Download Weekly report 34

Weekly Report
24/0528/05/2010
May- 2010
BIDV Securities Co.,ltd
BIDV Securities Co.,ltd
Weekly report 34
Economics
•
Trade deficit was at an acceptable level, the increasing
exports eased concerns about macroeconomic imbalance.
Exchange rate fluctuated to rise during the week, but
would soon be stabilized.
•
Asian flourishes when China commits to maintain its
investments in Europe. Expectations for the success of the
bailout packages in this area will help the world market
firmly recover.
Equity
• The market sharply rebound entering solid supporting
threshold, foreign traders increased their trading volume.
Although medium uptrend has not been confirmed, the
market would become more stable thanks to the return of
big caps
• Due to high selling pressure around 525 point, it is difficult
for VNIndex to strongly rise next week. It is right time for
reducing “hot” shares and widening portfolios with good
fundamentals. Real estate considered “safe destination” for
long term investment
BSC Economic Research Team
Research Department
BIDV Securities Company
Weekly Report
May- 2010
BIDV Securities Co.,ltd
Crude oil, gold price
World indices
NIKKEI
Crude oil price
DJ index
GOLD price
10800
11400
100
1260
10500
11100
90
1240
10800
80
1220
10200
9900
10500
70
1200
60
9600
10200
9300
9900
40
1160
9000
9600
30
1140
8700
9300
20
3/5
10/5
17/5
1180
50
24/5
1120
27/4 1/5
5/5
9/5 13/5 17/5 21/5 25/5
Source: Bloomberg
Source: Bloomberg
CPI m-o-m
Import reduced, export rose
2.5
$mil
8,000
2
7,000
1.5
6,000
1
5,000
4,000
0.5
Xuất khẩu
Nhập khẩu
3,000
0
05/09
07/09
09/09
11/09
01/10
03/10
05/10
2,000
5/09 7/09 9/09 11/09 1/10 3/10 5/10
Source: Bloomberg
Source: Bloomberg
50
Dollar Index
VIXIndex
88
45
40
35
84
30
25
80
20
15
76
10
12/04
19/04
Source: Bloomberg
26/04
03/05
10/05
17/05
24/05
15/4
22/4
29/4
Source: Bloomberg
6/5
13/5
20/5
27/5
Weekly Report
May- 2010
BIDV Securities Co.,ltd
ECONOMICS
•
•
Exports increase, trade deficit tends to decrease, concerns about
macroeconomic imbalance eased off. Exchange rate fluctuated during the week,
but would soon be stabilized.
World stock market flourishes after China commits to maintain its investments in
Europe. Success of bailout packages would help the world firmly recover
Exports increase, trade deficit tends
to decrease
High trade deficit is one of the major concerns
to domestic macro-balance. However, the trade
deficit now tends to decrease with the
improvement of exports. The country’s export
turnover reached $ 6.1 billion in May, bringing
the total export turnover this year to 25.83
billion dollars, 12.6% increase yoy. Particularly,
trade deficit was at $750 million in May,
equivalent to 12.3% of export turnover. While
trade deficit of the first 4 months reached 4.63
billion dollars (the average trade deficit reached
1.15 billion dollars), equivalent to 23.4% of
export turnover, trade deficit of the first 5
months fell to 20.8% (about 5.37 billion dollars)
thanks to the strong decline of trade deficit in
May.
In the export-import balance, import now
manifests strong accumulation force which
contributes great value to economic growth. It
can be seen that machinery and raw materials
for business activities are the country’s major
import products which account for 70% of
import turnover. Moreover, due to the low
localization rate of export goods and the lack of
raw materials for manufacturing, importing
inputs plays important roles in increasing
export value. The United States remains the
largest investor in Vietnam as the record of
bilateral trade volume between Vietnam and
the U.S. is likely to be broken. This is
considered positive signals for the major
exports of Vietnam such as clothing, footwear,
coffee and seafood.
In Vietnam, survey results said that there was a
significant improvement in the import-export
companies’ forecast about trade prospects:
Vietnam’s trade reliable indicators reached 132
points from 110 points in the survey carried out
in the second half of 2009. Most enterprises
asked in Vietnam (75% compared with 65% in
the second half of 2009) said that trade volume
would increase in the next six months.
Thus, we believe that, although trade deficit
will keep increasing at around 20% of
export turnover, imports of raw materials
will contribute significantly to economic
growth. Regarding investors, concerns about
increasing trade deficit and inflation will be
eased off. And the macroeconomic overview is
still wide open for the fiscal monetary policy
towards an open and growing economy.
Exchange rate fluctuated during the
week, but would soon be stabilized
In the past week, exchange rate slightly
increased at about 20VND per USD. The
adjustment of exchange rate over the past time
has brought an abundant supply of foreign
currency, met the needs for foreign currency of
the market and cooled off exchange rate.
Weekly Report
May- 2010
BIDV Securities Co.,ltd
However, this has increased the risks of foreign
debts and raised import price.
unemployment rate in April rose to 5.1% from
5% previously.
However, exchange rate would tend to
increase from now until year-end, and this can
be explained by the following reasons: (1) USD
credit has sharply increased since early of the
year and foreign currency demands for
payment of loans will increase. (2) Disbursed
FDI for the economy reached $4.5 billion in the
first five months, not to mention over 6 billion
dollars of FII, the needs to realize profits and
capital transfer from now until year-end. (3) In
addition, demand for foreign currency for
imports will also rise in the year-end months.
USD interest rates tend to decline, which
means USD/USD rate will rise slightly but will
gradually be stabilized until the end of this year.
Consumer’s price index fell by 1.5% yoy after
falling by 1.2% in March 2010. In comparison
with the last year, household consumption fell
by 0.7% in April 2010. Retail revenue rose
4.9% in April 2010.
USD/VND Spot rate
19055
18970
18885
USD/VND
18800
27/4
4/5
11/5
18/5
25/5
Source: Bloomberg
However, the exchange rate is likely to rise
until year-end. As long as VND lending rate
falls, the USD/VND exchange rate would firmly
rise from now until year-end.
Japan: Unemployment rose,
consumption fell, deflation
worsened
Japan’s unemployment rate suddenly rose in
April 2010, household consumption fell and
deflation situation got worse, which meant that
domestic demand was restricting Japan
economy’s recovery. Japan statistics office
located in Tokyo reports that the country’s
Exports played important role in increasing
Japan’s economic growth to 4.9% in Q1/2010.
Japan economy depends much on exports to
keep growing.
Spain released its plan on budget
cut
After China and U.S. had released optimistic
announcements on Thursday, Spain also
claimed its plan on budget cut.
Spain Parliament has officially passed the plan
on cutting 15 billion euros (equivalent to 18.4
billion USD) of national budget in an effort to
reduce budget deficit and regain the market’s
trust.Investors have continuously sold out the
euro due to concerns that budget deficit and
disturbance may spread to other European
countries. After falling 8% this month, in the
recent sessions, the euro has almost fallen to
the lowest level in the last 4 years in
comparison with the USD.
Interest rate in Europe rose sharply while
debt crisis has not come to an end
3M-Libor rate is on increasing trend
0.6
0.5
0.4
0.3
0.2
01/04
15/04
Source: Bloomberg
29/04
13/05
27/05
Weekly Report
May- 2010
BIDV Securities Co.,ltd
BSC’s comments
The IMF has recommended another bailout
package totaling 1,000 billion USD in order to
promote economic growth in Greece, Spain
and the Eurozone. Together with contractionary
policies and budget cut, more drastic solutions
are expected to revitalize the economies after
crisis. The euro is now under great pressures.
However, the euro crisis is believed to do no
harm to the Europe as a 10% devaluation of
the euro can add 1% to the region’s growth rate
in 12 months without any inflation pressures.
Asian markets went up after China had
confirmed that it would keep investing in the
Europe. Concerns about the European debts’
affects on global economic recovery were
eased off. Despite the IMF and the European
community’s support, we believe that solutions
to Greece as well as other countries with high
debt rate’s problems depend much on their
own efforts. And it is obvious that global
stock market would be affected in one way
or another. Investors’ cautions are rational
at the current stage although the
confidence index – VIX – has been
stabilized after some recovery signals of the
world’s financial market. Global financial
market will be challenged along with the routine
of solving the European debt crisis as well as
the economies’ capability to grow in the second
quarter. Although Dow Jones has gained the
important sentimental cornerstone of 10,000
points, the recovery efforts of the world’s
biggest financial market would have great
influence on the world’s sustainable
development after the initial booming signs.
The fluctuating VIX index has temporarily
been stabilized
50
VIXIndex
45
40
35
30
25
20
15
10
12/04
19/04
Source: Bloomberg
26/04
03/05
10/05
17/05
24/05
Weekly Report
May- 2010
BIDV Securities Co.,ltd
EQUITY
• The market rebounded after reaching the hard support threshold. A reversal
trend is not yet confirmed, but the market would be more stable thanks to the
comeback of big stocks.
• The market can hardly go up in the next week as pressures for selling increase
around the threshold of 525 points. It is recommended to consider selling hot
stocks in the next week and restructure portfolio focusing on basic stocks and
real estate ones.
Technical Analysis
VN Index rose in all 5 trading sessions and
closed the trading week at an increase of 29.3
points (equivalent to 6%) and almost regained
the lost points of the last week. Positive signs
showed up early in the week as VN Index
reached the Fibonaci medium resistance
threshold of 38.2% with exhausting volume. At
the same time, VN Index also established a
price channel when reaching the threshold of
482 points and rebounded. VN Index has
regained the sentimental threshold of 500
points and the equal increase of key stocks
has confirmed a firm uptrend. Such quick
signals as Parabolic Sar, Stochastic showed
positive signs in the short term. With 15.83
points increase in today’s session, VN Index
has created a space in price and the threshold
of 500-5050 points would become the support
zone for the market in the short run. However,
it is still too early to say that VN Index has
escaped the decreasing channel:
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Weekly Report
May- 2010
BIDV Securities Co.,ltd
The ADX line at 32, the +DI (25) line below
the –DI (29).
- Such indicators as MACD, Aroon Up…
have not yet confirmed a reserval trend.
- Although exceeding SMA(100) today, VN
Index maintained a long distance from
SMA(200) which was equivalent to 525
points.
VN Index has been moving within the threshold
of 480-550 points during the last 5 months and
around the SMA(200) line (which is now at 525
points with the upward declination of 5 degree).
Thus, in our technical opinion, the support
threshold of VN Index would be the price space
of 497-510 points and the resistance threshold
would be at 520-525 points (SMA(200) and
Fibonaci 23.8% in the short term).
Rebounding sessions would be unlikely to
take place in the next week; however,
uptrend will maintain despite some
correction sessions coming
-
Foreign investors’ transactions
In the last week, foreign investors boosted
buying in, thus speeded up the accumulation
and rebound of the market. Their purchase
value reached 467 billion dollars this week, in
comparison with the value of 175 billion dollars
of the last week. There was also a sudden
increase of purchase scale while liquidity
fell on the whole market which highlighted
foreign investors’ roles on the market.
Besides, their purchase of big stocks has
driven the market to strongly grow in the last
two trading sessions of the week. The most
bought stocks this week included those that
had been collected weeks before such as HAG,
DIG, KBC, KDC, SJS and SSI. Real estate
stocks remained the most interested ones
for foreign investors.
Trend analysis
Changes in investors’ sentiment showed up
early in the week as there had been strong
correction in the purchase of hot stocks.
Pressures for sale were released as price went
down; investors tended to hold their stocks and
catch the bottom despite the complex evolution
of world markets. The initial success of hot
stocks has also contributed to improving the
market’s sentiment and paved the way for the 2
up sessions at the end of the week as foreign
investors promoted buying in which increased
big stocks’ price. The market changed
positively this week, but it will be challenged in
the next week when pressures for sale strongly
increased around 525 points. We believe that
the market could hardly rebound in the next
week. There would be some correction
sessions coming between the uptrend of the
whole week. 525 points is the expected level of
the week.
Recommendations
The market is unlikely to strongly rebound in
the next week and investors should avoid
pursuing the market. Correction sessions would
be good chances for investors to raise the
amount basic stocks in their portfolios. It is
recommended to restructure investors’
portfolios through selling hot stocks and raising
basic stocks. Although blue chips sharply
increased in the last two sessions, we
believe that it was not the right time this
group grew rapidly. However, this group is at
a high safety level in the context of no obvious
trend of money flow among stocks. Considering
initial changes of the real estate market and
foreign investors’ net purchase, it is likely that
real estate stocks would be the most bought
group in the second and third quarters. These
stocks are also recommended while
restructuring portfolios.
Weekly Report
May- 2010
BIDV Securities Co.,ltd
BIDV SECURITIES COMPANY
BSC Head Office
10th Floor – Vincom Tower
191 Ba Trieu Str – Hanoi
Tel: 84 4 22200668
Fax: 84 4 22200669
www.bsc.com.vn
BSC Ho Chi Minh Branch
9th Floor – 146 Nguyen Cong Tru Str
District 1, Ho Chi Minh City
Tel: 84 8 3 8128885
Fax: 84 8 3 8128510
BSC Nam Ky Khoi Nghia Transaction Office
12-14 Nam Ky Khoi Nghia
District 1, Ho Chi Minh City
Tel: 84 8 8214803
Fax: 84 8 8214804
Research Team
Nguyen Ngoc Tuan
Nguyen Thi Thu Trang
Bui Nguyen Khoa
Editor:
Vu Thang Binh
Manager of the Analysis & Research Department
Tong Minh Tuan
Manager of Economics
Disclaimer: The information, statements, forecasts and projections contained herein, including any
expression of opinion, are based upon sources believed to be reliable but their accuracy completeness or
correctness are not guaranteed. Expressions of opinion herein were arrived at after due and careful
consideration and they were based upon the best information then known to us, and in our opinion are fair
and reasonable in the circumstances prevailing at the time. Expressions of opinion contained herein are
subject to change without notice. This document is not, and should not be construed as, an offer or the
solicitation of an offer to buy or sell any securities. BSC and other companies in the BSC and/or their officers,
directors and employees may have positions and may affect transactions in securities of companies
mentioned herein and may also perform or seek to perform investment banking services for these companies.
This document is for private circulation only and is not for publication in the press or elsewhere. BSC accepts
no liability whatsoever for any direct or consequential loss arising from any use of this document or its
content. The use of any information, statements forecasts and projections contained herein shall be at the
sole discretion and risk of the user.
BIDV Securities Company (BSC)
No part of this material may be (i) copied, photocopied or duplicated in any form by any mean or (ii)
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