Market Weekly Strategy 09/16-09/19/2016

Published Date: 21/09/2016

International market wrap
According to Reuters poll, 100 involved economists revealed that the FED should increase interest rate to 0.5 – 0.7% in Q4/2016, of which 70% participants voted for the hike to happen in December, 2016 while only 57.5% participants for the hike given in the market. The stock market is still keeping eyes on every move to be in coming meeting falling on 20-21/9 in Washington. However, the US economy has seen many diverse signals ahead of this event. 
16/9 US equity trading lost some points when Deustche Bank was penalized at USD 14 bn, causing more troubles on banking tickers while investors have struggled with solutions for uncertainties ahead of the FED’s rate hike. The Dow Jones declined by 0.49% to 18123.8, S&P 500 by 0.38 to 2139.16 and the Nasdaq Composite by 0.1% to 5244.57. For the last week, the Dow Jones rose by 0.2% and S&P 500 by 0.5% and Nasdaq by 2.3%, namely. 
Gold future contracts closed at the lowest within the three months, in the 7th consecutive session of losing streak. Closing Friday trading, gold future contract for Dec Delivery declined by USD 7.8 (or 0.6%) to USD 1310.2 /ounce, the lowest level since 23/6/2016. Therefore, the contract lost 1.8% for this week. 
Crude oil future contracts closed at the lowest price within one month with a decline of 6%. WTI crude oil contract for Oct delivery declined by 2% to USD 43.03/brl on the Nymex exchange, closed at the lowest since 10/8/2016. For the last week, the contract lost 6.2%.
Domestic market wrap 
ETF restructure resulted in significant sell in large caps among foreign investors contributing to declines in both indices. Besides, speculative cash flows are withdrawing from the market when these tickers continued to decline further. 
Both indices declined over the last week with a decrease of 2.33% to 651.31 in the VN-Index while the HNX-Index dropped by 2.5% to 82.36. Market liquidity strengthened sharply on both exchanges. 
In beginning tradings, sharp declines in the US and Asian stock markets imposed more risks to domestic market, contributed by drops in VCB, GAS, HPG, MWG, CTG, CTD, PVD… with the biggest strikes coming from VCB, GAS, VNM. 
After declines in early sessions, almost ticker groups continued posting drops in the later sessions. However, bottom fishing cash flows in Bluechips started to be ample, especially Mid caps and Small caps. 

In late tradings, accelerating selling pressure resulted in declines in the indices, mostly in large caps such as VNM, VCB, BVH, STB…ETF fund restructure as well as profit taking activities accelerated in large caps, shaking the market.  Market liquidity picked up significantly as a result of the ETF funds reshuffle. 
Foreign investors had net sell of VND 1985 bn on both exchanges, of which they had a net sell of VND 1948 bn on the HSX, of which the last trading saw net sell worth VND 1468 bn and VND 36.4 bn on the HNX. Foreign selling activities focus on blue chips and large caps such as HPG (VND 436.8 bn), VNM (VND 287.9 bn), VCB (VND 275.1 bn), SSI (VND 137.8 bn)…while net buying activities were found in HSG (VND 132.62 bn), GAS (VND 26.9 bn), EVE (VND 22.4 bn)…On the HNX, strong net sell was seen in SHB (VND 91.46 bn), PVS (VND 66.2 bn), VGP (VND 5.45 bn)…
The market will see significant moves in both indices as a result of the FED’s coming meeting to fall on 20 – 21/9. Some critics forecast that the chance that FED will increase the rate is low but it should take caution that the FED might shock the market. Moreover, it is uncertain to confirm that foreign investors will continue net sell or not in addition to some notable short-term signals that the market did not have any leading stock groups and cash flows have signed to withdraw from the market. 
Technical signals: 
After losing support level around 655 – 660, the VN-Index moved to lower support around 640- 650. Some other signals continued downward trend such as MACD, RSI, ADX but the VN-Index continued being above mid-term trend lines around important support levels such as 650+/-. 
However, the HNX-Index weakened after crossing above middleline of Boilinger Bands and lying beneath P.SAR while other signals continued going down such as MACD, RSI, Stochastic. 
For positive scenario, the VN-Index tested successfully support level around 650 +/- 5 then recover. The VN-Index might have upbeat before approaching former peak of 675 – 680.   
For conservative scenario, there might be a sharp downbeat after one downbeat and decline across strong support level at 650 +/-5, breakdown in mid-term trend line, which we have discussed in our recent MBS talk 10. The VN-Index might retest support level around 600-620. 
Next week strategy: Maintain portfolio with balanced cash and stock weights. 
After breaking support levels at 655 – 66, the VN-Index would approach the nearest support level at 640 - 650. Speculative tickers need to be not included in portfolios at present. Investors should consider disbursing cash from basic tickers when the market has corrected. Some tickers get profound business results for 2016 such as BMP, NTP, HPG, FPT, KBC, HBC, HUT…
Commodities market should be kept eyes on when the FED might increase the rate in coming scheduled meeting (21/9) and OPEC countries meeting about output freezing to be schedule in late month…
Portfolio