Market Strategy Nov 2021 – Time to double down on quality

• At as 27 Oct 2021, VN-INDEX closed at 1,423.02pts, setting all-time record high (+6.0% mtd, +28.9% ytd). Market sentiment has been more positive in this month, following the movement control relaxation in both Hanoi and HCMC. Notably, the possibility of a new financial stimulus package to be approved in late-2021 has enhanced investors’ confidence about market outlook.  Total liquidity in 3 main bourses edged up 1.0% mom to VND26,991bn/session (+274.7% yoy).
• Small caps took the centre-stage. Daily trading value of VNSML (representing small caps) rose 4.7% mom (after an increase of 17.9% mom in Sep), resulting an impressive increase of 13.9% mtd of VNSML Index (data on 27/10/2021). On the contrary, money kept running away from large caps and mid caps with daily liquidity sliding 0.1% mom and 0.6% mom respectively in Oct. However, we expect that money would flow into large cap and mid cap stocks in Nov after the VN-INDEX confirmed short-term uptrend.
• 3Q21 earnings season has kicked off. We see more positive surprises at this point in time. At as 27 Oct, 310 listed companies, representing 17.8% of the total listed stocks and 21.9% of market capitalisation, have released 3Q21 results with 25.0% yoy growth in aggregate net profit..
• We expect earnings of HOSE-listed companies to grow 26% yoy in FY21F. Oil & gas, property, retail and food & beverage will be probably back to strong earnings growth momentum in 4Q21; while steel makers and securities brokerage firms still enjoy one more quarter of vibrance. We maintain our FY22F EPS growth forecast of 21% yoy for HOSE-listed companies. Top earnings growth in FY22F should be industrial goods and services, property, oil & gas, and aviation.
• We are more confident about the market outlook in the last 2 months of 2021, underpinned by: (1) a seeable robust recovery in market ‘s earnings in 4Q21, supported by low interest rates; (2) new financial stimulus package to be approved and (3) the valuation of Vietnam’s stock market looks attractive in a longer view. We expect the VN-INDEX to fluctuate in the range from 1,380-1,480 points in Nov. Our investment ideas for this month include: PHR, FCN, TPB, PLX.

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