Though it feels good be back above the 1,000 mark on improved liquidity, I also feel we are seeing some market complacency regarding the escalation of the trade war between the US and China. The tariffs that were announced by both sides during the week come into effect next Monday (24 September).
Looking at global markets performance, it seems investors believe tariffs are not as harsh as originally suspected. Vietnam may benefit if it leads to more foreign direct investment (FDI) flowing to the country as multinational companies diversify their supply chains away from China.
This week, the VNIndex broke through and managed to remain above the psychological barrier to close the week at 1,002.97 points on Friday. For the week, the market was up 1.2% and liquidity increased by nearly 38%!
Flows seem to be gravitating towards large-cap stocks. Oil stocks led the market for most of the week on rising oil prices. GAS was on the way to create a new high, and PVD had received positive consensus.
Foreigners turned net sellers on Friday, divesting VND783.9bn (USD34mn) which focused mainly on offloading MSN, NVL and VCB. So for the week, foreigners were net sellers for a total of USD26mn worth of equity.
In other news:
Domestic banks are finally reducing their cross-ownerships to less than 5% as per Circular 36/2014 / TT-NHNN. Among them, Vietcombank (HSX: VCB) announced that it would auction its 53.4mn shares of Military Bank (HSX: MBB), equivalent to a 2.47% ownership of MBB. The starting price is VND19,641 per share. The auction will be held on 15 October. With the price, it is estimated that VCB will earn over VND1.048tn from this auction. Earlier this week, Vietcombank also announced it will hold an auction to sell the shares it owns in Eximbank (HSX: EIB) on 22 October. The number of shares to be auctioned will be 45.6 million shares with the starting price of VND14,497 per share. At this price, Vietcombank is expected to earn over VND661 billion. Up to the beginning of 2018, Vietcombank holds over 101.2 million shares of EIB. If the deal is successful, Vietcombank’s stake in EIB will drop to 4.5% of chartered capital.
Analyst Pinboard
Growth Opportunity for Textile & Garment Companies
- According to the General Statistical Office (GSO), the export turnover of the textile & garment industry for the first eight months of 2018 is estimated at USD19.4bn, an increase of 14,9% YoY.
- We assumed that this uptrend will last in the future
- Besides, many of global brand names such as Adidas, Puma, and Nike have been moving garment orders from China to Vietnam to take advantage of the free trade agreement.
- Among the companies in the industry, TCM and STK are distinct players because they meet the rule of origin from yarn onwards as required by the CPTPP agreement.