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Investment Strategy Report - August­­­­­­ 2017: Will the Good Buy Opportunity Arise for Patient Investors?

​Investor sentiment seems "stable" even though the market in the first days of the month received a lot of information of the type that had created many "dark" sessions in the past. In addition, the rise of stocks that have a large impact on the basket of indexes such as SAB, VNM, VCB, BID, or ROS are supporting the VNIndex. We believe that VNIndex can easily reach 800 points in August.

Despite of that, after considering other factors, we think the index could not go further from this point in the short term. VNIndex has increased 17.9% YTD, lifting the overall P/E of the market to 16.3 by the end of July from 15.5 at the end of 2016. Our earlier assumption that market’s P/E will be mean-reversed has not occurred yet, thanks to the abundance of cash inflows. It looks like the rally of VNIndex, however, has fully reflected the listed companies’ business prospects as well as supported information. The 6M 2017 NPAT of 611 out of 733 listed companies in the HSX and HNX increased 14.4% YoY, but most of them just fulfilled a little bit more than 50% of their business plans in 2017. Besides, around 50% of corporations under RongViet Research coverage reported their business results just in line with our forecast, while more than 30% of coverage stocks showed disappointing business results. Moreover, after the positive rally since the beginning of the year, the recommendation on many stocks under our coverage has changed to “Neutral” rating. In other words, it is not easy to select stocks that are attractive at the moment. Typically, in such conditions, investors would be psychologically waiting for the business picture of macro and firms to be more open and clearer.