KIM Vietnam Fund Management Co., Ltd.

VN market Weekly Commentary – 21st May 2021

Money inflow ticked up across SEA after experiencing two weeks of outflow. Net inflow was USD6mn. To be specific, the positive flow of money was mainly driven by the sharp demand across Singapore (USD9mn), reaching a 2-month high. However, outflow across Vietnam was maintained whilst other countries recorded no inflow/outflow activity last week. Regardless, VNIndex continues strength. 

Vietnam Market Weekly Commentary – 21 May 2021
The VNIndex closed at a fresh all-time-high this week, up 1.4% WoW, and logging for the third consecutive weekly gain in a row. Eight out of ten sectors finished in positive territory. Among those, Information Technology (+9.3%), Energy (+3.5%), Financials (+2.6%), and Materials (+2.2%) led the gains, while Utilities (-3.6%), Industrials (-2.8%), and Consumer Staples (0.0%) fell behind.
Market sentiment improved although concerns over global inflation pressures and the fourth domestic Covid wave are still lingering around. We observed it, in part, through active increases in market liquidity. The average daily trading value reached a fresh record high of US$1.03bn on Friday, which caused the HoSE trading system to glitch again in late afternoon session.
In the corporate headlines, there was some notable news during the week. Firstly, the deal of selling stake in The CrownX was officially announced. Alibaba and Baring Private Equity Asia were buyers, investing US$400mn for a 5.5% stake of the firm, which was established by merging Masan Consumer Holdings and VinCommerce last year. The benefit of collaboration is clear, through The CrownX, Alibaba would leverage on VinCommerce’s nationwide retail physical stores as pick-up points for online orders from Lazada’s e-commerce platform in Vietnam. And MSN also can push their sales and increase their grocery market share through this online channel unit of Alibaba. MSN’s share actively went up 3.5% this week and has rallied more than 14% MTD since this news appeared. Further than that, MSN also noted that there will be more rounds of stake selling in The CrownX in the upcoming time.
Secondly, after removing rebates on export taxes and raising tariffs on some export products took effect, China’s steel prices started to cool down this week with China’s domestic HRC price dropping 15% from the peak. Iron ore prices also followed that trend. The trend of Vietnam's domestic steel price is still unclear, even it seemed to ease a bit. We saw there was divergence among steel share performance this week. The volatility of HRC prices, the main input for flat steel products, weighed on flat steel companies such as HSG (+3%), NKG (-0.2%), while HPG, the leading long steel and the second-largest HRC producer in Vietnam, continued to increase strongly +6.8% over the week.
The fourth wave of Covid pandemic suspended several business operations in Bac Ninh and Bac Giang provinces, where many industrial parks located and key factories of Samsung, Foxconn, and Canon there were severely affected. Many new cases were factory workers in these areas which forced these two provincial authorities to shut down four industrial parks this week to prevent further infections. Although the government accepted several key manufacturers and vendors to Samsung, Canon… to reopen their factories from next week to avoid disruptions to global production chains, we think the industrial production index would be negatively impacted in the upcoming month. All industrial park stocks, KBC (-7.3%), SZC (-4.3%), GVR (-3.6%), BCM (-3.1%), corrected sharply this week and traded more than 20% lower from their peak after experiencing two Covid waves this year.  
Since the fourth wave began on 13 May, there were 2,036 cases as of 22 May, mostly in the Northern provinces. Bac Giang (851 cases, ~ 42% of total) and Bac Ninh (419 cases, ~20% of total) have the highest confirmed cases, becoming hot spots of this outbreak. Several new cases were found in HCMC (3 cases so far) which raised the alert of further spread in the city. However, we observed life activities do not affect much except wearing face mask being strictly mandatory and the reaction of investors to the stock market this time was calmer than the previous waves.
For more information please visit our webpage  https://koreainvestment.com.vn/us  


VN Index continues to rally, replacing new highs New COVID cases are raising concerns but well managed

KIMVGIU LX Equity and KIMVGIE LX Equity are recording resilient alpha vs the FTSE and the VN Index. Reach out to us to hear the most recent updates and our outlook for the remainder of the year!
Allan Kim       kimfunds@koreainvestment.com