Strategy Note /

Vietnam investment strategy – July 2019

    Lam Nguyen
    Lam Nguyen

    Banking, Market Strat

    Hoang Nguyen
    Tu Vu
    Son Tran
    Rong Viet
    5 July 2019
    Published byRong Viet

    Although pressures from inflation and exchange rate are low, core inflation is close to the government’s 2% target. Hence, we think there will be slow growth in money supply in H2 19, which will (indirectly) impact capital flow to the Vietnamese stock market. Additionally, corporate bonds, real estate and gold look more attractive now, which may cause capital flow to diverge.

    We believe capital flow will be influenced by Vietnam’s economic growth and external factors.

    • Macro indicators show that Vietnam’s economic growth will stablise. It is currently still in line with the government’s 6.6%-6.8% target.
    • Although there is now a truce in the US-China trade war, there are still risks with no strong signal of a deal being agreed soon. Hence, despite a strong rebound in ETF fund flow in June, we do not believe it will remain as high as it did at the beginning of the year.

    Investors should also pay close attention to the Fed meeting in late-July – global stock markets have already priced in a rate cut. If the Fed’s decision goes against market expectations, offshore fund flows to Vietnam will continue.

    In all, we expect market performance in July will be better than in June because: (1) external risks have reduced; and (2) earnings season will start soon (in our view, Q2 19 and 6M earnings will be divergent). We expect positive earnings from some stocks in leading sectors like banking and sectors that have benefited from the trade war (textiles, wooden furniture).

    Some of our top picks are MWG, FPT, HAX, MBB, VHC, ACB and VCB.