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Market Strategy – IS THE SURGE IN MARKET VOLATILITY THE CANARY IN THE COAL MINE?

Strategy Note 15/03/2018    169

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The sharp global market correction has ushered in a new era of volatility
Before the Lunar New Year, a big bout of jitters in the global equity markets triggered by the specter of accelerating inflation in the US ushered in a new period of volatility in Vietnam’s equity market. While the sharp correction in the VNINDEX proved to be rather knee jerk in nature with the index having clawed back all its pre-Tet losses and currently up 15.6% YTD, the new-found volatility looks like it is here to stay.

Valuations are reaching heady levels despite strong 2017 earnings growth
Valuations have continued their skyward journey. The VNINDEX is now trading at a 9.6% premium to the regional average and a 38.2% premium to the MSCI Frontier Markets Index on a TTM P/E basis. More amazingly, the VNINDEX is also trading at a substantial premium to the MSCI Emerging Markets Index.

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