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Investment Strategy Report - March­­­­­ 2019: Better safe than sorry

Foreign investors were net buyers of Asian shares on hopes the U.S. Federal Reserve would go slow with its monetary tightening measures this year and the trade talks would unwind some tariffs, bolstering world trade. Indeed, there are some good signs. The US officials visited Beijing for trade negotiations last month, led by Robert Lighthizer, the hard-nosed United States Trade Representative. This promises some agreements to take place in May. Meanwhile, the Fed also lean towards only one rate hike in 2019.

Inflows into ETFs is particularly strong YTD, especially in India, Brazil, South Africa, Saudi Arabia, and Vietnam. In Vietnam, USD 110 Mn has flown into ETFs tracking the stock index in only two months of 2019, much higher than the figure for the entire year. 

It seems that, generally, all the good news - about US-China trade, growth, etc- is almost priced in. If the inflows into ETFs continued, the 'party' can last but will eventually end at some point. The VN-Index has done well lately and could test the 1030-1050 level, doubt that there is juice to push past that for now. 

It remains a stock pick environment. Thus, we recommend investor to focus on stock with sound fundamental and a good story. Many of them stay in the midcaps category. Smart money will eventually find them, as what happen with Textile and Thermal Power stocks.

Volume is the main indicator to watch: if stocks move up on lower volume, it indicates that investors are not participating