A quiet holiday season restrained market growth. The VN-Index ended 2016 at 664.72, falling 0.03% from end-November. This continued a downward trend from November, but with a smaller decline. Declining momentum started from the third week of November and ran through the first half of December as the index dropped to 651.49 on December 6, a two and a half month low, as foreign investors stepped up selling of large-cap names.
High foreign investment continued to drive Vietnam’s strong export growth and rising consumer strength in 2016. In spite of political uncertainties in the US, we believe that its economic strength will help to support Vietnam in 2017. The VN-Index was swayed by global trends throughout 2016, but finished with solid gains. 2017 may present some challenges if the US dollar continues to strengthen but macro stability should continue to support earnings growth. The real story,
The VN-Index dropped slightly in the aftermath of Trump’s victory. The VN-Index moved sideways without any significant fluctuations from the beginning of the month to November 23 when it reached its monthly peak of 683.16. Vietnam’s equity market thereafter incurred a sharp and steady drop by 3.6% to the bottom of the month at 658.26 on November 29.
Q3 earnings results failed to maintain investor confidence as market gave up all of its gains for the month. The VN-Index moved sideways within a range of 670-690 during the month, but was more inclined to a slight downtrend, finishing October at 675.8, down 1.45% from the end of September. Vietnam’s equity market incurred a MoM decrease for the first time since January 2016, triggered by Q3 results which failed to maintain investor conviction and prompted some profit taking.
The VN-Index recovered strongly in the second half of the month, achieving its highest level since February 2008, after ETF rebalancing put downward pressure on the market earlier in September. Vietnam’s equity market had a weak first half of the month, but finished the second half strongly. The VN-Index closed the month at 685.73, up 1.65% compared to the end of August, though that was the lowest MTD growth since April 2016. ETF’s periodic Q3 rebalancing, which ended in mid-September,
VN-Index ended August just shy of its highest level since February 2008 despite a pullback at the beginning of the month. Counter to August’s historical pattern of trading down, the VN-Index increased by 3.4% from the end of July and traded above 660 for most of the month.
VN-Index began the month by moving strongly through its old barrier. The index registered gains in four of the month’s first five trading sessions to blast through resistance at 640 and reach 661. It then went on to peak at 681 on July 14 before retreating back and trading between 650 to 660 for the second half of the month.
First half macro performance was strong. Low GDP growth resulted largely from weather conditions affecting agricultural output. Consumption, investment and trade numbers were all strong. We therefore see good investment opportunities in consumer, logistics, power and cement sectors and some in banking and property.
Modest gains put the VN-Index within striking distance of 640 long-term barrier. The VN-Index rose a modest 2.2% for the month of June to close at 632. In fact, it had already risen to close at 631 on June 9. It dropped back and then recovered later in the month. Nevertheless, the Index did peak at 637 on June 30, coming within striking distance of its eight-year high of 640. This is an especially significant barrier based on history of the past few years.
Equity market momentum continued in May. The phenomenon of “sell in May and go away” proved unfounded as the VN-Index increased by 3.4% from the end of April and maintained above 600 throughout the month. It reached a peak of 624.8 on May 17, marking the highest level since the end of July 2015.