State divestments fueled market sentiment. Despite a correction in early December, news that ThaiBev invested USD4.8 billion in Sabeco, signs from SCIC that it plans to divest more of its stake next year and a strong recovery in the energy sector buoyed market sentiment in December. Moreover, investor confidence was reinforced in the last days of the year by Vietnam’s FY2017 GDP growth reaching 6.81%, the highest rate in a decade.
There is an old saying that opportunities come to those who are both lucky and prepared. Such was the case for Vietnam in 2017. Vietnam was lucky to benefit from strong growth in global GDP and consumption and a risk-on global capital market eager to look at emerging markets. At the same time, it was prepared with a growing manufacturing base, emerging middle class and a stable macro environment that was very hospitable to foreign investment.
The VN-Index extended its rally to fresh 10-year highs bolstered by APEC and state divestment. Market sentiment was buoyed during the first half of November by the expectation that the APEC Economic Leaders’ summit in Da Nang, with the participation of the leaders from 21 member economies and thousands of CEOs, would bring numerous opportunities for host country Vietnam. Besides APEC, state divestment activities and plans also boosted the market.
The VN-Index reached its highest level in nearly 10 years in October at 845 points led by large-cap stocks such as ROS (+86.7% MoM), VIC (+14.2% MoM), SAB (+9.9% MoM) and VCB (+10.1% MoM). ROS became a focus of the market as its price nearly doubled during the month and contributed 17.2 points or 52% of the total increase of the VN-Index in October.
The VN-Index hit 808, its highest level since February 2008. With strong upward momentum from late August, the VN-Index breached technical resistance at 790-795 to reach a new nine and a half year high of 808 on September 18. Profit-taking pressure kept the index between 802-808 in the final week of the month so that it closed September at 804.4, up 2.8% MoM and 21% YTD.
VN-Index pulled back strongly after breaching 790. The index accelerated at the beginning of the month to surpass 790 on August 7, partly supported by the divestment news of VNM and rumors of divestments of SAB and BHN. However, a rumor of a banker’s arrest, escalating tension between the US and North Korea and profit taking activities all led to a sharp sell-off on August 9 as the VNI plummeted nearly 18 points (-2.3%) to 773.66, the biggest one-day loss in 19 months. The pullback deepened
Profit-taking caused a sell-off after the index surpassed 780, but large-caps and banks helped the market recover for a modest monthly gain. June’s rally extended to the first week of July with the VN-Index breaching 780 to reach a nine-year high. However, profit-taking in the face of a technical resistance level took 16 points or 2.1% off the index in just two trading sessions (July 6 and 10). SBV rate cuts restored positive sentiment for a few days, but it did not last and the pullback
Vietnam equities had a great H1 2017. The VN-Index rose 16.8% on strong trading volume of USD145 million per day USD195 million including HNX and UPCoM) with USD438 million of foreign money entering the market (including HNX and UPCoM). This strong performance was driven by a combination of global and domestic factors, outlined below. Vietnam will continue to benefit as emerging markets are now back in vogue.
The VN-Index became the regional leader in terms of YTD market growth. The VN-Index rose 5.2% MoM and is up 16.8% YTD. After having corrected in the second half of April, it regained momentum to reach 776.47 on June 30, its highest level since February 2008. All sectors except for industrials had strong gains in June.
Investors in Vietnam ignored the old adage “sell in May and go away” as average daily trading volume surged to a record high of nearly USD260 million, far above the USD145 million seen in the Philippines. Positive macro-economic news, low YTD inflation of 0.37%, TPP-11 moving ahead, the visit of Vietnam’s Prime Minister to the US and improved outlooks from Moody’s and Fitch helped bolster market sentiment. Margin lending levels moved close to limits.