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Market Strategy April 2022 – April showers bring May flowers

Strategy Note 01/04/2022    93

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  • VN-INDEX witnessed a V-shaped pattern in Mar. The VN-INDEX dropped to the lowest level of 1,446.3 pts (-2.9% mtd) on Mar 14 due to concerned that Western sanctions imposed on Russia negatively affect the global economy. However, the VN-INDEX soon rebounded in the second half of this month, following the strong recovery of global stock market. At as 23 Mar 2022, VN-INDEX closed at 1,502.3pts, (+0.8% mtd, +0.3% ytd). Total liquidity in 3 main bourses increased 14.5% mom (+61.2% yoy) to VND31,530bn/session.
  • A tycoons and several market authorities were arrested over stock manipulation in late-Mar. These arrests have shaken off the market in short-term, but for longer term, this signals Government’s effort to maintain the sustainable development and protect the lawful rights of investors.
  • Strong macro fundamental to bode well for the market expansion. 1Q22 GDP grew 5.0% yoy, higher than that of 4.7% in 1Q21 and 3.7% in 1Q20.
  • We believe that the Fed’s rate hike could help alleviate the market’s concerns about current high inflation. The slight increase in policy rate also suggests that the FED is willing to carefully tighten monetary policy to avoid negative impacts on the global economy and financial markets. Looking back, the stock market remained positive throughout most of the Fed’s previous rate hike cycles.
  • We believe that investors’ concerns will gradually shift from the Russia-Ukraine conflict to the 1Q22 earnings season. In general, we expect the business results of listed companies in 1Q22 to be positive, benefiting from the resumption of most economic activities as well as a new economic stimulus package. We expect the brokerage, chemicals, fertiliser, fishery and retail sectors to record the strongest earning growth in 1Q22F.
  • We expect that the VN-INDEX could maintain its recovery momentum and retest the historic peak of 1,538 points in Apr as the stock market would be supported by the 1Q22 earnings results. If it surpasses the historical peak, the VN-INDEX could move towards 1,560-1,570 points level in the second half of April.

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