Strategy Note /
Vietnam

Vietnam investment strategy – September 2019

    Lam Nguyen
    Lam Nguyen

    Banking, Market Strat

    Contributors
    Hoang Nguyen
    Tu Vu
    Son Tran
    Rong Viet
    5 September 2019
    Published by

    Foreigners were net sellers in August, the largest value since the beginning of the year. However, we think Vietnam is still attractive compared with other markets as macro indicators are in line with the government’s objectives. Moreover, while the ROE of VN-Index is high compared with peers, its PE is in the middle of the range. We believe a short-term sideways move of the stock market will create opportunities for investors to accumulate stocks that are independent of global trade issues.

    We also rate sectors related to consumer spending:

    • We expect growth from core businesses may be slower, but more stable and sustainable than in previous quarters.
    • We are positive on retail, aviation, technology, insurance and pharmaceuticals.
    • Meanwhile, we maintain a negative rating for sectors whose business activities are highly cyclical, or have a high contribution of material expenses in their production costs, as well as sectors where Vietnam does not have the advantage of scale. These groups include steel, construction and construction materials, chemicals (fertilizers, agricultural chemicals and natural rubber).

    At the same time, we maintain a negative outlook for sectors whose business activities are highly cyclical, or have a high contribution of material expenses in their production costs, as well as sectors where Vietnam does not have the advantage of scale. These groups include steel, construction and construction materials, and chemicals (fertilisers, agricultural chemicals and natural rubber).

    The US-china trade continues to present a gloomy picture for global trade, and while export-related industries stand to benefit, there are still challenges ahead. Our view is neutral (compared with positive at the beginning of the year) for the fisheries, textiles and oil & gas sectors. The trend of shifting production from China to other Asian countries is still ongoing. Therefore, we keep an optimistic view in the short and medium term for the logistics, transportation/seaport and industrial park sectors.

    Some of our favourite stocks include: POW, MBB, HPG, REE and QNS.