The first half of June has been relatively stable but with a lower trend for the Vietnamese stock markets. As always when volatility is relatively low, we are facing a trading environment that is a not appealing for day traders and other active traders. Regarding the main Vietnamese indexes, they both followed the same trend during these first days of June.
Since the start of the year 2019, the two main Vietnamese stock indexes have followed the same general trends even though the HNX index has consistently underperformed the HOSE index over the period. At the time of writing of this post, The HOSE index still offers a positive return for 2019 while the HNX index just entered into negative territory.
HNX Price to Earnings stands at the time of the writing of this post at 8 while HOSE Price to Earnings is close to 16. 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 capitalisation.
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.