VN-Index hits fresh high in May

, VN-Index hits fresh high in May

VNI reached a new high in May despite a resurgence in COVID-19 cases. From the start of Vietnam’s fourth wave of COVID-19 (April 27) to the end of May, the country reported 4,245 domestic cases, accounting for nearly 75% of total domestic cases since the COVID-19 pandemic began.

However, the resurgence of COVID-19 cases has not had a negative impact on the stock market. In May, the VNI was mainly
driven by banking, materials and diversified financials to increase 7.2% MoM and 20.3% since the beginning of 2021, hitting a new high of 1,328.1 on the last trading day of the month. Similarly, the HNI gained 12.8% to close the month at 317.8 — its
highest level since 2009.

Meanwhile, major neighboring markets experienced mixed performances. The Philippines’ PSEi rose 4.0% MoM (-7.2% since the beginning of 2021) and the Thai SET inched up 0.7% MoM (+10.0% since the beginning of 2021), while Indonesia’s
JCI slid 0.8% MoM (-0.5% since the beginning of 2021).

Diversified financials achieved remarkable gains in May. Diversified financials surged 30.2% MoM, led by SSI (+36.2%), HSC (+30.5%) and VCI (+28.0%). Banks (+19.2%) delivered the second highest gain with strong increases from CTG (+30.1%), TCB (+31.0%), BID (+18.8%) and VPB (+18.3%), followed by information technology (+19.0%) — mainly driven by FPT (+21.0%) — and materials (+15.7%) — thanks to HPG (+23.4%) and HSG (+38.3%).

Record high number of new accounts. The rally in Vietnam’s equity market was partly attributed to the entrance of new local retail investors. According to the latest data from the Vietnam Securities Depository (VSD), new account opening jumped to more than 114,000 in May (local retail accounts for 99.5% of the total) and was over 110,000/month in the past three months vs averages of 33,000/month in 2020 and 16,000/month in 2019.

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Trading activity increased further to a new record high. Average daily trading volume (ADTV) for the three bourses combined increased 16.1% MoM to USD1.15bn in May. ADTV on HSX soared 19.1% MoM to USD974.4mn. In 5M 2021, ADTV
jumped four times from the same period last year.

May saw the highest monthly foreign net outflows ever. Foreign investors net sold USD510.5mn on the three bourses combined during the month, leading to a net foreign outflow of USD1.12bn in 5M 2021. The three tickers that recorded the
strongest net foreign outflows in May included HPG (-USD171mn), CTG (-USD57.7mn) and VPB (-USD54.8mn). The top foreign inflows were seen from TDP (USD16.4mn), CCI (USD13.5mn) and PLX (USD10.1mn).

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Outlook: Despite the strong rally since the start of the year, as of the end of May, the VNI’s ttm P/E of 18.2x remained attractive vs neighboring markets such as the Thai SET at 29.6x, Indonesian JCI at 29.0 and the Philippines’ PSEi at 26.9x. We believe the large number of local investors entering the market should continue to be a supportive factor for the stock market in the near term. However, the recent resurgence of COVID-19 cases — which has led to the implementation of a series of restrictions on activity in Ho Chi Minh City and several many other cities/provinces — is a risk factor that could negatively impact industries such as retailing, transportation and hospitality in June.


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