Blue chips that carried VN-Index deep into the green

By Minh Son   November 27, 2020 | 07:30 pm PT
Blue chips that carried VN-Index deep into the green
An investor looks at stock prices on a laptop at a brokerage in Ho Chi Minh City. Photo by VnExpress/Quynh Tran.
Ten of the 30 largest capped stocks on the market have gained over 65 percent after the VN-Index bottomed in March this year.

On Thursday, the benchmark VN-Index closed at above 1,000 points for the first time since November 20 last year. It had bottomed at 659.21 points in late March, at the height of Vietnam’s first Covid-19 outbreak, and has since gained more than 50 percent.

Blue chips, or stocks on the VN30, a basket of the Ho Chi Minh Stock Exchange’s (HoSE) 30 largest capped tickers, have been the market’s main growth driver, with some stocks registering gains double that of the VN-Index, according to reports from several securities companies.

However, unlike the period prior to Covid-19, no single ticker had been a consistent growth driver for the VN-Index until now. Cash has now more clearly diversified towards different industry groups, rotating between different tickers that become growth catalysts, allowing the VN-Index to maintain its upward momentum.

HPG of steelmaker Hoa Phat Group has been the best gainer on the VN30 during this timeframe, currently trading at VND36,250 ($1.6), nearly three times its March-end price. The group’s gains really picked up at the beginning of October, when it released third quarter results, showing the best quarterly post-tax profits it has ever made.

This news sent HPG, which was trading at VND26,000, catapulting over 40 percent within less than two months to its historical peak of VND38,500, before correcting to VND35,000 on news of foreign divestment from the steelmaker.

The SSI ticker of top brokerage firm, Saigon Securities Inc., has also doubled in value since March, and currently trades at VND19,350. But unlike HPG, SSI is far away from its historical peak of over VND36,000 in April 2018, and the magnitude of its recovery is partly a result of how low it was trading at the time.

In the first quarter and early part of the second, when the market was feeling the consequences of the Covid-19 pandemic, stocks of securities companies were some of the worst hit as a result of the VN-Index’s continuous decline, resulting in SSI bottoming below par value.

However, with the market rebounding and liquidity at its highest levels historically, investors are optimistic that securities firms’ tickers will once again lead gains on equity markets.

Representatives of the banking industry have generally outperformed their VN30 peers, with four tickers among the 10 best gainers. Between March-end and last Thursday's session, CTG of state-owned giant VietinBank was up 92 percent, HDB of private HDBank, 92 percent, STB of private Sacombank, 90 percent, and MBB of mid-sized state-owned Military Bank, 65 percent.

The remaining names, including state-owned lenders BID of BIDV, VCB of Vietcombank, or private banks VPB of VPBank and TCB of Techcombank all gained at least 40 percent as banks continued to prove profitable in the first three quarters despite being affected by the pandemic.

CTG of VietinBank, in particular, led gains in terms of percentage increase, a result analysts have attributed to a board decision to raise its charter capital by over VND10 trillion ($432.88 million) last month. In the past three months, CTG’s market price had surged 40 percent from VND24,000 to VND34,000.

In the retail sector, MWG of electronics store chain Mobile World has risen 92 percent over its March low, with stock growth in line with improved business performance.

Mobile World reported that in the first ten months, it achieved a 6 percent year-on-year increase in revenue to VND90 trillion ($3.9 billion) and 1 percent year-on-year increase in post-tax profits to VND3.3 trillion, as a result of diversifying into groceries stores.

Similarly, the value of MSN shares of food conglomerate Masan Group, that of REE of appliances maker Refrigeration Electrical Engineering, and FPT of IT services giant FPT have gone up 70 percent, 69 percent and 65 percent, respectively, over their March-end, thanks to positive business performances and stake sales.

MSN for instance, had surged since the beginning of October after the Mitsubishi Materials Corporation declared it was going to acquire a 10 percent stake in a tungsten mining subsidiary of Masan for $90 million.

The Covid-19 pandemic had posed challenges for every sector in the economy, it has also opened up opportunities in information technology, digital transformation and online platforms. FPT, as a result, has reported that revenue and post-tax profits in the first three quarters rose 8 percent and 9 percent year-on-year respectively, a result of improved sales in cloud computing, IoT and low code.

All this saw the VN-Index gained 0.6 percent to 1,005.97 points Thursday, the first time it crossed the four-digit figure since November 20 last year. It had started the year off at 966.67 points, began crashing at the end of late January as a result of Covid-19 and bottomed at 659.21 points in late March before recovering to its present level.

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