The first half of April has been relatively stable for the Vietnamese stock markets. This is a good environment for investors but less interesting for day traders and other active traders. Regarding the main Vietnamese indexes, they both culminated at roughly +1.5% on the 8th of the month before starting a downtrend.
Since the start of the year 2019, the two main Vietnamese stock indexes are up. HNX index is up by 2.1% while the HOSA index has gained a much stronger 7.2%. Since the first of January, the HNX index has consistently underperformed the HOSE index. Similarly, when looking at the past couple of years we see that the HOSE index has over performed the HNX index.
HNX Price to Earnings stands at the time of the writing of this post at 8.7 while HOSE Price to Earnings is close to 16.6. These numbers are still at extremely reasonable level. The reasons behind the discrepancies between the two numbers are rather obvious. In the recent past and up to now, international investors have tended to focus on the largest Vietnamese stocks, which tend to be quoted on Ho Chi Minh stock exchange. The Hanoi Stock exchange tends to be home to companies with much smaller capitalisations.
Limiting an analysis on Price to Earnings would be foolish, however we believe at Anh Thomas Investment that investors should focus on the Hanoi Stock Exchange where stocks have more upward space left.
Strong discrepancies are once again found in terms of sectors. Telecommunications and Financials stocks tend to be overvalued while Basic Materials and Technology stocks seem undervalued.
At Anh Thomas Investment, we are excited to see how the markets will behave in the following months.