The second week of the month has been a rather subdued week with not much volatility compared to prior weeks past. The market has traded in a tighter range from -0.36% (Tuesday) to the high of 0.99% (Wednesday).
This week closed out at 968.47, +0.52% for the day and +0.93% WoW. The VN Index has been creeping higher almost daily and is 7.89 points above the 50dma (960.58). We can see the shorter trend line turning back to a rising trend, which is an encouraging sign, which looks like the shorter term bottom has passed. Now the question is whether this short term rebound will translate into a mid-term recovery. As the midterm 100dma trend line 1024.96 this week continues to decrease versus 1034.36 last week so we are not out of the woods just yet. However, additional glimmering hope is the longer term 200dma is at 1008.83 and has also slightly increased from last week’s 1005.38. The bulls look like are giving the upper hand to the bears.
Liquidity this week slightly fell by around -9% WoW at a daily average of VND3.42trn (USD147mn). We had VND17.1tn (USD735mn) liquidity for the week. The week’s liquidity was far below the YTD average of VND4.9trn (USD210mn). The stock to focus on this week was HAG as its stock price has been on a recent tear on market speculation that it will be merged into unlisted Thaco (automotive industry giant). The share price has risen about 50% since its bottom of mid July. The market believes that that part of the acquisition is based on large land lots in Cambodia and Laos owned by HAG, which are in trouble.
Foreigners continue to be net sellers this week. Buying VND4.1tn (USD177mn) about 19.09% of the entire market value VND21.6 (USD927mn) including put throughs, while selling is VND4.8tn (USD927mn) about 22.58% of the total market value leading to a net selling of VND-754.8bn (USD32.4mn). The top foreign bought stocks were HPG at VND21.24bn (USD911k), while top sold stock was HAG at VND-20.89bn (USD896.5k).
Earnings Results
As a continuation to last week’s earnings update, as earnings seasons reaches a close now 51 out of our 53 companies under our coverage have released their 2Q (accumulatively 1H) business results. So far our results indicate that 23 stocks were in line, 13’s were better than, and 13’s were worse than our forecast. 2 stocks were muted due to analyst coverage change. These results are closely in line with our overall expectation of our coverage result. You can find more details in our Coverage List attached.
Other news worth nothing this week is:
Vietcombank will sell all of its remaining 1.48 million Orient Commercial Bank (OCB) shares at an auction on September 6. According to Vietcombank, at a starting price of VNĐ18,876 (80 US cents) per share, the bank is estimated to earn nearly VNĐ27.9 billion (US$1.19 million) if the auction succeeds. The shares are bonus shares that Vietcombank received from OCB before its first auction to sell 13.2 million OCB shares held in December last year.
Business conditions related to the establishment and operation of joint stock commercial banks and non-bank credit institutions in Việt Nam will be eased under a draft circular from the State Bank of Việt Nam (SBV). The draft revisions are part of SBV’s plans to remove or simplify 257 business conditions under its management, which will require SBV to revise eight decrees and 10 circulars. According to SBV, the revisions are aimed to simplify business conditions and administrative procedures in the banking industry according to the Prime Minister’s instructions.
By Marc Djandji, CFA
Head of Institutional Sales
Rong Viet Securities Corporation (VDSC)