Long VN Index, Cheap for Good fundamental
Vietnam economy has been quite strong so far with brightening economic outlook ahead (GDP growth for 2023 could be > +6%y/y).
However, recently the stock market (
VNINDEX) has performed poorly which could be due to weak sentiments among local investors due to lots of rumors, stock/bond manipulation crackdown and fears of further monetary tightening from the SBV (central bank). Margin calls for some players esp. foreign investors could be one of the factors that affected VN Index as well.
So with the current valuation based on P/E multiple or Forward P/E, VN Index remains quite attractive (P/E and Forward P/E are near -2SD level over the last 10 years). Additionally, VN Index's EPS forecasts continue to rise higher which should signal a good upside potential should such EPS forecasts become materialized. Even -15% or -20% shock to EPS forecasts (based on previous episodes of Global recession, China hard landing and Trade war), VN Index should still offer at least 10%+ upside (using -1SD P/E multiple).
Statistically, Long VN Index at oversold level (RSI < 20) did generate positive return for long-term investors e.g. +15%pa for 5 years holding period.
However, recently the stock market (
VNINDEX) has performed poorly which could be due to weak sentiments among local investors due to lots of rumors, stock/bond manipulation crackdown and fears of further monetary tightening from the SBV (central bank). Margin calls for some players esp. foreign investors could be one of the factors that affected VN Index as well.So with the current valuation based on P/E multiple or Forward P/E, VN Index remains quite attractive (P/E and Forward P/E are near -2SD level over the last 10 years). Additionally, VN Index's EPS forecasts continue to rise higher which should signal a good upside potential should such EPS forecasts become materialized. Even -15% or -20% shock to EPS forecasts (based on previous episodes of Global recession, China hard landing and Trade war), VN Index should still offer at least 10%+ upside (using -1SD P/E multiple).
Statistically, Long VN Index at oversold level (RSI < 20) did generate positive return for long-term investors e.g. +15%pa for 5 years holding period.
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