Construct investment portfolio which includes 5 trading stocks on HOSE and HNX, Thesis of Investment Management and Portfolio Theory

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ACADEMY OF POLICY AND DEVELOPMENT

International School of Economics and Finance Hanoi, June 2021 PRINCIPLES OF INVESTMENT Submission form Group Requirements: Construct investment portfolio which includes 5 trading stocks on HOSE and HNX with at least 1 blue-chip and 2 stocks from VN30. BUTTER TEAM 1 st^ member: Nguyen Nhu Quynh 2 nd^ member: Nguyen Ngoc Quynh 3 rd^ member: Pham Ngoc Anh 4 th^ member: Nguyen Thi Van Anh 5 th^ member: Do Minh Ngoc Signature: Quynh Signature: Quynh Signature: Anh Signature: Anh Signature: Ngoc Date of submission: 20/06/ Receiver: PhD. Phuong My Hang Pham Mark: Comments:

3.6. Determining the proportion of stocks to portfolio with minimal risk 3.7. Optimal portfolio Excel Summarization PHAM NGOC ANH

II. Prospective of the stock market

**3. Market capitalization

4. Market outlook for 2021**

III. List of recommendation for

investment

1. Recommendation for the portfolio

2. Reasons to choose:

2.3. Vietnam National Petroleum Group

(PLX)

NGUYEN THI

VAN ANH

Introduction Abstract I. Macroeconomics overview

1. Economics Growth
2. Inflation

III. List of recommendation for

investment

2. Reasons to choose:

2.2. Hoa Phat Steel Joint Stock Company

(HPG)

DO MINH

NGOC

I. Macroeconomics overview

**3. FDI

6. Bank Interest**

III. List of recommendation for

investment

2. Reasons to choose:

2.4. Vietnam Technological and

Commercial Joint Stock Bank (TCB)

LIST OF ABBREVIATIONS

Words Meanings FDI Foreign Direct Investment EU Euroupean Union FMCG Fast – Moving Consumer Goods GTN GTNFood Joint Stock Company NPLs Non – performing loans GDP Gross Domestic Production IMF International Monetary Fund WB World Bank CPI Consumer Price Index RCEP The Regional Comprehensive Economic Partnership FTAs Free Trade Agreements

• INTRODUCTION
• ABSTRACT
• I. Macroeconomics overview
• 1.Economic growth:
• 1.1: GDP for the first quarter of 2021:
• 1.2 Outlook for Economic growth in 2021:
• 2. Inflation:
• 2.1 Inflation in the first quarter of 2021:
• 2.2 Outlook
• 3. Foreign direct investment (FDI)............................................................................
• 4. Foreign trade
• 5. Forex market
• 6. Bank interest rate
• II. Prospective of the stock market
• 1. Overview of the Vietnamese stock market in 2020 and the first quarter of
• 1.1. In
• 1.2. In the first quarter of
• 2. Highlights of Vietnamese stock market in 2020 and the first quarter of
• 2.1. Vietnam’s stock market in
• 2.2. Highlights of stock market in the first quarter of
• 3. Market capitalization:............................................................................................
• 3.1. Large-cap stock:
• 3.2. Mid-cap and penny stock:
• 4. Market outlook for
• III. List of recommendation for investment
• 1. Recommendation of the portfolio
• 2. Reasons to choose
• a. Vietnam Dairy Products Joint Stock Company (VNM)........................................
• b. Hoa Phat Steel Joint Stock Company (HPG)
• c. Viet Nam National Petroleum Group (PLX).........................................................
• d. Vietnam technological and commercial JS Bank (TCB)
• e. Spilit Rock Joint Stock Company (SPI)
• 3. Setting up the portfolio..........................................................................................
• 3.1 Determining the average return on each security................................................
• 3.2 Identifying the risk of each security
• 3.3 Portfolio includes stocks of equal weight
• 3.4 Portfolio with expected return
• 3.5 Portfolio with expected risk levels
• 3.6 Determining the proportion of stocks to portfolio with minimal risk
• 3.7 Optimal portfolio
• MEMBER EVALUATION FORM

INTRODUCTION

The stock market appeared in the world centuries ago, but only formed in the Vietnamese market more than 20 years ago. Over the past 20 years, Vietnam's stock market has experienced many fluctuations, but it was also growing stronger and stronger through many stages. To participate in the stock market, everyone must have certain knowledge about the stock market. The stock market has its inherent appeal. It is not only important for the economy of a country, but it is also important for every person because of its ability to invest profitably. Therefore, each person, depending on their conditions and abilities, needs to approach quickly to participate in effective investment in the stock market. It is these activities that will contribute to the development of Vietnam's stock market. Securities is considered one of the popular financial investment channels in our country and attracts a large number of investors.

10 | P a g e I. Macroeconomics overview 1.Economic growth: 1.1: GDP for the first quarter of 2021: Gross domestic product (GDP) in the first quarter of 2021 is estimated to increase by 4.48% year-on-year, higher than the 3.68% increase in the first quarter of 2020. (Source: General Statistics Office) According to the General Statistics Office, in the general growth rate of the whole economy, the agriculture, forestry and fishery sector increased by 3.16%, contributing 8.34% to the overall growth, the industry and construction sector increased by 3.16%. increased by 6.3%, contributing 55.96%; the service sector increased by 3.34%, contributing 35.70% → This is a high increase compared to the same period last year. The agriculture, forestry and fishery sector in the first quarter of 2021 increased sharply compared to the same period last year due to good rice productivity, good yield of perennial crops, well-controlled African swine fever, meat production, and barn production increased significantly. At the same time, the export market for wood and forest products was expanded.

4.75 4.

I / 2 0 1 1 I / 2 0 1 2 I / 2 0 1 3 I / 2 0 1 4 I / 2 0 1 5 I / 2 0 1 6 I / 2 0 1 7 I / 2 0 1 8 I / 2 0 1 9 I / 2 0 2 0 I / 2 0 2 1

Q1'S GDP GROWTH OF VIETNAM OVER YEARS

GDP Growth Rate (%)

11 | P a g e In the industry and construction sector, the industry in the first quarter of 2021 increased by 6.5% over the same period last year, higher than the growth rate of 5.1% in the first quarter of 2020 but much lower than the growth rate. 10.45% of the first quarter of 2018 and 9% of the first quarter of 2019, contributing 2.2 percentage points to the growth rate of the total added value of the whole economy.

• The processing and manufacturing industry, especially electronics, phones and accessories - was the main driver of first-quarter growth, up 9.45% from a year earlier. continued to play a leading role in the growth of the economy, contributed 2. percentage points.
• Mining industry grew by negative 8.24%, reducing 0.36 percentage points of total value added of the whole economy as crude oil production fell by 11% and natural gas by 16.1%.
• The construction industry increased by 5.17%, higher than the increase of 4.37% in the first quarter of 2020, contributing 0.32 percentage points. The service sector in the first quarter of 2021 grew positively when the Covid- 19 epidemic was strictly controlled.
• Wholesale and retail increased by 6.45% over the same period last year, is the service industry with the largest contribution to the increase in the total added value of the whole economy.
• Financial, banking and insurance activities increased by 7.35%, contributing 0.4 percentage points; transportation, warehousing decreased by 2.17%, decreased by 0.15 percentage points; accommodation and catering services decreased by 4.49%, down 0.12 percentage points. Exports rose 19.2% in March from a year earlier, while imports rose 27.7%. Vietnam ran a trade surplus of $400 million for the month, $1 billion below expectations. In the January-March period, exports increased by 22% year-on-year and imports increased by 26.3%.

13 | P a g e 1.2 Outlook for Economic growth in 2021: ADB forecasts that Vietnam's economic prospects in the medium and long term will be very positive, thanks to its participation in bilateral and multilateral trade agreements, along with benefiting from the current shift in supply chains. to countries with lower costs… According to the Global Research Report titled "Vietnam - Growth was interrupted in the third quarter of 2020, but the prospect of recovery is stable", Standard Chartered Bank said that Vietnam will achieve a growth rate of 3%. in 2020 and surpassing 7.8% in 2021. In 2021, Vietnam's economy will recover strongly with GDP expected to grow by 6.5%. Previously, in October 2020, the IMF also forecast that in 2020, Vietnam's GDP will increase by 1.6%. Vietnam's GDP scale is 340.6 billion USD, ranking 4th in Southeast Asia (surpassing Singapore with 337.5 billion USD. By 2025, GDP per capita of Vietnam will reach 5,211.90 USD. Vietnam is among the few economies in Asia to grow positively in 2020, regardless of the impact of the Covid-19 wave. The investment in infrastructure and improved service sector growth will help Vietnam achieve growth rates that outperform other economies in Asia. The World Bank (WB) forecasts that Vietnam's GDP will grow by 2.8% in 2020 and 6.8% in 2021. HSBC has just released the Report "Asian Economy: All suffer", in which Vietnam's GDP growth forecast in 2020 will reach 2.6% and is expected to reach 8.1% in 2021. HSBC recommends, Vietnam needs more monetary support policies to help the economy recover... Analyzing the long-term prospects of the Vietnamese economy, Fitch Solutions said that Vietnam is a dynamic, fast-growing economy in Asia, with an average annual GDP of about 6.3% in the past 10 years. In 2020, Fitch Solutions expects that the economy will recover well in the second half of the year and increase its GDP forecast to 3.0% instead of 2.8% in the previous report. The international credit rating agency S&P Global Ratings forecasts that Vietnam ranks second in the Asia-Pacific region in terms of the speed of economic

14 | P a g e recovery after the crisis caused by the impact of Covid-19. S&P Global Ratings also forecasts Vietnam's GDP growth will reach 1.9% in 2020 and 11.2% in 2021. Forecast Vietnam’s GDP growth rate in 2021 GDP Annual Growth Rate in Vietnam is expected to be 5.8% by the end of this quarter, according to Trading Economics global macro models and analysis expectations. Looking forward, they estimate GDP Annual Growth Rate in Vietnam to stand at 6.5 in 12 months. In the long-term, the Vietnam GDP Annual Growth Rate is projected to trend around 6.5% in 2022 and 5.9% in 2023, according to their econometric models

16 | P a g e Besides, statistics of the first quarter of 2021 show that, in general, inflation tends to increase slowly in the first quarter (January inflation is negative 0.97%; February is 0.70%; March is 1.16%) it also indicates weak demand. Vietnam's inflation (over the same period) Inflation by component (over the same period) (Source: VDSC)

17 | P a g e Inflation in February increased sharply mainly due to EVN's adjustment in electricity prices when the Government's electricity bill reduction program ended in January, due to increased food and transportation prices due to increased demand during the Lunar New Year… In addition, the Government is cautious with inflation expectations by continuously using the petroleum price stabilization fund to offset the impact of higher world oil prices on domestic commodity prices. Inflation rebounded in the following months mainly due to factors such as rising global commodity prices or the effect of the previous year's low base. Accordingly, the inflation forecast in 2021 is at 3.5%. → However, global inflation should be noticed as markets around the world from the US and EU, from bonds to equities are giving clear signals about rising inflation expectations. According to VEPR, inflation is expected to increase rapidly starting from April 2021 as the economic recovery causes the demand for goods and services to increase. Initially, rising inflation was considered a good thing as it could be a sign of economic recovery. However, an important aspect of ensuring good inflation is controlling inflation expectations. Maintaining monetary (and fiscal) easing measures could lead to consumer prices falling short of the Government's target below 4% year-end. Therefore, monetary policy must balance between growth target and inflation control. Accordingly, central banks must raise interest rates to control inflation expectations.

19 | P a g e

3. Foreign direct investment (FDI) The prospect of attracting foreign direct investment (FDI) in Vietnam in 2021 is very bright in the context that many large. medium and small investors from developed countries gradually turn to invest in Vietnam. Total foreign investment capital into Vietnam as of March 2021 including newly registered capital, adjusted registered capital and value of capital contribution and share purchase by foreign investors reached nearly 10. billion USD, up 18.5% over the same period last year. In which, there are had 234 newly licensed projects with registered capital of 7. billion USD, down 69.1% in the number of projects and up 30.6% in registered capital over the same period last year, 161 turns of projects licensed from previous years

20 | P a g e registered to adjust investment capital with the additional capital reaching 2.1 billion USD, up 97.4%. There was 734 times the capital contribution to buy shares from foreign investors with the total capital contribution value of nearly 805.3 million USD, down 58.8%. Out of the total number of times of capital contribution and share purchase by foreign investors, there were 179 times of capital contribution and share purchase, increasing the charter capital of the enterprise with a capital contribution value is 281 million USD and 555 turns of foreign investors are repurchased domestic shares without increasing charter capital with the value is 524.3 million USD. Foreign direct investment capital in the first quarter of 2021 was estimated at 4. billion USD, up 6.5% over the same period last year. Among FDI partners in Vietnam, the top 5 FDI partners are mainly Asian countries such as Korea, Japan, Singapore, the presence of Western countries among the top FDI partners is still quite low. Registered foreign direct investment increased by 17.8% in the first quarter of 2021 from the same quarter last year. Typically, the United States increased by 205.5%, Japan increased by 147.7%, South Korea increased by 67.1%. FDI into Vietnam by year (US$ million)