Korea Investment Management Co., Ltd.

VN Market Weekly Commentary – 26th March 2021

  • Large cap stocks restreated on the back of foreign selling
  • Taiwan based Fubon lanuched Vietnam ETF, rainsing $180mn, expected to be disbursed in April
  • Expect strong corporate earnings to support market sentiment

The VNIndex failed to break the 1,200 level, ending the week at 1,162.2 pts and retreating by -2.7% WoW. While trading glitch and net foreign selling, have been existing obstacles for a while, continued weighing on sentiment - especially 3rd time fail attempts to break the 1,200-resistance level sapping elation of investors, the market correction this week was triggered by a rumor of some large brokers tightening their margin lending activities to make up financial statement numbers as quarter-end is coming. On the last trading day of the week, there were 2 Vietnamese illegal entrants confirmed with Covid on Friday, which also caused a bout of volatility to the market when it is mounting fears of the 4th covid wave.
However, with a quick intraday rebound, recoupling most of its intraday losses 2.2%, on a Covid returning day, it seems that investors become calmer than preceding times when receiving such kind of information on Covid cases.     
On foreign investors’ transaction, this week's net selling value was US$53m and YTD cumulative number has reached US$579m. Large-cap stocks were the largest victims. The stock that was impacted most was VNM (-US$169mn YTD), accounting for nearly 30% of the total net selling value. VNM is a favorite blue-chip with high liquidity for institutional investors but growth deceleration is a concern. This week, on the other hand, another foreign Vietnam-ETF was launched by a leading Taiwanese financial conglomerate Fubon on 24th March, which had planned to raise up to US$180mn during the IPO. The fund is expected to disburse in early April, focusing on large caps with available foreign rooms. Though trading impacts to the overall market will be likely small, we think launching this second Vietnam dedicated fund of Taiwan, following CTBC (launched in August 2020), is somewhat creating a good sentiment as it reflects Vietnam is still attractive in the eyes of foreign investors.
During the week, the real estate sector slightly declined by -0.4% WoW, supported by its largest market-cap weighting stock VIC (+3.7%). Rumor has it that VIC plans to raise funds for its car-making arm VinFast in the US at high valuations. Incidentally, VinFast launched its first electric car model this week at an affordable price of ~US$25k for early subscribers has well-captured the market’s attention. In the week before that, there was news that Foxconn (Taiwan) proposed to cooperate with VinFast to develop EV cars that positively helped VIC to gain steam this week.  
The worse-hit sectors for the week were IT (-4.8% WoW) and Materials (-3.9% WoW). While for IT, FPT (-4.6%) correction was simply a breath after a long rally in the previous weeks; the decline of the materials sector was caused by GVR (-9.0%) as the company released its audited NPATMI lower than the unaudited number, raising concerns of corporate governance. On the other hand, the largest company in the Materials sector HPG (-2.0%) increased strongly on Friday after it released robust 2021 business guidance with revenue of VND120tn and PAT of VND18tn, up +33.2% and 33.3% respectively. HPG is going to invest VND85tn (US$3.7bn) in the 2nd phase of the mega Dung Quat Integrated Steel Complex, upgrading capacity by another 5.6mtpa from its 1st phase of 4mtpa of both long & flat steel. The steel complex is the largest industrial project by a local company historically.
There will be more and more 1Q21 earnings results and 2021 business targets in the AGM materials information being released next week. So far, we have seen positive signals from the early preliminary NPAT results, and we expect good 1Q21 numbers would add more fuel for the market to break through its psychological resistance level.