Viet Capital Securities Joint Stock Company

Luan Nguyen

Thematic (Sector/Industry)

Rubber prices have grown positively from early 2016, not yet showing signs of cooling down, arguably the most important factor that helped rubber exploitation businesses record such a period of victory. Accordingly, the two major rubber suppliers, Phuoc Hoa Rubber (PHR) and Dong Phu Rubber (DPR), generated such impressive results.

Rubber prices have grown positively from early 2016, not yet showing signs of cooling down, arguably the most important factor that helped rubber exploitation businesses record such a period of victory. Accordingly, the two major rubber suppliers, Phuoc Hoa Rubber (PHR) and Dong Phu Rubber (DPR), generated such impressive results.

Frontier and emerging markets (Vietnam)

Dylan Waller

Nomadic Equity

Steel Industry UpdatesVietnam's steel industry is still delivering rapid growth and experienced a <a href="http://vietnamnews.vn/economy/273001/domestic-steel-consumption-up.html#Ix6S1SdprrtPVHxt.97" target="_blank">24.4% increase</a> in the purchase of building steel products and a 34.7% increase in consumption of steel pipes during the first half of this year.  Several factors to note moving forward include the following:<ul><li>The current consumption per capita is currently<a href="http://www.seaisi.org/News/5712/Vietnams+steel+industry+makes+a+case+for+more+production+amid+distrust" target="_blank"> 200 kg.</a>, below the global average of 240 kg, and the average of 500-600 kgs. for industrialized nations.  The industry still has ample potential…</li></ul>

Steel Industry UpdatesVietnam's steel industry is still delivering rapid growth and experienced a 24.4% increase in the purchase of building steel products and a 34.7% increase in consumption of steel pipes during the first half of this year.  Several factors to note moving forward include the following:The current consumption per capita is currently 200 kg., below the global average of 240 kg, and the average of 500-600 kgs. for industrialized nations.  The industry still has ample potential…

In my previous insight, I covered how Hoa Phat Group and Hoa Sen Group were strong value investment picks, and were not financially impacted from the plunging price of steel.  This insight will take a further look at how Vietnam stands out as a positive outlier compared to the global steel industry, as a significant number of major steel companies are currently not profitable.  Vietnam can also be considered a positive outlier when compared to frontier and emerging asia, as many stocks in Vietnam are discounted to other frontier and emerging markets in Asia.  Vietnam’s steel industry is therefore a significant area for investment when compared to larger companies in developed markets, as well as frontier and emerging Asia.  The struggle in Vietnam has mainly been for small and mid cap companies in this industry, although some of these companies are exceptions.

In my previous insight, I covered how Hoa Phat Group and Hoa Sen Group were strong value investment picks, and were not financially impacted from the plunging price of steel.  This insight will take a further look at how Vietnam stands out as a positive outlier compared to the global steel industry, as a significant number of major steel companies are currently not profitable.  Vietnam can also be considered a positive outlier when compared to frontier and emerging asia, as many stocks in Vietnam are discounted to other frontier and emerging markets in Asia.  Vietnam’s steel industry is therefore a significant area for investment when compared to larger companies in developed markets, as well as frontier and emerging Asia.  The struggle in Vietnam has mainly been for small and mid cap companies in this industry, although some of these companies are exceptions.

Vietnam's Steel Industry Is a Global Outlier

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>Last October, a global index provider announced that Vietnam would be added to their index in September 2026 as long as progress was made on one key issue.</li>
<li>On 2 February, the Ministry of Finance issued a circular that allows foreign investors to place orders through global brokers, in addition to trading through local brokers.</li>
<li>That should clear the way for inclusion of Vietnam stocks in the global index in September. Inclusion should take place in more than 1 tranche to minimise market impact.</li>
</ul>


Last October, a global index provider announced that Vietnam would be added to their index in September 2026 as long as progress was made on one key issue.
On 2 February, the Ministry of Finance issued a circular that allows foreign investors to place orders through global brokers, in addition to trading through local brokers.
That should clear the way for inclusion of Vietnam stocks in the global index in September. Inclusion should take place in more than 1 tranche to minimise market impact.


Vietnam: Global Index Inclusion Probability Jumps; Updated Names & Flows

<ul>
<li>Masan Consumer Corp (MCH VN), VPS Securities (VCK VN) and VPBank Securities (VPX VN) will be added to the MarketVector Vietnam Local Index at the close on 20 March.</li>
<li>Estimated one-way turnover is 10.55% and that results in a round-trip trade of US$121m. There are a few stocks with more than 1x ADV to buy from passives.</li>
<li>There is a high probability of Vietnam stocks being added to a global index starting from the September rebalance and the market could outperform its regional peers.</li>
</ul>


Masan Consumer Corp (MCH VN), VPS Securities (VCK VN) and VPBank Securities (VPX VN) will be added to the MarketVector Vietnam Local Index at the close on 20 March.
Estimated one-way turnover is 10.55% and that results in a round-trip trade of US$121m. There are a few stocks with more than 1x ADV to buy from passives.
There is a high probability of Vietnam stocks being added to a global index starting from the September rebalance and the market could outperform its regional peers.


MarketVector Vietnam Local Index Rebalance: 3 Adds; 10.6% Turnover; US$120m Trade

Vietnam

Hoa Phat Group is a leading industrial manufacturing group in Vietnam, primarily specializing in iron and steel production, including construction steel, hot rolled coil, steel pipes, and galvanized steel. The group also diversifies into agriculture, real estate, and home appliances. Founded in August 1992 as a construction machine and equipment trading company, Hoa Phat Group is headquartered in Hanoi, Vietnam.

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Hoa Phat Group (HPG VN)

Natural Rubber Industry as of Q3 2016

Rubber prices have grown positively from early 2016, not yet showing signs of cooling down, arguably the most important factor that helped rubber...

Luan Nguyen

Updates for Vietnam's Steel Industry

Steel Industry UpdatesVietnam's steel industry is still delivering rapid growth and experienced a 24.4% increase in the purchase of building steel...

Nomadic Equity

Vietnam's Steel Industry Is a Global Outlier

In my previous insight, I covered how Hoa Phat Group and Hoa Sen Group were strong value investment picks, and were not financially impacted from...

Nomadic Equity

Vietnam: Global Index Inclusion Probability Jumps; Updated Names & Flows

The MoF approval for international investors to place orders through global brokers resolves the main hurdle for global index inclusion. Passives...

Brian Freitas

MarketVector Vietnam Local Index Rebalance: 3 Adds; 10.6% Turnover; US$120m Trade

There are 3 adds for the index in March. Estimated one-way turnover is 10.55% and that results in a round-trip trade of US$121m. Vietnam stocks...

Brian Freitas

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