Research Center

Because our year-end target for the VNIndex is still between 900 - 1,000, assuming that interest rate remains low and the economy recovers markedly, we expect to see the bullish scenario in September. Of note, FOL stocks may be the best performers given the consistent strong foreign inflow into VFM VN Diamond and SSIAM VN FinLead ETFs.

Given the current well-controlled virus situation, we maintain our target of 900-1,000 for the VNIndex by the end of this year. However, the outbreak of Danang teaches us that there is a high probability of another virus resurgence, another economic lockdown as well as another sell-off of the stock market and the recovery path will be intermittent, a new normal life.

For July, we are more optimistics than June as the recent correction with diminishing volume looks like a consolidation period. Therefore, we expect to see the VNIndex resume its uptrend or stop falling at least in July. However, the market may become choppy by the month-end because 2Q business results of listed companies may make many surprises this year.

As of 02 Jun, our KIS universe was traded at 14.2x its 2020 earnings, higher than 2019-end PE of 13.3x. In terms of technical analysis, the VNIndex is now heading back to 900, its strong support when the pandemic broke out in early February, warning a strong selling pressure there. Although new money may continue to support the market in the coming weeks, we recommend a cautious stance in Jun

As the pandemic has made significant behavioral changes in production, consumption as well as investment, seasonal effects will be likely ineffective this year. We recommend investors to “DO NOT sell in May and go away” because of potential new local money.

In a half-full-glass viewpoint, we expect the pandemic will peak in 2Q20. In terms of economy, in our three scenarios, Vietnam will resume its pre-outbreak level in 2H20, ranging from early to late, because domestic spending, inflowing FDI and international trade will soon come back. Assuming a better outlook in the second half, we expect the stock market is providing many bargaining opportunities for both traders and investors.

It took two weeks since the outbreak for the number of new confirmed cases to peak in China in late January and early February. Therefore, the outbreak in South Korea may progress in the same way. However, we expect that Chinese lesson will help South Korea contain the spreading faster, maybe in early March.

Although the novel coronavirus will continue to haunt Vietnam stock markets in February, we expect the market will soon calm down if the epidemic peaks by the middle of this month. High volatility is also generating many trading opportunities. As the VNIndex has penetrated below 3xstandard deviation PER band, we expect a mean reverting movement in the coming weeks.