Weekly Wrap: Rebound supports a cautiously optimistic near-term outlook Matthew Smith, CFA Head of Research +84 28 3622 6868 [email protected]The VNI posted a solid 5.4% increase last week, handily outperforming the region after the prior week’s selloff. The mainboard is now just 1.8% below its close of June 23, before the secondary COVID-19 outbreak became public knowledge on June 24. The pandemic remains a key concern (total cases were 841 as of Monday morning) and near term volatility is likely to persist, but the market’s resilience supports our argument that the index is not likely to retest its March lows. Index, Flows, and FX Performance VNINDEX: 841 (+5.4% WoW / -12.4% YTD / -12.9% YoY) HNINDEX: 113 (+4.9% WoW / +10.0% YTD / +10.7% YoY) UPCOM Index: 56.2 (+2.6% WoW / -0.6% YTD / -3.4% YoY) Average daily turnover: US$237mn (-3% WoW) Foreigners net sold US$8.0mn of 3-index constituents. VND:USD rate: 23,177 (-4bp WoW / -2bp YTD / +17bp YoY) VN30 Components Ticker Closing price (VND K) WoW chg Cont to VN30 (WoW) TTM PE (x) BID 38.1 4.0% 1% 18 CTG 22.8 7.3% 4% 8 EIB 16.9 2.1% 1% 30 FPT 47.1 5.8% 5% 11 GAS 70.2 7.2% 1% 14 HDB 26.1 8.8% 4% 6 HPG 24.2 11.5% 16% 9 KDH 24.6 7.4% 2% 12 MBB 16.3 3.5% 2% 5 MSN 54.1 7.1% 5% 17 MWG 78.6 5.5% 4% 9 NVL 64.6 -0.8% 0% 16 PLX 44.6 5.7% 1% 101 PNJ 55.2 7.0% 2% 12 POW 9.4 2.7% 0% 10 REE 34.6 6.6% 1% 7 ROS 2.3 9.6% 0% -- SAB 184.0 9.5% 4% 29 SBT 14.2 7.2% 1% 25 SSI 14.3 5.2% 1% 8 STB 10.5 3.5% 2% 8 TCB 19.2 5.5% 7% 6 TCH 20.4 3.3% 0% 9 VCB 82.9 8.5% 8% 17 VHM 79.6 2.4% 2% 12 VIC 87.5 0.0% 0% 39 VJC 100.3 6.1% 5% 29 VNM 115.5 7.9% 14% 21 VPB 21.3 5.2% 5% 5 VRE 26.4 5.2% 2% 25 Source: Bloomberg, Yuanta Vietnam. Pricing date: August 7, 2020. The VN30 saw strong breadth with 29 gainers led by HPG (+12% WoW), VNM (+8%), and VCB (+9%). New VN30 components KDH (+7%, and one of our top picks) and TCH (+3%) also had a solid week. Margin leverage remains elevated but not alarmingly so. Total margin loans represented 4.2% of the free float market cap of HOSE & HNX as at 1Q20. But this ratio fell -50bps from the record high 4.7% of 1Q20 despite a 12% QoQ increase in margin loans to US$2.3bn. Source: FiinPro, Bloomberg, Yuanta Vietnam Macro updates. The SBV announced a slowdown in credit growth in July after a relatively strong sequential growth in June. Overall credit expanded by 3.45% in 7M20, less than half the 7.13% growth rate of 7M19. By contrast, Nielsen announced that Vietnam’s consumer confidence index was second highest in the world at 117 in 2Q20. Market outlook. Last week’s solid performance supports our view that the secondary COVID outbreak would not lead to a test of the panic-driven March lows given that 1) the March trough was part of a synchronized global panic, which is not the case today, 2) containment efforts would follow the same playbook that succeeded in the two prior phases of the pandemic, and 3) foreign bottom fishing, or at least dip-buying, would stem the riptide of local investor sentiment. We reiterate our call to focus on quality businesses, and our top picks remain VHM, KDH, MBB, and HCM. August 10, 2020
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Weekly Wrap: Rebound supports a cautiously optimistic near ... · Weekly Wrap: Rebound supports a cautiously optimistic near-term outlook Matthew Smith, CFA Head of Research +84 28
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Weekly Wrap: Rebound supports a cautiously optimistic near-term outlook
Source: Bloomberg, Yuanta Vietnam. Pricing date: August 7, 2020.
The VN30 saw strong breadth with 29 gainers led by HPG (+12%
WoW), VNM (+8%), and VCB (+9%). New VN30 components KDH
(+7%, and one of our top picks) and TCH (+3%) also had a solid week.
Margin leverage remains elevated but not alarmingly so. Total
margin loans represented 4.2% of the free float market cap of HOSE
& HNX as at 1Q20. But this ratio fell -50bps from the record high 4.7%
of 1Q20 despite a 12% QoQ increase in margin loans to US$2.3bn.
Source: FiinPro, Bloomberg, Yuanta Vietnam
Macro updates. The SBV announced a slowdown in credit growth in July after a relatively strong sequential growth in June. Overall credit expanded by 3.45% in 7M20, less than half the 7.13% growth rate of
7M19. By contrast, Nielsen announced that Vietnam’s consumer confidence index was second highest in the world at 117 in 2Q20.
Market outlook. Last week’s solid performance supports our view
that the secondary COVID outbreak would not lead to a test of the
panic-driven March lows given that 1) the March trough was part of a
synchronized global panic, which is not the case today, 2)
containment efforts would follow the same playbook that succeeded
in the two prior phases of the pandemic, and 3) foreign bottom fishing,
or at least dip-buying, would stem the riptide of local investor
sentiment. We reiterate our call to focus on quality businesses, and