FiinGroup’s CEO speaks at Vietnam Access Day 2019 by Viet Capital Securities
Mr. Nguyen Quang Thuan, CEO of FiinGroup (previously StoxPlus) is one of the guest speakers speaking at the Vietnam Access Day 2019 – the annual investor conference organized by Viet Capital Securities (VCSC). The event is known as the largest institutional investor forum held annually for Vietnam.
The topic discussed by the FiinGroup’s representative is “Drivers of Domestic Investor Sentiment”. Key takeaways from the presentation are as follows:
- Foreign investors, not domestic investors, are driving market sentiment. The VN-Index has moved in tandem with the changes in net foreign flows. Also, domestic investors tend to buy on the sales of the foreign and vice versa. This finding is particular for monthly tracking of the investor group behaviors. The study used only order matching data which excludes the put-through and block share transactions that are not representing the market momentum as by its nature.
- There is no clear correlation between business fundamental changes and the trading activities by domestic or retail investors. In other words, domestic investors do not really bother much about the corporate fundamental strength of listed companies. This is the practical characteristic of Vietnamese investors as they make up appr. 75% of daily trading value.
- Speaker also discussed the insider information issue in Vietnam stock market. Taking banking stocks as an example: price is leading at normally 3-months’ time. In other words, banking earnings growth is normally 1-quarter leading to its price index. net earnings growth and EBIT growth were slowing down to just 3.5% in Q42018. The corporate earnings for non-bank sectors are weakening in Q4-2018 with both EBIT and NPAT growth lowering to just 3.5% in y-o-y basis.
- The speaker highlighted the possible increase in interest rates (especially the medium and long-term tenor) which would result in the headwind for real estates. The data showed that there was an aggressive increase in financial leverage of real estate companies. The interest hike also may cause possible losses for banks where their investment portfolio (both g-bonds and c-bonds) built up at the lower yield in previous time. Total fixed income investment book by banks amounted to appr. US$50bn or 17% of total assets.
The presentation also delivered a message that investors should be mindful of data quality in Vietnam. We observe that anchoring and overconfidence biases are not so unpopular among investors in Vietnam market. We hope this Presentation will help reduce such biases.
- However, the VN30 companies are expected to post another year of net earnings. The data extracted from FiinPro Platform shows that brokers’ earning consensus produced an EPS Growth at 18% for 2019 (2018: 26%). However, the speaker advised that this may not reflect well the overall market as there may have selection bias i.e. the good and large companies are often covered by brokers’ analysts.
Vietnam is largely dominated by retail investors still when it accounts for ~ 75% of daily trading value. Understanding their trading behaviors and factors behind their sentiment would be very important for foreign investors and traders especially offshore organizations.
FiinGroup has more than a decade of our experience as a leading data-based research and analytics firm in Vietnam to work with foreign and domestic investors. We hope the presentation will help investors understand better the market sentiment and thus increase investment operation efficiency.
The presentation handout can be download here. Or if you have any questions, please contact our Client Advisor:
Executive, Client Advisor
T: +84 24 3562 6962 (ext.: 103)
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