Vietnamese companies had a good earnings growth momentum and the year 2020 was ripe for an excellent market performance. After a strong start in January, we witnessed in the spring huge outflows by foreign investors because of Covid-19. The good sentiment we had with the Vietnamese stock market was gone.
But now things are different.
1. At the moment VN Index is up only 2.9% YTD, although the Vietnamese economy is growing 2.5% this year despite Covid-19, and the listed companies’ earnings are expected to grow 34% in 2021.
2. PYN Elite is up 12.5% YTD. That performance deviates VN Index weak performance and is based on good returns of individual stocks. For example CTG’s (Vietinbank) stock has gained 59%. CTG is still lagging behind its peers in valuation but bank’s last week market day has triggered several analysts to raise meaningfully their target prices. CTG is expected to record strong Q4 results.
3. PYN Elite has recently put more weight on the companies which have underperformed YTD. Added stocks, which share prices are still below the level they were in the beginning of the year. They are the potential outperformers for year 2021. To name a few, VHM, the biggest housing developer in Vietnam is still -7% YTD and POW, the biggest power generation company in Vietnam is -14% YTD.
4. Because of Covid-19 the foreign investors sold heavily their Vietnamese stock in spring. Cumulatively they’ve withdrawn 543 million US dollars this year. There are reasons to believe that during the next 12 months the outflow will turn around to positive inflow.
5. VN Index correlation with the S & P 500 is rather low at 0.298. You should not stay away from the Vietnamese stock market just because the US or European stocks are fully priced.
6. The 2021 forward P/E 12 for VN Index is trading at historically low levels as well as when compared to the valuations in other Emerging Markets in Asia.
7. PYN Elite portfolio manager made personally additional subscription to PYN Elite Fund in October. Since then we have heard the news of a sensible president-elect of the USA who will work as a leader to stabilize the political situation in the world. We’ve also heard that there are already proven vaccines for Covid-19, which are just waiting for the governments’ approval. The second wave of Covid-19 has been quite well in control in Asia, and even the current Asian economic situation looks bright compared to the US or Europe.
The next subscription date for the PYN Elite fund is on the 30th of November. It is still not too late to come aboard and enjoy the positive outlook of the market.