Market Strategy Jan 2022 – New year, new height

• Market sentiment had been negative in early of this month due to concern about new Omicron variant. The VN-INDEX dropped to the lowest level of 1,413.6pts (-4.4% mtd). However, VN-INDEX soon rebounded strongly thanks to (1) the possibility of the new financial stimulus package being approved, and (2) the faster-than-expected anti-coronavirus vaccination. At as 27 Dec 2021, VN-INDEX closed at 1,488.9pts, (+0.7% mtd, +34.9% ytd).
• Liquidity slumped as spread of new coronavirus variant-Omicron casted a shadow over economic recovery as well as rising profit-taking sentiment. Total liquidity in 3 main bourses fell 17.1% mom to VND33,457bn/session (+122.4% yoy).
• Mid caps outperformed the market. Daily trading value of VNMID (representing mid caps) dropped 10.6% mom, however VNMID Index still rose 5.9% mtd in Dec and outperformed the VNSML (+4.3% mtd) and VN30 (-1.5% mtd).
• Vietnam’s economy recovered strongly in 4Q21. GDP rose 5.2% yoy in 4Q21, which was better than we expected (we previously forecast 4Q21 GDP to increase 3.3% yoy) as all three pillars of the economy made a faster-than-expected recovery. The strong recovery of Vietnam’s GDP in 4Q21 indicates the V-shaped recovery of the economy and strengthens the stock market sentiment.
• Market earnings FY22-23 growths to bode well for VN-INDEX. We expect earnings of HOSE-listed companies to grow 23% yoy in FY22F. Some sectors could see strong improvement in earnings growth, including Industrial goods and Services, Retail and Real Estate while performance of Oil & Gas, Utilities and Technology remain relative strong.
• We are more confident about the market outlook in Jan 2022, underpinned by: (1) faster-than-expected recovery of Vietnam’s growth engines, including exports and foreign-direct-investment (FDI); (2) new financial stimulus package to be approved and (3) the valuation of Vietnam’s stock market looks attractive in a longer view. We expect the VN-INDEX to fluctuate in the range from 1,480-1,580 points in Jan 2022.

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