MARKET REPORT WEEK FROM JULY 27 TO 31, 2009 www.fpts.com.vn Tran Duy Ngoc NgocTD@fpts.com.vn Nguyen Binh Duong DuongNB2@fpts.com.vn Listed Brokerage Department FPT Securities JSC Head Office Floor 2, 71 Nguyen Chi Thanh Street, Dong Da District, Hanoi Tel: (84.4) 3773 7070 Fax: (84.4) 3773 9058 Contents Page ECONOMIC OVERVIEW 1 World News 1 Vietnam News 2 STOCK MARKET 2 Market in the week 3 Technical Analysis 4 RECOMMENDATION FOR INVESTORS 7 ECONOMIC OVERVIEW Ho Chi Minh City Branch 31, Nguyen Cong Tru, Nguyen Thai Binh Ward, District I, Ho Chi Minh City Tel: (84.8) 290 86 86 Fax: (84.8) 290 60 70 Danang Branch 124 Nguyen Thi Minh Khai, Hai Chau Dist., Danang Tel: (84.511) 3553 666 Fax: (84.511) 3553 888 World News The latest report from the Federal Reserve s 12 region banks showed that the US economy already decreased at a lower rate in June and July, a signal that the US economic recession was very close to an ending. The US housing market also recovered when the number of new home sales in June increased by 11%, the highest increase within the last 8 years. However, the jumping unemployment rate negatively affected consumers confidence: the Consumer Confidence Index decreased from 49.3 in June to 46.6 in July. The UK economy had to suffer a big shock upon receiving the news that their GDP in the 2nd quarter of 2009 decreased more sharply then expectation. The UK Central Statistical Office announced that their GDP decreased by 0.8% compared to that last month and by 5.6% compared to the same period last year; that was the worst decrease since 1955. The UK economy has been falling for the 5th consecutive quarter and their GDP has decreased by 5.7% during that time. 2009 FPT Securities Joint Stock Co. Page 1
Japanese production revealed signs of recovery after increasing for the 4th consecutive month; their factories productivity in June 2009 rose by 2.4% compared to that in May 2009. However, their unemployment rate continued to jump; it already reached the highest level within the last 6 years and badly affected consumers spending and retail turnover. Vietnam News In the latest report on Vietnam economy, Standard Chartered Bank pointed out that the inflation rate in June already decreased by 3.9% compared to the same period last year and it could even fell to under 3% if the price of energy and foodstuff stay unchanged in coming months. Though the inflation was no longer a direct threat to our country but Standard Chartered Bank analyst still recommended that any development of the inflation must be closely watched until the year end. On July 30, 2009, the State Bank of Vietnam Governor approved a new Decision on the basic interest rate of Vietnam Dong. According to that Decision, the basic interest rate of 7% would be applied from August 01, 2009. Before that, Standard Chartered Bank also predicted that the basic interest rate would be maintained at 7% until the end of 2009 but could be raised back in mid 2010 STOCK MARKET Market in the week Market Statistics - Market indexes and FPTS Composite Index Index Start Highest Lowest End 1 month (%) Change 3 month (%) 1 year (%) VN-Index 454.71 469.71 451.91 466.76 +4.12 +45.1 +3.41 HASTC - Index FPTS - Index 154.62 161.05 148.91 153.91 +3.27 +33.8 +7.39 66.22 68.34 65.36 67.22 +6.23 +34.7-2.51 2009 FPT Securities Joint Stock Co. Page 2
- Sector Statistics + 05 sectors with strongest increases Top winners Index Sector % Change Capital (VND billion) Automobiles & Parts 83.88 +21.16% 152.26 Travel & Leisure 125.29 +13.90% 8,981.67 Financial Services 83.99 +4.14% 86,351.04 Food & Beverages 73.71 +3.80% 36,946.66 Industrial Goods & Services 41.68 +2.17% 17,232.63 + 05 sectors with strongest decreases Capital Top losers Index Sector % Change (VND billion) Health 91.69-3.77% 5,766.50 Public Services 59.27-2.40% 2,250.42 Personal & Appliance Household 37.21-1.39% 2,734.58 Retailers 52.44-1.36% 1,977.68 Technology 34.73-0.93% 15,839.28 Summary of the details: Finishing the trading session on July 31, VN-Index added 12.05 points, equal to 2.65%, to settle at 466.76 points. Each trading session saw a considerable increase in both trading volume and value as well. In particular, the average trading volume accounted by order-matching method achieved 45.29 million shares per session in comparison with 24.94 million shares of last week. The average order-matching trading value achieved VND1,692 billion compared with the number of VND861.4 billion of the previous one. On HNX, HNX-Index decreased to 153.91 points with a loss of 0.71 points (equal to 0.46% compared to last one). However, the northern bourse this week underwent a sharp increase in trading value and volume. The average trading volume on HASTC achieved 13.907 million shares equal to the average trading value of VND429.2 billion compared with 12.591 million shares and VND395.8 billion respectively of last week. 2009 FPT Securities Joint Stock Co. Page 3
This week was characterized by enthusiasm and optimism. Exciting trading sessions along with tremendous increases in supply and demand show that cash flow has been flowing into the stock market and most investors sentiment of taking profit in short term. Business results have gradually been released, and there has been a price differentiation between stocks with good and bad results. Besides, increasing global stock market along with expectation on the economic recovery and consecutively foreign net buying are a main impetus for the market standing above 450 points. The market needs more positive news from the macro economy and listed firms in order to keep the uptrend in upcoming time. Technical Analysis I/ Support and resistance levels: 435 is a strong support level and 450 matching with Fibonacci 38.2% is rather stable after a failure to breaking through this level on June 30. We suppose that it is difficult for VNI to lower than the support level of 435 in short term. Next strong resistance levels are 475 matching with Fibonacci 61.8% and 512 an old peak. II/ Indicators: Aroon Up jumping to 100 on July 28 shows that a short-term uptrend is gradually formed. However, ADX has not changed and we are waiting for this index s increase to reinforce this trend. MACD (26, 12) is showing some good signals when this line cut its signal line, EMA (9) from bottom up on July 26 and overcome the level 0 on July 28. This indicates that short-term MAs are staying above long-term MAs and gradually diverging. This phenomenon usually occurs in growth period. After 3 adjusted sessions, VNI is supported by EMA (5). The first reverse signal happens when VNI cut EMA (5) from top down. CMF (21), Chaikin Oscillator and MFI (14) are showing good signals. These lines are recovering strongly after a series of decreasing sessions. Momentum, ROC, RSI and STO are not showing clear signals. A series of movement fluctuation express that the market has not recovered strongly. A short-term uptrend is not strong and investors sentiment is not stable. After supported by the level of 450, VNI on July 30 formed a Doji which shows 2009 FPT Securities Joint Stock Co. Page 4
investors sentiment of hesitation. A blue and empty candle in the next session indicates that investors are expecting the market growth and this sentiment possibly occurs in several sessions next week. LRS: Linear Regression Slope ADX: Average Directional Movement Index DI: Direction Indicator EMA: Exponential Moving Average MACD: Moving Average Convergence Divergence CMF: Chaikin Money Flow MFI: Money Flow Index ROC: Rate of Change RSI: Relative Strength Index STO: Stochastic Oscillator 2009 FPT Securities Joint Stock Co. Page 5
III/ Conclusion on Technical Analysis: Technical indicators show that VNI is in the period of short-term uptrend. However, this trend is not actually strong. If the trend is stable next week, VNI might cross over the level of 475 points and fluctuate in the range of 450 and 490. If the market is opposed to our expectation, the uptrend is broken through. At that time, VNI will cut EMA (5) from top down. RECOMMENDATION FOR INVESTORS It s been such a long time since VN-Index last moved against HNX-Index, but the difference was still not quite remarkable. Recently investors paid more attention to HOSE than HNX and the slight increase of VN-Index this week was evidence. According to FPTS analysis, the recovery of liquidity on the 2 exchanges in addition with net buy of foreign investors were the main reasons for the positive development of Vietnam stock market. After observing the market development for such a long time, we realized that the impact from outside to our stock market was periodical. According to that rule, periods in which our stock market was deeply impacted from outside were often interrupted by periods in which our market suffered nearly no effect from outside. In general, the reason for the rise of HOSE this week was similar to that last week: it was good news from the world financial market. We suppose that our 2 indexes are still being affected strongly by the world market, If there is no macroeconomic news which could directly affect our market next week, our market trend will be decided by factors from outside. Beside positive effects from the world market, the newly released financial reports also created a remarkable demand for our market. After announcing good reports, such stocks as VCG, DBC, KMR, KKC, etc all increased in some following sessions even the market fell. The money flow which has been being poured into the market also improved the market liquidity. 2009 FPT Securities Joint Stock Co. Page 6
There would be more listed companies that announce their financial reports in the 2nd quarter and the market would be surely affected by such kinds of information. Companies already released good reports would stay unchanged and even increase. We recommend our investors to keep the money/stocks ratio at 50/50, please pay attention to securities and financial stocks but don t forget the stocks that achieve good basic financial criteria. Disclaimer The information herein is believed by FPTS to be reliable and has been obtained from public sources believed to be reliable. However, FPTS makes no representation as to the accuracy or completeness of such information. Opinions, estimates and projections in this report constitute the current judgment of the author as of the date of this report. Investors must make their own investment decisions using their own independent advisors. FPTS may trade for its own account as a result of the short term trading suggestions of analysts and may also engage in securities transactions in a manner inconsistent with this research report and with respect to securities covered by this report, will sell to or buy from customers on a principal basis. Additional information relative is available at https://ezsearch.fpts.com.vn or upon official request. Copyright 2009, FPT Securities 2009 FPT Securities Joint Stock Co. Page 7