4 industry groups are advised to buy when the stock market drops sharply

In April, the market faced strong correcting pressure when there was negative information about the arrest of Chairman of the Board of Directors of Tan Hoang Minh Group on charges of fraudulently appropriating assets related to the issuance of bonds and mobilize investors’ money through subsidiaries. This leads to a “domino” effect on speculative stocks due to concerns about some related groups being arrested and margin calls occurring and spreading to the underlying stocks.

Market will be calmer in May

Entering May, VDSC believes that the market will be calmer. Strictly controlling and combating fraudulent/market manipulation activities will increase transparency and reduce risks in capital markets, real estate in Vietnam, providing a better environment for investors in the medium and long term.

In terms of market sentiment, the market has experienced previous declines with the information of the Chairman ACB arrested (decreased 12% after 6 days) but rebounded 2% in the following month. In the following period, the market rallied 27% in six months.

As for China 2020 case (they step up corruption investigation on April 19, 2020), Shanghai index is positive after that and maintains an uptrend (+2% one month and 17% after). three months). In addition, on a broader scale, the market’s strongest correction at an average of 17% for the VN-Index and 8% for the VN30 from important events including Covid-19 US-China trade war, arrest at ACB. Even so, the market started to recover gradually after these events for both VN30 & VN-Index.

However, the short-term risk of news through arrest/investigation still exists.

Regarding cash flow, VDSC is cautious with cash flow of individual investors. Cash flow from individual domestic investors is the main driver of the market in an uptrend in the period of 2020 – 20201. However, individual investors were panicking during the most recent sharp correction of the stock market. market, reflected in the net selling of 4,683 billion dong in April.

Therefore, in the short term, it will be difficult for individual investors to return to the market with strong buying as the results season gradually ends and less supportive news in May. , smart cash flow from long-term investors can be a factor supporting the market.

In terms of valuation, currently, the VN-Index has an attractive valuation as the VN-Index is trading at a 2022F PE of 12.4 times (according to Bloomberg), 14.9 times lower than the 10-year average of 14.9 times. (EPS 2022F growth is 21%). With the VN-Index’s biggest drop since the Covid-19 pandemic, PE was 10.4 times as of March 30, 2020). For VN30, this index is also attractive with a PE of 12.3x (as of August 29, 2022) and a forward PE of 11.1x in 2022.

Therefore, expect VN-Index will fluctuate in the range of 1,320-1,420 points.

Buy selectively when the market plummets

If in the period of 2020-2021, the market will increase on a large scale thanks to “easy” cash flow, then in the coming period, the cash flow will be very differentiated between industry groups and stocks in the context of risk aversion. market in general.

The upward momentum is only really sustainable in stocks with positive growth stories, or capital raising issues, etc. in the coming quarters. On the other hand, the results of Q1/2022 also show that stocks with stronger price movements while the general market dropped sharply in April were supported by positive growth in revenue. and profits, in which, stocks in the seafood industry, logistics, technology, and retail are some typical examples.

VDSC believes that the above trends will continue to dominate the movement of stock market in 2022. Selecting stocks in this period is still more important than forecasting market trends.

At this time, investors should focus on industry groups with positive expected Q2 business results such as seafood (VHC, ANV), gas thermal power (NT2), technology (FPT), and banking. TCB, MBB, ACB, VCB, CTG). VDSC continues to recommend these stocks.

At the same time, according to VDSC, the “counter-trend” investment strategy for value investors with high risk tolerance and long investment time frame can still be applied to investors. bonds in the real estate industry when the valuation ground of this group has been heavily discounted.

Real estate businesses with many projects ready for sale (NLG, KDH, HDG) can be good investment choices in the current period. Last but not least, it is necessary to be more cautious with stocks related to the group of basic materials that have surged recently.