Market Weekly Strategy 08/22-08/26/2016

Published Date: 29/08/2016

International stock market status 
In 19/8 session, the US stock market declined mainly due to declines in utilities tickers as investors were not optimistic about rate hike probability in the next months. Specifically, the Dow Jones fell by 0.1 % to 18552.57 points and the S & P 500 fell by 0.01 % to 2183.87, while the Nasdaq composite rose by 0.09 % to 5238.38. Notably, San Francisco Fed President John Williams said the US central bank should raise interest rates soon,possibly in September to come, and realized if the Fed must have waited too long, theeconomy might get certain consequences. New York Fed Chairman William Dudley gave some his own comments on this issue.
Oil prices gained the 3rd consecutive weeklyrally in 19/8 session after the expectation that supply freeze might affect inventory. Ending this week, WTI oil prices rose by 9.1% to USD48.52/barrel, the largest increase since March. In addition, the USD Index fell by 1.15% over this week, a booster for recovery in oil prices. However, oversupply pressure has increaseddue to higher number of the US rigs of 406 ending 19/8, in the 8th consecutive weekly gain, the longest rally over the last 2 years as reported by Baker Hughes. At least two Fed officials feel optimistic about the US economy and concerns about their wait for another rate hike so long in July/2016 meeting minute release. In addition, another member of the Fed hasraised probability to hike interest rates in Sep/2016 although there were some traders not putting much belief in this probability in one month to come. 
Vietnam stock market status 
The fluctuations in blue chips contributed to movements in both indices over the last week. Notably, foreign investors saw significant net sell, not causing too serious effects on the market but turning into a short-term signal. Market liquidity strengthened and weakened on both exchanges when average traded volumes reached 115.5 million shares/session(up 8.65% WoW) on the HSX and 35 million shares/session (down 2.09% WoW)on the HNX However, liquidity weakened substantially in the last week. 
The VN-Index rose slightly by 0.99% to 662.28 and the HNX-Index declined by 0.02% to 83.10 due to intensive profit taking activities 
Indices movement: Selling pressure expanded in early sessions, causing uncertainties in both indices. However, large caps increased in turn such as VNM, MWG, KDC, HPGbesides increases in oil & gas tickers, contributing to the increases in both indices. 
The VN-Index maintained above 660 thanks to contributions in MSN, VNM and GAS. Majority of other tickers have started to classify andmay correct in late sessions. In particular, steel tickers suffer correction pressure as a result of profit taking in HPG and HSG after hitting strong resistance levels. Real Estate tickers (VIC, TDH, DXG, SCR ...), tire production( CSM , DRC ...), Pharmaceutical ( DHG, IMP, DMC ... ), Textile (TNG , TCM ...) , Banking (BID, CTG ...) continued a downward trend, showing weakening signal in short-term. This has led to weakened liquidity during the last sessions.
However, cash flows were active among ticker groups when declines in tickers were not significant. 
Foreign investors transaction: Foreign investors had significant net sell over the sessions while selling pressure was in Blue chips such as VNM, VIC, HBC, KBC, PVT, ... , causing the market difficult to increase. In particular, foreign investors net sold to VND 1,098 billion on both exchanges. In particular, they were net sellers on the HOSE with value of VND 1,079 billion on the HSX and VND 19 bn on the HNX. VNM saw net selling to VND 303 bn while VIC was net sold to VND 191 bn. 
Notes about HAG 
Hoang Anh Gia Lai reported a loss of more than VND 1,000 billion in the first half. Specifically, in H1/2016, revenue gained VND 3,658 billion and financial revenue VND 507 billion. After deducting expenses, the Company had a pretax loss of VND1,075 billion, except extraordinary loss of VND 941 billion, resulting from the liquidation of real estate projects in HCMC worth VND 413 billion, asset revaluation of VND 530 bn and loss from interests .

HAG has about 7,500 dairy, 130,000 steers are the main contributor to the group’s revenue and profits. March/2016 sugar production completion gained 47,000 tons,  lower than previous years due to cultivation. The company has completed palm oil processing plant with a capacity of 45 tons of fruit per hour, the plant is put in operation in Q4/2016.
Project in Myanmar, the office building has been 60% leased, commercial center has been 95% leased and 5-star hotel will start to operate in Aug/2016. In the first 6 months/2016, the Company has liquidated real estate projects in Vietnam, mineral projects and other nonpotential businesses. Total extraordinary costsof disposal of assets are VND 944 billion (2% of total consolidated assets). Services such as hospitality are profitable.
HAG and its subsidiary- HNG has yet to publish its parent and consolidated financial statements for Q2/2016 as well as H1/2016. On 16/08, the State Securities Commission has approved time extension of releasing these statements. 
Technical signals: 
The VN - Index continued to go sideways within range of 653-668 with short-term support at 655. In particular, resistance at the upper band of Boillinger are close to 670, therefore possibility to cross above strong resistance in the short term is the lowest when traded volumes are declining.
Besides selling pressure tends to rise sharply in recent days, so if the VN-Index breaks  653 milestone, the index might retest strong resistance at MA20 and MA50, equivalent to 645-648. In contrast, if 655-660 range will continue in the coming sessions, short term uptrend will hike consequently.
Next week strategy : Maintaining current portfolio
The VN- Index keeping around 660 was a huge success when the last week saw strong continuous selling pressure among foreign investors. After a strong rise in the previous week, the market has got accumulation sessions, the VN - Index saw fluctuations around 660 with substantialclassification before ending with slight increase in the end of the session. 
The orderly increases in tickers ranging from large caps to basic tickers show that cash flow is still actively seeking profitable opportunities in the market. Besides,technical signals still remained positive in both indices, the market might increase in short term. Accordingly, the VN - Index is likely to test the previous high at 670-675 next week .
Hence, we suggest maintaining current portfolio to take advantage of upward trend in both indices. In the case that the VN-Index plummeted below strong support at 645-650, investors should reduce proportion of margin and equity portfolio, and increase proportion of cash.