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 November 2018.
Macroeconomic highlights:
- Inflation fell by 0.29% mom, but was up by 3.46% yoy. Lower oil/gas prices, which lead to two petrol price cuts in November, were mainly responsible for the mom decline. Prices of 4 out of 11 groups fell: transportation (-1.8%), housing and construction materials (-0.6%), food and food stuffs (-0.1%), and telecommunication (-0.1%). Core inflation, which excludes commodities and government-controlled education and healthcare prices, was higher by 0.1% mom and by 1.7% yoy.
- Vietnam’s final trade balance in Oct amounted to USD 0.8 bn, higher than the preliminary number of USD 0.1 bn. The preliminary number for November calls for a deficit of USD 0.4 mn, leading to a trade surplus of USD 6.9 bn for the first 11 months of 2018.
- Retail sales and service revenue continued to post solid growth of 12.2% yoy.
- The Nikkei Vietnam Manufacturing Purchasing Managers’ Index stayed at a solid 56.5 points in November, indicating a consistent expansion of manufacturing activities. Vietnam’s PMI has continuously stayed above 50 for about three years now, and the November’s number was the highest since early 2011, when the survey was launched.
- Like in October, the USDVND rate moved in a narrow range. The unofficial market rate has moved within the defined band from the central bank’s mid-rate, ending the period above the upper-band. This is an indicator that the downward pressure on the VND is easing.
Stock market highlights:
- Vietnam’s stock market, measured by the VN-Index, increased 1.5% in November. But the increase was to a large extent driven by two large cap stocks: By the property developer – Vinhome (VHM, +18%, 8% weight in the VN-Index) and by the brewer – Sabeco (SAB, +13%, 5% weight in the VN-Index). These two stocks contributed 1.3% and 0.6% respectively to the total increase of the VN-Index. VHM has a 25% free-float and is trading at a 2018F P/E and a P/B of 15.1x and of 6.2x respectively. SAB has a 10% free-float and is trading at a 2018F P/E and a P/B of 40.4x and of 9.7x respectively.
- The two major sectors, financials (27% weight in the VN-Index) and real estate (26%) had mixed returns this month: -1.4% for financials and +7.3% for real estate. We recall that these two sectors were responsible for 50% of the VN-Indexes loss of 10.0% back in October.
- The combined daily trading volume of the three bourses amounted to USD 187 mn, dropped by about 30% compared to that of October. Foreign investors were net buyers with total net purchases of USD 57 mn, including a large transaction of USD 100 mn in Masan Group (MSN). Domestic investors made up 85% of all trading volume. Based on data from a major brokerage firm, their outstanding margin loan amount, is now about 20% higher than at the low in July (at that time, the VN-Index also fell to the lowest level of this year). But domestic investors’ margin loan amount is now 30% below its 4M/2018 average (during this year’s rally), and it is at about the level as the average for H2/2017 (margin loans are only available for domestic investors). In our view, this is a sustainable and healthy level.
- At the end of November, the Top 50 stocks by market cap traded at a 2019F P/E and at a P/B of 15.6x and of 2.5x respectively. The stocks on our BUY recommendation list traded on average at a 2019F P/E and at a P/B of 10.3x and of 1.6x respectively.
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Please download the November 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 to invest in listed Vietnamese equities.
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