In the April 2021 investment strategy report just announced, Rong Viet Securities Company (VDSC) believes that the stock market in April will continue the gaining momentum of March. There are two main catalysts, according to VDSC. One is the driving force from new foreign capital inflows and domestic individual investors. VDSC’s expert group stated that new foreign cash flow and domestic individual investors are still the main force driving the market to go further in the net selling trend of foreign investors.
Specifically, in the past year (March 31, 2020 – March 31, 2021), foreign investors remained net sellers with accumulated value of more than VND 29,379 billion. However, VDSC does not consider this a significant risk thanks to the strong participation of domestic individual investors and new foreign funds.
Recently, the new ETFs from Taiwan – Fubon FTSE Vietnam ETF – was established by Fubon Financial Holdingsc on March 16, 2021. At the end of March, Fubon FTSE Vietnam ETF conducted an IPO and raised TWD 5.28 billion (about VND 4,279 billion). Previously, the Fubon FTSE Vietnam ETF planned to mobilize up to NT $ 10 billion (about VND 8,100 billion) to invest in Vietnamese stocks. Because this fund references the FTSE Vietnam 30 Index, VDSC hopes that this capital flow will create a prosperity for the VN30 stocks (accounting for 40-50% of the trading value of the VN Index) in the near future and contribute to reinforcing the uptrend of the VN-Index.
The second catalyst is the leadership of banking stocks. According to VDSC, the banking group will be the main driving force supporting the market in April thanks to the positive business prospects.
“We believe that banking stocks and Vingroup stocks are leading stocks of the market. While the Vingroup group has their own stories, the banking stocks group has a fairly clear growth base” , the expert group emphasized.
Specifically, VDSC forecasts that the growth of profit before tax in 2021 of the banks on the company’s watch list will be 26% in 2021. In which, interest income is expected to increase 17%. In addition, the CIR may increase slightly, but provisioning costs will decrease moderately (down 2%), which is expected to boost profits.
Business results in the first quarter are even better with pre-tax profit of banks expected to grow 115% thanks to the contribution of non-interest income and lower provisioning expenses.
“However, the system overload is still a risk exists in the short term. Therefore, we believe that the VN Index can fluctuate in the range of 1,200 – 1,300 points”, the group of experts forecast.
In April, an important event is the time to restructure the portfolio of ETFs referencing indices such as VN30, VNFinlead and VNDiamond. VDSC recommends investors to observe the cash flow of ETFs such as SSIAM VNFinlead ETF and VFMVN Diamond when these two funds have the best investment performance (% NAV / share growth) in the first quarter of the market, respectively 19.4% and 18.8% while the VN-Index and VN30-Index recorded lower growth at 7.9% and 11.7%.
VFM VN Diamond ETF Fund has continuously attracted cash flow from foreign investors since the beginning of 2021 with a value of nearly 95 million USD. In this restructuring period, banking stocks including ACB, EIB, MSB and VIB are expected to benefit from Diamond Fund’s cash flow when they meet the additional conditions to be added to the index basket while KDH is in favor of the the risk face is excluded from the index basket. Meanwhile, SSIAM VNFinlead ETF fund will eliminate VND in the next restructuring period because the implemented VND is transferred to HNX.
VDSC believes that selective investment should be a priority strategy when the VN-Index surpasses 1,200 points.
“We prioritize a bottom-up approach during this period of the market when VN-Index has crossed the psychological threshold since the beginning of April. Specifically, we focus on stocks that have “better-than-expected business results” and have clear growth expectations for 2021. After the AGM season ends, the market will fall into the “information blank” zone. Therefore, the driving force of the market in late April and May will need to be reconsidered, especially the technical factor of overloading the trading system has not been fully addressed”, the expert group stated.
VDSC’s favorite stocks in April include MWG, LHG, TCB, ACB, VCB, PNJ, PPC, and DXG.
Source: vietnamfinance.vn – Translated by fintel.vn
