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Market Strategy Sep 2021 – Time to build the investment portfolio for 2022

Strategy Note 30/08/2021    287

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  • Market witnessed turbulence in Aug as VN-INDEX bounced back to 1370 level then corrected and closed the month at 1,328 (+1.4% mtd). Investor sentiment remains weak as longer and stricter nationwide lockdown protocols have been adopted.
  • Liquidity rebound strongly in Aug as market valuation turned more attractive. Total trading transaction of 3 main bourses rose 15.3% mom to VND30,177bn per day (+363.2% yoy).

We saw money ran into small and mid caps in Aug. Liquidity of VNSML (representing small caps) surged 90.1% mom, resulting an impressive increase of 10.6% mtd of VNSML Index. Liquidity of VNMID (representing of mid caps) rose 69.9% mom to bring VNMID Index up 0.4% mtd. On the other hand, daily trading volume of VN30 (representing large caps) dropped 4.1% mom, leading to a 2.4% mtd decline for VN30 Index.

We see some positive catalysts in Sep, including: (1) the infection likely peak in late-Aug and slow down in Sep thanks to drastic control movement measures and rising vaccination (17.14% at as 27 Aug 2021); (2) liquidity rebound strongly in Aug, suggesting that investors are willing to jump into the stock market when the opportunity arises; (3) the valuation of Vietnam’s stock market looks attractive now, in our view.

We lower 2021F EPS growth of listed companies on HOSE to 26% (vs. previous forecast of 30%) as 2H21 business outlook likely hit hard by the current wave. For 2022F, we expect EPS growth of listed companies on HOSE to grew 21% yoy.

We expect the VN-INDEX to recover in Sep and fluctuate within the 1,280-1,380pts range. The 1,280-1,300 points would be strong supporting level for the VN-INDEX in Sep. Investors could raise proportion of stocks in their portfolios if the index drops to the supporting zone. We prefer leading companies in the Real Estate (including both residential and industrial park real estate companies), Building Materials, Logistics, Port and Export-oriented companies.

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