Growth in the volume of global industrial production and trade slowed in H1 2019 to the lowest levels since the global financial crisis (GFC) in 2009. The IMF cut its 2019F global GDP growth forecast in April 2019 to 3.3%, also a post-GFC low, citing factors affecting major economies such as increasing trade tensions, tariff hikes, tighter financial conditions and weakening business confidence. The private sector consensus forecast for 2019F global GDP growth also dropped in H1 2019
The VN-Index slipped by 1% in June. Investor sentiment remained cautious in June due to several factors, including: 1) uncertainty ahead of trade talks between the US and China during the G20 Summit at the end of June, 2) US President Donald Trump’s threat to impose tariffs on Vietnam and 3) no change in MSCI’s classification of the Vietnamese equity market (Vietnam remains a frontier market and is not on MSCI’s watchlist for a potential upgrade to emerging market status).
Covered warrants (CWs) have seen significant growth in countries which have adopted the product. Eight countries in Asia utilize CWs vs four countries in the Western Hemisphere. Across these 12 countries, value and quantity have grown by 759% and 4,785%, respectively, for the period from 2003 to 2015. In Asia, South Korea, Thailand, Taiwan and Hong Kong are some notable markets for CWs.
The VN-INDEX posted its largest monthly decline since the beginning of the year. The VN-Index had a poor start as BVH plunged to its trading floor in the first two trading days of May as Bao Viet Holdings unlocked 60% of 20.4 million ESOP issued in 2018 at VND35,900/share. The VNI then declined further to 947.0 on May 9, the lowest level seen in nearly three months as US President Trump’s tariff threat to China dampened global markets.
The VN-INDEX moved sideways around a technical resistance of 980. Despite some effort to approach 1,000 at the beginning of April, the VNI pulled back and moved sideways throughout the rest of the month. Market liquidity slumped ahead of the Reunification Day and Labor Day holidays. The VNI closed the month at 980 (-0.1%), virtually unchanged from the previous month. With the exception of the Thai SET (+1.7%), other ASEAN markets also exhibited similar performance, e.g., the Philippines
The VN-INDEX fluctuated around the 1,000 level. The VN-Index approached near 1,000 during the first seven trading days of the month. On March 12, it successfully surpassed the 1,000-point mark and then posted the highest closing price in six months at 1011.86 on March 18. However, profit-taking activities led to a market pullback. In addition, Warburg Pincus’s registration to sell VRE at a lower than market price brought about declines of not only VRE, but also related stocks VHM and VIC
We are pleased to provide our strategy masterclass presentation from our recent Vietnam Access Day conference. Vietnam’s real GDP growth exceeded 7% in 2018 and we forecast further robust growth of 6.8% in 2019 and 6.7% in 2020. Foreign direct investment, in particular in the manufacturing sector, remains a key growth driver, supported by Vietnam's competitive labor costs vs the region and a growing list of free trade agreements. While a marked slowdown in global trade growth around
The VN-INDEX outperformed ASEAN markets. The VN-Index climbed to a five-month high on February 25, perhaps encouraged by the news that the US-DPRK summit would be held in Hanoi in late February. The VNI then retreated somewhat at the end of the month as Presidents Trump and Kim could not finalize any agreement and ended their meeting earlier than expected. Closing the month at 966, the VNI still outperformed other ASEAN neighbor markets to grow 6.0% MoM and 8.2% YTD vs the Thai SET (5.7% YTD), I
Global equities kicked off 2019 on a positive note. The S&P 500 and the Dow Jones Industrial Average both jumped more than 7% in January, marking their best January in 30 years and the biggest monthly gain since 2015, supported by an upbeat earnings season and a more dovish interest rate outlook from the Fed. Developing markets also had a strong start to the year. The MSCI EM index surged by 8.7%, its best monthly gain since March 2016 and best January since 2012, while the MSCI FM index rose 4.
The Vietnamese market caught a dose of irrational exuberance in H1 2018 with the VN-Index reaching an all-time high of 1,204 in April 2018 and a trailing P/E of 22x. However, we believe the subsequent 25% correction leaves Vietnam’s robust growth story very reasonably priced. We set a year-end 2019 target for the VN-Index of 1,050, implying 18% projected upside (and 20% TSR) from the 2018 closing level of 892.