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April Macroeconomic & Stock Market Highlights for Vietnam
We would like to present you our monthly Macreoeconomic & Stock Market Highlights for Vietnam alongside with the monthly performance update of the TIM Vietnam Actively Managed Certificate for April 2019.
Macroeconomic highlights:
Key April economic data:
- Retails sales and services grew strongly by 12.0% yoy in April, and were up by 11.9% yoy in the first four months of 2019, equivalent to VND 1,584 trillion (~$ 68bn).
- The trade balance showed a deficit of $0.7bn in April. But it recorded a surplus of $0.7 bn year-to-date. Exports have increased by 5.8% yoy in the first four months of 2019, while imports expanded by 10.4% yoy during the same period of time. Exports of mobiles and parts, which is the biggest component (20% of total exports), did not grow. This largely explains why exports remained relatively moderate during the last four months.
- The Nikkei Vietnam Manufacturing Purchasing Managers’ Index rose to 52.5 points in April from 51.9 in March, indicating a consistent expansion of manufacturing activities.
- FDI disbursement was USD 5.7bn, +7.5% yoy, while FDI registration surged to USD 14.6bn, up by 81% yoy, which was the largest increase in the last four years. The manufacturing sector was still the main pool of FDI registration, accounting for 72% of the total amount in the first four months.
- Inflation remained moderate at 2.9% yoy. The inflation was very closely monitored due to the recent rally in petroleum prices and as the government decided to raise electricity prices by 8.4% in March. So far, the inflation is still well controlled. Core inflation, which excludes food & foodstuffs, energy as well as government-supported prices such as healthcare and educational services, was up by 1.9% yoy only.
- The state budget continued to show a surplus of $1.9 bn, up from $1.0 bn by the end of March, mainly due to slow expenditures for development investments. During the January to April period, state expenditures for development investments only made up 15% of the full year’s budget.
Stock Market highlights:
- The VN-Index as a gauge for the Vietnamese stock market, declined by 0.34% in April. Prices of 190 tickers out of a total of 379 tickers declined. The bank sector was the worst performing sector with a correction of 2.3%, (total index weight 23%). Rather soft first quarter earnings did not bode well for stocks. Q1 financial results are now out and most listed companies have organized Annual General Meeting (AGM) to discuss about this year’s financial targets. From our top 100 stocks by market cap, 58 companies had positive earnings growth in Q1/2019, while 42 companies suffered negative growth. We note that the first quarter is usually the slowest period of the year. Hence the opening three months of the year might not properly represent the full year. These rather subdued results also prompt companies to set conservative financial targets, which they communicate during their AGM’s. The AGM season is currently in full swing. Our full year expectation is still positive with an EPS growth of 11.7% for the top 100 stocks.
- Trading volume, as measured by the sum of the average daily volumes on all three bourses, was $182 mn, dropping by 28% compared to the previous month. In the first four months of this year, the average daily volume was $206 mn, only about half compared to the same period of last year. Foreign investors were net buyers in April with net purchases of $55.3 mn ($240 mn ytd in 2019). Low ETF activities might be one of the reasons for the slight market correction and the low volume in April. The three largest ETFs in Vietnam received net inflows of 10.6mn in April, compared to inflows of $160.7 mn in the first quarter of this year.
- On the back of somewhat soft earnings in the first quarter (while our full year estimates are more positive), ETF flows should be the main performance driver of the general market in coming weeks: Most ETF portfolios consist of large cap companies, which are currently characterized by very thin trading volume; thus any change in ETF flows is likely to cause significant movements not only in single stock prices, but also in the general market. On a positive note, the expected ongoing stock market fluctuations are likely to create good opportunities to accumulate selective stocks of companies, which are undervalued compared to their growth prospects.
- By the end April, the top 100 stocks were trading at a 2019F P/E of 17.5x and at a P/B of 2.4x, while the names on our Buy recommendation list were trading at an average 2019F P/E of 9.7x and at an average P/B of 1.4x.
Invest with us:
Please download the April Factsheet for our TIM Vietnam Actively Managed Certificate. We are also offering investment advisory mandates and research services for the Vietnamese stock market. Furthermore, we offer our clients Discretionary and Investment Advisory Mandates for the purpose of investing in listed Vietnamese equities.
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