07/06/2021 - 08:29
Weekly strategy June 7
Trading value rose by 16.1% WoW despite the Tuesday afternoon session difficulties as weekly ADT reached a record high US$1.2bn. Liquidity soared toward the end of the week with the Friday session exceeding VND 30tn (US$1.3bn). Foreign trading also hit a YTD record, but not the kind that we like to see: FINI net selling reached US$261mn (12 times higher than the previous week).
Macro figures indicate that the recovery slowed down in May, and we see short-term headwinds at least until the end of June. The GSO reported that retail sales of consumer goods and services in May reached VND393.6tn, slid 3.1% MoM and -1% YoY, down from a very strong recovery of 30.9% YoY in Apr. IIP in May 2021 increased 11.6% YoY in May, which is still strong but reflects a dramatic, and perhaps inevitable, decline from 24.1% YoY expansion in Apr. HCMC’s social distancing imposition may continue to hit demand in Jun since the city represents the largest provincial economy in the country.
The new Covid-19 daily cases decelerated from the peak but the situation remains unpredictable. The number of daily cases has slowed from the May 25 high of 444 cases thanks to the impressive efforts of health authorities. HCMC adopted two-week social distancing measures last week, which may further reduce the spread of the virus over the next few weeks. However, the outbreaks in Bac Giang and Bac Ninh provinces remain severe, with new cases spread amongst workers in the high-density industrial parks there.
Momentum may extend this week based on surging liquidity, but we remained strategically cautious because 1) the resurgence of covid-19 outbreak remains unpredictable, and social distancing measures across cities/provinces have begun to impact the overall economy; 2) Macro figures showed that the recovery slowed down in May, and the short-term headwinds may extend until the end of June; 3) foreign net selling has escalated in recent sessions and shows no signs of slowing down.
