Securities corporation releases first-half report.
by My Van
The Real Estate and Banking sectors have seen the sharpest corrections since the beginning of 2018 but have still outperformed the VN-Index, according to the Mid-year Strategy 2018 of VNDIRECT, released on July 16.
Construction and transportation underperformed heavily, probably due to rising input commodity prices. Some major construction companies, such as CTD and SC5, had set conservative 2018 targets in recognition of growing headwinds.
Oil and Gas stocks surprisingly did not benefit from the rally in crude prices, possibly due to territorial tensions in the East Sea and also due to a planned State sell down of GAS being delayed. The market expected the sale to happen in 2018.
The report also pointed out that the total net profit of listed companies in the first quarter of 2018 increased 22 per cent year-on-year, of which the Banking and Food and Beverage sectors were among the main contributors, with net profit rising 52 per cent and 23 per cent, respectively.
The Financial Services sector saw the strongest earnings growth as securities brokerage firms rode the surge in market liquidity in the first quarter. This is unlikely to be sustained, however, due to the sharp market correction and waning liquidity seen in the second quarter.
The report also noted that the VN-Index standing at 983 points on June 26 meant that all gains made in the first quarter of the year had been erased but made Vietnam an outperformer relative to its regional peers.
Market liquidity remained low as investors maintained caution following a long and sharp correction phase that began in mid-April.
The P/E ratio on the VN-Index and the HNX-Index stand at 18.4x and 12.2x, respectively. VNDIRECT expects the VN-Index to trade between 870 and 1,050 points, while elevated volatility and low liquidity are likely to persist for months. The market is unlikely to recover strongly, as global risk aversion continues to deepen.
Combined daily turnover on HSX and HNX fell in June by 19.1 per cent month-on-month. The average daily trading value on the two main bourses in June stood at VND5.6 trillion ($242.3 million), which was still 16 per cent higher than the level seen in the same period last year.
The sharp fall in liquidity could be seen as just a retreat from the abnormal surge levels seen in the second half of 2017 and early 2018. The average daily trading value of the two main bourses in the first six months of 2018 reached VND7.7 trillion ($333.1 million), still up 59.4 per cent compared to the same period last year.