Strategy Note /

Vietnam investment strategy - June 2019

    Lam Nguyen
    Lam Nguyen

    Banking, Market Strat

    Son Tran
    Hieu Nguyen
    Rong Viet
    5 June 2019
    Published by

    Although downside risks are limited at the moment, external uncertainties and lack of supportive information may keep the VN-Index in the 920–965 range. Based on data from the first four months, foreign investors tend to net sell as the VN-Index approaches 980 and net buy as the index falls to 930-940. Thus, foreign investors not yet turning to sellers would be a temporary support factor in early June. That being said, we recommend a flexible trading strategy – Buy as VN-Index approaches strong resistances and Sell as it enters volatile territories at higher price.

    We think investors should not rush to buy on gains and avoid using margin at this moment. Investors can accumulate only if outside risks soften. Global markets are expected to see some important events later this month: (1) a possible meeting between Trump and Xi at the G20 meeting; (2) the Fed’s semi-annual economy review – we believe the Fed will keep rates unchanged; and (3) OPEC meeting – OPEC announced that it will raise production and oil prices fell 13% WTD.

    Low-beta stocks are often recommended during periods of strong market volatility. Many studies show that in the long term, low-beta stock portfolios offer higher returns than those consisting solely of high-beta stocks. Our research on 255 stocks (in HSX, HNX and UpCom) shows that in the context of external uncertainties, a low beta-based investment strategy is not enough to guarantee positive results. Such strategies are too simple and we advise picking stocks based on fundamental factors including industry prospects, risks and long-term growth potential.

    Our top picks are PVS, QNS, GDT and GMD for medium to long-term investment.