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August 15, 2022

Return of cash flow and potential stocks of Vietnam lifts investor sentiment

Market sentiment improves

Giao dịch chứng khoán tháng 3-2021. Ảnh Quỳnh Trần.jpg

Photo by Quynh Tran. 

The market ended mixed on Monday 15th August 2022, with benchmark indices gaining points on the return of cash flow, improving general sentiment.

The Ho Chi Minh Stock Exchange's (HoSE) VN-Index rose 11.84 points, or 0.94 percent, to 1,274.2 points. The index began the new week on a positive note as risk asset demand increased. 

The market’s breadth was positive with more potential stocks of Vietnam increasing, while liquidity also rose over the previous session. Accordingly, the matching value on HoSE jumped 15 percent to nearly VNĐ14 trillion (US$596.8 million), equivalent to a matching volume of 586 million shares.

The market benchmark rallied for the second straight session, boosted by the uptrend of large-cap potential stocks of Vietnam. The 30 biggest stocks tracker VN30-Index closed the trading day at 1,293.79 points, up 2.83 points, or 3.1 percent.

Twenty-two stocks in the VN30 basket rose, four fell, and four remained unchanged. The banking sector dominated the bullish trend, with potential stocks of Vietnam such as BIDV (BID) posting the biggest gain, up nearly 4.6 percent. Vietinbank (CTG), Sahabank (SHB), VPBank (VPB), and HDBank (HDB) all increased sharply, with SHB reaching the highest daily gain of 7%.

Supporting the index, other potential stocks of Vietnam in manufacturing, retail and information technology (IT) industries witnessed strong performance. Mobile World Investment Corporation (MWG), FPT Corporation (FPT), Sabeco (SAB), and Masan Group (MSN) all increased by at least 1.2%.

According to analysts at Saigon-Hanoi Securities JSC (SHS), the market's short-term trend is positive, and the VN-Index is likely to move toward the next resistance zone of 1,260-1,285 points.

In the meantime, as economic growth is maintained, the market continues to form an accumulation zone on low valuation for a long-term trend, providing numerous investment opportunities.

Analysts from Saigon-Hanoi Securities JSC (SHS) said that the market’s short-term trend remains positive, and the VN-Index is likely to head toward the next resistance territory of 1,260-1,285 points.

Meanwhile, the market continues to form an accumulation zone on low valuation for a long-term trend as economic growth is maintained, providing many investment opportunities.

On the Hà Nội Stock Exchange (HNX), the HNX-Index finished Monday at 303.97 points, a gain of 0.55 points, or 0.18 percent. On the northern bourse, nearly 81.1 million shares worth over VN1.65 trillion were traded during the session.

On the other hand, the UPCoM-Index fell by 0.22 percent, or 0.2 points, to 92.64 points.

Foreign investors continued to be net purchasers of the market, spending a total of $62.9 billion. In particular, they net sold VN 28.42 billion on UPCoM, while net buying VN 65.19 billion on HoSE and VN 26.13 billion on HNX.

Vietnam’s stock market grows at a remarkable rate

According to HSBC, the size of the Vietnamese stock market has nearly quadrupled since it began trading in 2012. This growth rate is outstanding when compared to that of all other significant markets in the region over the past ten years.

Recently, the Ho Chi Minh City Stock Exchange's average daily trading value exceeded $1 billion, ten times the forecast for 2020. This makes Vietnam the second most liquid market in ASEAN, behind only Thailand.

The Vietnamese stock market’s capitalization exceeded $350 billion in 2021, equivalent to over 120% of national GDP, with earnings per share jumping by 35%.

The positive outlook of potential stocks of Vietnam is also based on macro-economic advancements. Vietnam's position in the global supply chain has improved in recent years, thanks to a new wave of foreign direct investment seeking lower-cost land and labor. The country has facilitated the establishment of companies and simplified land registration and loan processes in recent years, making it an ideal place to build a new factory.

Education has provided a qualified and skilled workforce, helping the country gain more market share in export markets. Investment in infrastructure and logistics also supports a wide range of activities in the industrial, commercial and residential real estate sectors.

By 2030, Vietnam has the potential to become the world's tenth largest consumer market. According to HSBC, when customers shop online, digital banking and services must be reinforced, making Vietnam one of the most appealing markets for financial inclusion and financial technology in the region.

Many investors are also enthused about Vietnam's inclusion in the emerging markets and the rise of potential stocks of Vietnam. Capital inflows will amount to $8-9 billion if the country accounts for a 2% share in emerging Asian economies. This equates to 1.4 times the allocated value of foreign investment funds and nearly eight trading days.

According to HBSC, many Vietnamese stocks have been accessed by international investment funds. Vietnam has a solid position in the global supply chain, a stable currency, ample foreign exchange reserves, a developing infrastructure, and rising domestic consumption demand. It goes on to say that these will serve as a long-term growth engine for the Vietnamese stock market.

With rising consumer demand and the shift to the modern retail channel, Masan Group (HoSE: MSN) is recognized as the leading consumer-focused business group in Vietnam and among potential stocks of Vietnam. Its subsidiary, The CrownX, is a successful integration of Masan’s F&B (Masan Consumer Holdings (MCH) and its grocery retail platform (WinCommerce). MCH is a dominant F&B player with 98% of Vietnam households consuming one MCH product like noodles, seasoning, soy sauce, etc. WCM is the largest Modern Trade (MT) retailer in Vietnam with a ~21% share of the US$7bn modern grocery market.

In terms of market knowledge, scale, and deep geographic and multi-format reach, The CrownX offers significant synergies between branded FMCG and modern retail.

In phase 2 of growth for The CrownX (which is set to IPO in the upcoming years), Masan will scale up its "Point of Life" minimal concept for WCM – an integrated ecosystem combining groceries, banking, pharmaceuticals, telecommunications, and fintech. This will improve sales/sqm & margins. Key risks are execution & a very rapid online shift disrupting offline players. When The CrownX is listed, it definitely will be among the potential stocks of Vietnam. 

WCM can help MCH to expand its modern trade footprint and deepen its geographic and multi-format presence boosting its sales. The retail arm can benefit from the scale and strong know-how of MCH and expand its private label share which are higher margin & also give it exclusivity (driving customer traffic & stickiness). WCM looks to increase the share of private label sales from 9% to 25% by 2025.

According to BofA Securities, this very unique model puts Masan in a very strong position and validates its position as one of the most significant potential stocks of Vietnam. 


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