Investment Strategy Report - July 2019: SHORT-TERM OPPORTUNITIES IN EARNINGS SEASON!
The relationship between VNIndex and Vietnam 5 year CDS has loosened since the beginning of 2019. Vietnam 5 year CDS has declined to 5-year low, but VNIndex still cannot reach to 1,000. As we mention above, external risks causing the weak capital flow from offshore weighs on market sentiment. Externals risks have reduced after June as US and China agree to renegotiate and the readiness of Fed to cut rate this year. Given that Vietnam 5Y CDS has been decreasing, ETF fund flow has bounced back and foreign investors have turned to net buy since June, we expect a positive scenario for the Vietnam stock market in the short-term.
However, external risks remain until US and China reach a deal and Fed announces a rate cut. Stability of Vietnam economy is one of the main reasons for us to set a higher range for Index in July than in June. Our range for VNIndex is 940-985 this month.
Sectors benefit from free trade agreement and/or post a positive earnings result during the earnings season will provide opportunities.
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