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The Index of Industrial Production (IIP) in October rose to 9.2% YoY, slightly decreasing compared to the data in September, mainly due to the plunge in coke and refined oil production. However, PMI has been in a downtrend in three consecutive months, which led this index down to 50 points – the lowest in the last four years. This will be a worrisome factor to the processing and manufacturing sector during the year-end period as the growth rate of new order number will turn down sharply. Inflation also needs to be closely watched in the last two months as pork price moves are unpredictable. It is most likely that there would be a trade deficit in November and December as companies will import a large volume of manufacturing and consumer goods for year-end production activities and preparation for Lunar New Year. Liquidity in the banking system in the last two months may be not abundant as the Circular No.58/2019/TT-BTC will affect the deposit sources of the State Treasury at commer

Vietnam’s 3Q GDP figures show more evidence of the SBV’s successful sterilization – with inflation in check, the VND stable, and exports remaining robust – and provides ample policy room for 4Q and into 2020E. Implications for our 4Q outlook include: 1) GDP growth to remain healthy at 6.9%-7.0%, albeit at a slower pace than 2017-2018 amid the ongoing US-China trade war; 2) CPI to moderate further to 2.49% and average 2.6% for all of 2019 (with core inflation manageable at 1.9% YoY); 3) money supply and credit growth of 13% and 14%, respectively, to keep the USD/VND exchange rate stable at VND23,350 by year-end and keep depreciation mild at 0.5%-1.0% YTD. Processing and manufacturing should continue to drive solid GDP growth as recovery of mobile phone manufacturing keeps export growth positive in 4Q. Falling trade demand from ongoing trade tensions between the US and China will likely slow 4Q GDP growth to 6.9%-7.0% and below 2017-2018 levels. Inflation has already fallen to the lowe

We raise our 2019 year-end range for the VN-Index to 970-1,010 from 940-1,000 as rate cuts from central banks and a partial US-China trade deal improve market conditions. Although we are looking for quieter performance in 4Q, this will likely only be a pause for the market and our outlook remains positive. Sectors we view as Positive include: power, IT, and retailing but are more selective for banks in 4Q. We are Neutral on industrial parks. Any sustained move above 1,000 in 4Q likely capped. As sentiment peaks for these events, we do not rule out short-term moves above 1,000 but concerns of a standstill in US-China trade talks, disappointments on Fed rates cuts, and growing evidence of a global slowdown in 2020 are likely to continue to weigh on market sentiment in 4Q and limit any gains. Large caps should continue to lead the market and our expectations for an unexciting 3Q earnings season for the lagging mid-caps will likely make it difficult for performance to catch up with large-

SCS is currently the 2nd largest cargo terminal operator in Tan Son Nhat International Airport. In 6M/2019, revenue hit VND361.8 billion, gaining 15.1% yoy; NPAT hit VND239.8 billion, rising 20.9% yoy. The growth force comes from the investment in cargo terminal Phase 2, raising capacity to 350,000 tons/year. SCS has had a high dividend payout ratio Risks

Hoa Phat is a construction steel and steel pipe manufacturer with the largest market share in Vietnam. When the Dung Quat Hoa Phat Project is completed, Hoa Phat’s steel production will be tripled Large production scale and BOF technology help HPG save production costs Investment risks

Leading company in retailing and electronics with a business system spreading over 63 provinces DMX is the core business of MWG Bach Hoa Xanh is expected to the key force of growth for MWG in the future BHX sets a target to break even at stores and distribution center at the end of this year Risks are always existing

The total number of ship arrivals at Hai Phong ports in 6M 2019 decreased by 1.76% yoy. The competition among Hai Phong ports become fiercer In the long-term, Lach Huyen will be the focus of development in Hai Phong port area

Revenue in 1H2019 gained 5.1% yoy, NPAT rose 12.9% yoy, completing 109.4% profit plan of the year Revenue from crude oil transportation climbed 34.2% yoy in 1H2019 with a force from oil transportation to Nghi Son Refinery. Revenue from finished oil transportation climbed 15.3% yoy. Revenue from LPG transportation reached VND581 billion, equal to 48% revenue recorded in 2018. Revenue from coal transportation increased 33% yoy, GPM hit 12.8%, surging over the same period with only 7%.

IIP in August was still positive thanks to a surge in coal production and an moderate increase in mobile phone production. PMI in August tumbled over July, mainly because of the weakening signs in investment goods.

Inverted yield curve is dangerous, and Fed is responding slowly Fed has to cut interest rates at least twice this year If a recession occurs, the lag will be much later than that in the past The risk of a recession of the US economy is not high in 2019-2020 and the US stock market still has room for development