HSC Daily Market Watch

Ngày đăng September 17, 2018

 Market commentary – The VN index decreased with turnover still below recent averages. Market breadth widened while we also see that 32 stocks went to the ceiling and 17 stocks fell to the floor. Foreigners were less active net buyers to a small degree. The put through market was more active with a large deal VHM & ROS and then a smaller deal in VND seen going through.  

Foreigners were active buyers of VHM; VNM and DXG. And net sellers of BMP and VNM.  

  • Bank shares were mostly down, except gains for VPB and TCB.  
  • Non-banks shares were mixed to lower, led by BVH and VND.  
  • Consumer and retail names were broadly down, led by KDF & PNJ.  
  • Tech stocks were mixed with a gain YEG while FPT lost ground a bit.  
  • Manufacturing names were mixed with gains for TMT and PAC while there were losses for RAL and STK.

 

  • Resource names were all higher, led by PVD and GAS.  
  • Real estate and construction stocks were mixed with gains for SJS and NLG while there were losses for CTI and DIG.  
  • Agriproducts and aquaculture stocks were mixed with gains for BFC and VHC while there were losses for VFG and HAG.  
  • Pharmaceutical stocks were mixed to higher, led by DMC and DHG.  
  • Utilities, transport and logistics stocks were mixed with gains for NCT and VNS while there were losses for GMD and NT2.  

Vietnamese stocks drop back – The markets lost ground today along with most regional exchanges as global trade concerns returned to scare away buyers. VIC saw the biggest decline in terms of index points while related company VRE also lost ground. Banks such as VCB; BID; CTG and MBB all lost ground today. While insurance sector leader BVH shed some of its recent gains. Then other blue chips such as MWG and SAB fell back also.  

VNM made gains as investors expect its Q3 numbers to show some improvement on the previous two quarters. GAS; PLX and PVD all ran higher as oil prices particularly Brent crude continues to rise in global markets. YEG jumped as the stock continues to make gains after the FOL was opened recently. VHC continued to rise on optimism that U.S demand will hold up. TCB was a rare bank making gains today. Foreigners were net buyers once again although the level of overall activity was somewhat less than seen recently. 

The four futures contracts fell by slightly more than the VN30 cash index on the whole and traded at a discount of 5.4-.8.2 points to the cash index by the close. While the longest dated contract also traded at a small discount to the shortest dated contract. This should be viewed slightly negatively and suggest further near-term weakness in cash equities is very possible tomorrow.  

The decline in Vietnamese equities today was slight compared to most regional markets. HSC argues that the recent strong performance of the Vietnamese equity markets after a Q2 correction show that investors are finding value in stocks here once again. Given reasonable valuations; strong earnings prospects and the very solid macroeconomic environment in the domestic economy.   

This reflects Vietnam’s (1) strong balance of payments; (2) growing exports; (3) trade surplus and (4) fairly stable CPI which has kept the currency within expected ranges in recent months. The SBV has slowed credit growth in recent months to trim inflation and this appears to be having some positive effects already with CPI now under 4% again.  

As a result, foreign investors in recent days appear to have woken up again to the clear differences between the Vietnamese economy in terms of structural strengths and growth potential when compared to many other Asian and emerging markets. Of course, the Vietnamese market is not immune to sharp short term moves to the downside in global equities if they come. Rather what we are arguing for is the prospect for relative outperformance vis a vis most regional and emerging markets over the next few months based on solid fundamentals.  

Asian shares & major currencies – Asian shares were mostly lower today as Wall Street ended Friday with only minor changes. As for currencies, the US$ (94.767) slipped today after previous gains when measured against its trade weighted ICE index. Then the Euro (1.1650) traded a little higher; Pound Sterling (1.3092) rose a little; the Japanese Yen (111.96) edged higher while the Chinese Yuan slipped today (6.8696). 

Oil prices gain – Crude oil made some gains today with the active month WTI futures crude oil contract trading at US$ 69.46 in late Asian trade. The number of U.S active rig rose slightly but have remained little changed since May.   

On Friday, General Electric Co’s Baker Hughes energy services firm disclosed that the number of active U.S. oil rigs have increased by 2 rigs to 749. The number has barely moved since May given capacity constraints in shale oil fields such as the Permian Basin as pipelines are running to full capacity and alternative transportation methods (road or rail) are too expensive for many operators.  

After a series of meetings with middle eastern producers, the U.S. Energy Secretary Rick Perry said in an interview on Friday that he does not expect price spikes. Arguing that the world’s top three oil producers, namely, Saudi Arabia, the U.S and Russia can between them raise global output over the next 18 months. This is a rather narrow statement as he didn’t suggest that they could offset potential shortfalls from Iran and Venezuela. And most people who have done the math don’t agree with his viewpoint.  

In fact, there is a clear sense that the top 3 producers have limited spare capacity and certainly nowhere near enough to match a further shortfall of 1,000,000-1,500,000 barrels per day which appears to be the most likely scenario over the next few months. And this is without taking into consideration the volatility of oil production from midsized producers such as Libya and Nigeria where national security remains elusive.  

In fact, falling inventories in the U.S. over the past few weeks would appear to be the result of a substitution effect as exports jump with U.S. oil directly replacing Iranian oil in export markets. If Rick Perry were correct we would expect to see rising U.S production to meet this new demand. Instead much of it is being met by reducing domestic inventories. Saudi production has also not risen as much as expected either despite promises of being able to hit 11 million barrels per day or more.  

And so, despite reduced expectations for demand growth in 2019 given rising trade war concerns, the likely shortfall in demand growth projections being talked about compared to previous estimates is about 20-40,000 barrels a day. And as you can see, the potential supply shortfall is many times that.   

In global macro and general news – Asian equities weakened today as the trade dispute has returned with a vengeance to the top of the agenda after a relatively quiet week last week. And Chinese shares for example fell to four-year lows today. Over the weekend it became clear that President Trump may announce 10% tariffs on a further US$ 200 billion worth of Chinese products as soon as today or tomorrow according to various media. This despite the planned talks between senior officials on both sides soon. The President has tweeted that he is not ready yet to do a deal with China yet and it seems the move is designed to increase pressure on the Chinese side.  

However, it will surely lead to a retaliation and also likely to threaten the likelihood of any talks. Indeed, the Global Times, a Chinese paper that often reflects official views said that the Chinese don’t only play defence. While the Wall Street Journal added that the Chinese don’t like to negotiate with a “gun to its head”. After the collapse of a putative deal in May, the last time the Chinese negotiated with Treasury Secretary Mnuchin, the Chinese side has become less trustful. And now sending mixed messages such as asking for talks and then imposing more tariffs over the last few days are hardly designed to increase the level of trust. The gap of cultural misunderstanding between the two governments has rarely been wider. 

 

HCMC – The VN index fell today as turnover narrowed to VND 3,844.96 billion or US$ 165.41 million. The index lost 0.38% and closed at 987.61. 117 stocks up while 179 stocks down. And 14 stocks went to the ceiling while 4 stocks dropped to the floor. Foreigners accounted for 19.17% of the buying value and 17.54% of the selling value.

Foreign buying rose in actual terms and also in percentage terms. While foreign selling also rose further in actual terms and also in percentage terms. Foreigners turned net buyers to the tune of VND 62.71 billion worth of shares in HCMC. And we saw thirty one transactions in the put through market today.

Foreigners were active buyers of VHM; VNM; DXG; HPG and PLX. They also actively sold VHM; GAS; DXG; BMP and VNM. The put through market was more active today with one enormous; two super jumbo; two jumbo; two large and some medium sized & smaller deals accounting for 14.85% of total turnover.

We saw 2,576,768 shares of VHM; 2,000,000 shares of ROS; 3,000,000 shares of VND; 864,000 shares of HDG and 350,000 shares of BMP going through. Foreigners were less active in the put through session in the VHM & MSN deals and then four other smaller deals today in the market.

E1VFVN30 was down 2.48% today closing at VND 15,700.

 

Hanoi – The Hanoi market went down today while turnover came to VND 572.36 billion or US$ 24.62 million. The HN index was down 0.54% to close at 112.76. 87 stocks up while 71 stocks down. And 18 stocks went to the ceiling while 13 stocks dropped to the floor. Foreigners accounted for 1.13% of the buying value and 0.74% of the selling value.

Foreigners were net buyers to the tune of VND 2.22 billion worth of shares. And we saw eleven medium and small sized deals today during more active put through session in Hanoi accounting for 1.38% of total turnover.

We saw 2,630,000 shares of ORS; 15,000 shares of PVB and 15,000 shares of MSC along with some smaller transactions in the put through market today.

 

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