VNIndex +8.6% MTD as all social distancing measures are lifted

Since Vietnam officially lifted its social distancing measures on 22 April, businesses have resumed, schools at all levels are now re-opened. There are NO businesses that are restricted at the moment. In the below chart by Google, that measures mobility to the workplace in South Asia countries, Vietnam showed a swift reversion. Vietnam remained clear of community transmission of COVID-19 cases for 26 consecutive days, and the country still recorded zero fatal cases out of the total 288 cases

Figure: Google mobility to the workplace – South Asia

The positive development of Covid-19 fighting and the resulted resumption of businesses has thereby boosted investors’ sentiment in the Vietnamese stock market.

  • MTD, VN-Index increased 8.6%, narrowing the YTD decline to -13.1%.
  • Liquidity also improved with the MTD average 3-bourse combined daily trading volume of $225mn (+30.3% vs. 1-year average). All the increase in trading volume came from domestic investors as foreign investors remained net sellers (MTD net selling amount of $129.7mn).
  • The market attracted a lot of new local investors: In Mar and Apr, there were 32,000 and 37,000 new trading accounts opened (Source: Vietnam Securities Depository) – these are the highest numbers since Mar 2018.
  • Some companies passed resolutions to buy back shares/ or insiders registered to purchase shares, sending signals to the general investors that the management is confident that stock prices have fallen more than what is justified by the real impact of COVID-19 on businesses: Vinamilk (VNM) to buy back up to 17.5 mn shares (1% stake) from 21 May, Vietnam Prosperity Bank (VPB) to buy up to 120 mn shares (5% stake) – waiting for State Securities Commission’s approval, Quang Ngai Sugar (QNS) ‘s Chairman registered to buy 1.2 mn shares.

We are positive that Vietnam’s economic activities that serve the domestic consumption are minimally impacted by the restrictive measures to contain COVID-19. In addition, the government is determined to boost the economy by fiscal spending into infrastructure investments (more info in the note we sent out last week). What’s more: this international crisis has led international producers to accelerate their shifting of production out of China, and to countries like Vietnam (Source:asia.nikkei)

We recommend investors to invest selectively in companies that serve the domestic market, are the leading companies in their respective markets, and are in sound financial positions.