Vietnam’s stock market had a bumpy start to July as the VN-Index fell to a 17-month low of 1149 points on July 6th. It then started bottoming out and recovered strongly over the rest of July before closing the month up 0.7% MoM. The sentiment was bolstered by positive global momentum and buoyant Q2 earnings results – especially from the banking sector. PYN Elite +0.9% MoM, thanks to the outperformance of ACV, MBB and CTG. Year-to-date, PYN Elite -19.3% vs. VN-Index’s -19.5%. Despite underperforming the global market, VN-Index’s valuation indicates a stronger upside ahead: Its forward 2022 P/E is at a staggering low 11.1 vs. MSCI ACWI World Index at 15,4.
Macro: After very strong GDP growth in Q2, July macro data suggested even more robust growth in Q3: Industrial production +11.2% YoY, export +8.9% YoY, disbursed FDI +20% YoY in July. Retail sales saw a significant jump of 42.6% YoY, but not just from a low base: It is 12% and 18% higher than July 2020 and July 2019 levels, respectively. Tourism revenue +3451% YoY in July and is already 82% of July 2019 (pre-COVID level).
Despite the country’s vigorous growth, inflation is still under control at 3.14% YoY. With gasoline prices on a downward trend, there should be less pressure on inflation over the coming months.
Stock of the Month: VHM. Vietnam’s largest developer Vinhomes became the real estate market’s highlight as it reported a record high presales value of USD 3.2 billion in Q2, +250% YoY only from the launch of its new 460-ha mega project The Empire. That is the first one among 4 mega projects that VHM plans to bring to the market over the next 1.5 years after the long COVID years – as the market continues to face a severe lack of supply despite buoyant demand. With a total area of 1,270 ha and a combined GDV of USD 17.5 billion, the projects are expected to secure earnings growth for VHM in the FY23-24 period.
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