banking Sector Outlook Report (Link);

- 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 (Link) and update report for Sector/Company (link).