THE UNIVERSITY OF DANANG UNIVERSITY OF ECONOMICS ⁕⁕⁕⁕⁕⁕⁕⁕⁕⁕ FINANCIAL INVESTMENT REPORT Instructor Associate Prof Vo Thi Thuy Anh Group 1 Class 44K15 1 Student 1 Le Ngoc Tu Uyen 2 Le Phuong Hong 3 Truong Thi Minh Hieu 4 Nguyen Thi Minh Tam Danang, May 4, 2021 TABLE OF CONTENTS TABLE OF CONTENTS 2 LIST OF TABLES 4 LIST OF FIGURES 4 INTRODUCTION 6 I Macro analysis 7 1 World economy 7 2 Vietnam Economy 9 3 Based on the analysis above, select and analyze the sectors in which the group will invest 12.
Macro analysis
World economy
Table 1.1 World growth in the period 2019-2020 and forecast for 2021
Source: IMF, World Economic Outlook Update, June 2020.
Through the data table, it can be seen that the growth rates of some key economies of the world have strong fluctuations in the period 2019-2021.
The COVID-19 pandemic led to significant volatility in the global economy However, by late 2020 and early 2021, signs of gradual stabilization began to emerge, although this trend remains uncertain.
Inflation has emerged as a significant concern for nations worldwide, particularly in Asia While recent years have seen a decline in inflation rates and short-term macroeconomic stability, medium and long-term forecasts indicate ongoing uncertainties and unpredictable factors that could impact the economy.
Table 1.3 The world unemployment situation in 2019-2020 and forecast for 2021
In recent years, Japan and China have emerged as global leaders with some of the lowest unemployment rates, consistently falling below 5% In contrast, Europe and America continue to experience relatively high unemployment levels Despite being at the forefront in various sectors, these regions face challenges in employment due to stringent workforce requirements.
Public Debt (in billion US dollars)
Table 1.4 The world public debt in 2019 – 2020 and forecast for 2021
The worldwide debt situation is on the rise The public debt of many countries has exceeded the safety threshold.
In the period 2019-2021, it can be seen that a public debt crisis and economic instability can occur and hamper global economic growth.
Vietnam Economy
Table 1.5 Growth of GDP in Vietnam in 2019-2020 and forecast for 2021
Despite the global economic downturn caused by the Covid-19 pandemic, Vietnam's economy demonstrated resilience in 2020, achieving a GDP growth rate of 2.8% This remarkable performance can be attributed to the government's effective anti-epidemic measures and proactive socio-economic development strategies, which played a crucial role in safeguarding the economy during challenging times.
Table 1.6 Inflation rate in Vietnam in 2019-2020 and forecast for 2021
Vietnam's average inflation rate remains around 3%, successfully meeting the established target In 2019, inflation was effectively controlled at 2.8% due to declining global commodity prices, prudent credit policies, stable exchange rates, and minimal increases in medical service costs However, in 2020, inflation rose slightly by 0.5% as the COVID-19 pandemic spurred a significant increase in domestic demand for essential goods and healthcare To manage inflation in 2021, it is crucial for macroeconomic policies to work together with a consistent focus on maintaining macroeconomic stability.
In 2021, the inflation rate is projected to range between 2.65% and 3.5%, while deposit rates are nearing historical lows Despite this, lending rates may decrease further due to policy lag effects To support economic recovery, the State Bank of Vietnam is expected to continue reducing borrowing costs to enhance credit growth.
In Vietnam, the unemployment rate remained low in 2019-2020, with a minor rise of 1.14% in 2020 attributed to the Covid-19 pandemic However, forecasts indicate that the unemployment rate is expected to decrease again in 2021, stabilizing around 2.7%.
Since 2001, the Vietnamese Dong (VND) has consistently depreciated against the US Dollar (USD) at an average rate of 2.5% annually However, 2020 marked a significant exception, as the USD not only failed to appreciate but also experienced a slight decline in value relative to the VND.
The Covid-19 pandemic significantly impacted Vietnam's economy, resulting in a GDP growth of just 2.91% In 2020, total retail sales of consumer goods and services fell by 1.2% compared to the previous year, after adjusting for price changes Consequently, this decline in demand contributed to a modest 3.6% increase in imports for the year.
The future trend of the VND/USD exchange rate will largely depend on the State Bank of Vietnam's intervention in the foreign exchange market In 2020, amidst a significant trade surplus, the State Bank purchased substantial amounts of USD to stabilize the VND/USD exchange rate and bolster foreign exchange reserves to over $90 billion However, this intervention strategy has contributed to Vietnam being labeled as a currency manipulator by the US Treasury Department, joining Switzerland on this list.
In the near future, the State Bank of Vietnam is expected to adopt a more cautious approach to purchasing foreign currencies in order to bolster foreign exchange reserves It is anticipated that in 2021, the bank may acquire fewer USD compared to 2020, ensuring that total foreign currency purchases remain below 2% of GDP, a threshold established by the US Department of Treasury to identify potential currency manipulation This strategy could result in a slight appreciation of the VND against the USD throughout 2021.
Despite a challenging global economic landscape marked by declining trade and reduced exports from neighboring countries, Vietnam has demonstrated resilience with a projected export growth rate In 2020, the country's total import and export turnover reached an estimated $543.9 billion, reflecting a 5.1% increase from the previous year Specifically, export turnover was $281.5 billion, up 5%, while imports amounted to $262.4 billion, a 3.6% rise Notably, Vietnam achieved a trade surplus of $19.1 billion in 2020, marking the highest surplus value in its history.
In 2020, the Government's effective coordination and administration of macroeconomic policies, particularly in fiscal and monetary strategies, proved to be a significant achievement amid challenges such as the Covid-19 pandemic, African swine fever, natural disasters, and saline intrusion These efforts played a crucial role in stabilizing various aspects of socio-economic life during unpredictable circumstances.
In 2021, the global economy faces numerous risks and uncertainties, with ongoing trade protectionism and strong foreign direct investment (FDI) inflows reflecting a trend towards diversifying the global value chain Commodity and energy prices are expected to recover, while Vietnam's National Assembly and Government have set a growth target of approximately 6% Additionally, various international organizations project Vietnam's rapid recovery and high growth rates between 4.5% and 8.1%.
To enhance the efficiency of policy transmission and support rapid economic recovery, it is crucial to strengthen the coordination between macroeconomic policies, particularly between fiscal and monetary policies This involves close collaboration between the Ministry of Finance and the State Bank, aiming to boost production, business, and consumption for sustainable socio-economic development in the new normal.
Based on the analysis above, select and analyze the sectors in which the group will invest
According to the Cophieu68 page (May 4, 2021), there are 25 sectors and the figures are summarized as follows:
No Industry Group +/- EPS PE ROA ROE
Based on the industry analysis and the influence of the global economy on Vietnam, our team has selected two key sectors for focus: Banking and Finance.
The recent shift in investment trends has led to a significant rally in industrial real estate stocks, characterized by a dramatic increase in both market prices and liquidity These stocks are projected to have strong growth potential in 2021, particularly for companies that possess substantial land available for lease.
Vietnam is strategically developing industrial zones across three regions to leverage its seaport advantages Currently, the country boasts 336 established industrial zones, encompassing a total industrial land area of 97,800 hectares.
As of the third quarter of 2020, there are 261 operational industrial zones covering a total leased area of 66,000 hectares, achieving an impressive occupancy rate of 76% Key economic zones have experienced positive absorption rates, with new rental prices rising significantly In Ho Chi Minh City, Dong Nai, and Long An, industrial land lease rates have surged by 20-30% compared to the previous year.
Vietnam's industrial real estate sector is poised for significant growth, driven by several key factors The country's economy is projected to lead the ASEAN region in recovery, while Japanese and Korean foreign direct investment (FDI) firms are increasing their commitments to invest in Vietnam Additionally, there is a notable trend of production shifting from electronics and technology FDI companies in China to Southeast Asia With limited capacity for rapid supply expansion, rental prices in existing industrial zones are expected to rise sharply.
Why invest in real estate:
Vietnam is effectively managing the COVID-19 situation, leading to a promising recovery in the real estate market The financial statements for the third quarter have instilled confidence and optimism among investors, particularly following a significant profit drop in Q4 2020 KB Vietnam Securities Joint Stock Company (KBSV) anticipates a strong performance in the final quarter, driven by a decline in COVID infections and a more open society This has resulted in increased land demand as businesses capitalize on the opportunity to sell apartments at attractive prices, supported by government loans and post-COVID assistance.
By the end of 2020, many banks in Vietnam surpassed their profit targets despite challenges posed by the pandemic, according to Business News (BNews), the economic information platform of the Vietnam News Agency Looking ahead, while 2021 is expected to remain challenging, analysts maintain an optimistic outlook for the banking sector's performance.
VNDIRECT predicts a recovery in net profits for banks in 2021, with varying degrees of improvement Since the lows of the first quarter of 2020, bank share prices have surged between 32% and 85%, approaching levels seen at the end of 2019, indicating that they are nearing their fair value.
Why invest in the banking industry:
The Vietnamese banking industry is poised for significant long-term growth, with approximately 70% of adults lacking a bank account and only around 4% of the population holding a credit card.
With 87% of the population under the age of 54, the potential customer group of the retail banking sector in Vietnam is large and very attractive.
The Vietnamese banking sector is currently trailing behind many Southeast Asian countries, presenting significant opportunities for growth In response to user demands, numerous Vietnamese banks are making substantial investments in e-banking solutions.
AFC Vietnam Fund said that Vietnamese banks are undervalued compared to other banks in the region, especially when compared with good growth and high profits.
Demand and supply stocks
The COVID-19 pandemic has significantly impacted the real estate sector, particularly in commercial rentals, including offices, hotels, and apartments With a dramatic decline in foot traffic to shopping malls—down by 70-80% in February and March, according to CBRE—many store owners have either returned their premises or negotiated rent reductions of 20-40% The office rental market has also been affected, as increased remote work has led to a decrease in office usage and delayed investment activities, making short-term leases particularly vulnerable CBRE forecasts that if the pandemic is controlled by Q2 2020, the vacancy rate for offices in Ho Chi Minh City could rise from 7% to 14%.
The hotel industry experienced a significant decline in visitors, resulting in a 40-60% drop in occupancy rates for high-end hotels in Q1 2020 compared to the previous year The apartment market also struggled, with demand from both local buyers and foreign visitors plummeting, leading to an 80% decrease in transactions and an absorption rate of only 14.3%, as reported by the Real Estate Brokerage Association In Ho Chi Minh City, apartment consumption fell by 37% year-over-year Despite a slight increase in product value of 2.65%, this was much lower than the 4.75% rise seen in Q1 2019, and the industry's stock prices fell sharply by 26.3% Notably, the number of real estate companies suspending operations surged by 94.1% during the same period.
2020 compared to the same period in 2019.
In Q1 2020, the finance-banking-insurance sector experienced a 2% decline in revenue compared to the previous year, primarily due to indirect effects of economic challenges As companies faced difficulties, there was a noticeable reduction in service utilization, leading to concerns about poor capital absorption and a potential rise in bad debt Investors perceived these factors as high-risk, resulting in a significant drop in stock prices, which fell over 20% since the beginning of the year.
The banking industry has faced significant challenges due to the economic downturn, with credit growth plummeting to 1.3% by the end of Q1 2020, a stark decline from 3.2% in the same period of 2019, as reported by the State Bank of Vietnam This situation has led to reduced revenue and an increased risk of bad debt as customers struggle financially In response, banks are offering more preferential loans to support their clients, while also implementing measures such as rescheduling debts, delaying payments, and reducing interest rates and fees However, these actions have further impacted banks' revenue and profits, resulting in a sharp decline in bank share prices, which fell by 22.4% since the beginning of the year.
Stock market Vietnam
In the first quarter of 2021, Vietnam's stock market witnessed remarkable growth, with the VN-Index reaching 1,200 points on three occasions Market liquidity surged, averaging over 653 million shares traded per session, translating to an impressive average transaction value exceeding VND 15,500 billion—an increase of 205% in volume and 302% in value compared to the previous year The VN-Index climbed to 1,191.44 points, marking a 79.83% rise from 2020, while the HNX-Index reached 286.67 points, up 44.13% Additionally, the Upcom-Index increased to 81.41 points, reflecting a 6.33% growth Overall, liquidity across both exchanges rose by 64%, averaging 19.022 billion VND per session.
On March 31, 2021, the Hose market reported a total of over 102.6 billion shares listed, with a capitalization value exceeding 4.46 million billion This marks a 2.28% increase from the previous month and a significant rise of 93.56% compared to the same period last year.
2020 Stocks that rose sharply include: raw materials industry (VNMAT) rose 5.69%; finance (VNFIN) increased 5.55% and healthcare (VNHEAL) increased 5.32%.
In March 2021, the HNX market recorded a total trading volume of 3.65 billion shares, with a trading value exceeding 57 trillion VND The average trading volume was over 158 million shares per session, and the trading value reached more than 2,517.5 billion VND per session, reflecting a 47% increase from the previous month By the end of March, the market capitalization rose to over 338.1 trillion VND, marking an 18.4% increase compared to the end of February 2021 The most actively traded stocks included SHB, PVS, SHS, HUT, and KLF.
In the Upcom market, the whole market had more than 1.8 billion shares traded, up
In the previous month, trading activity surged by 131.53%, resulting in a total trading value of 28.6 trillion dongs, which is an increase of 146.96% The average trading volume climbed to 80 million shares per session, reflecting a 51% rise Additionally, the trading value per session exceeded 1.2 trillion dongs, marking a 61.06% increase Notable stocks that experienced significant gains include finance (IFC), real estate investment and business (VHD), invest (RGC), and building (L45).
INVEST IN A TWO-RISKY-ASSET PORTFOLIO AND RISKFREE ASSET
Introducing two stocks listed on Vietnam Security Market
Company name: Asia - Pacific Investment Joint Stock Company
Volume of outstanding shares: 35,400,000 shares
Asia-Pacific Investment Joint Stock Company (APEC Investment., JSC) was established on July 31, 2006, under Business Registration Certificate No 0103013346 issued by the Department of Planning and Investment of Ho Chi Minh City, with an initial capital of VND 22,950,000,000 The company's stock, API, was first listed on UPCOM on October 27, 2009, and later moved to the HNX in 2010 On March 13, 2015, the charter capital increased to VND 364,000,000,000 following a retail issuance to strategic investors.
Investment consulting services at home and abroad.
Consulting, brokerage, real estate business.
Consulting on business management, business strategy.
Market research and analysis. b Fundamental analysis
Table 2: Financial ratios of API
Earnings per share for the last 4 quarters (EPS) 683 1,452
Book value of shares (BVPS) 13,924 15,171
Market price index to book value
Debt to Total Assets ratio 79.9 81.72
The market price index on income (P/E) often declines as businesses enhance their operational efficiency, resulting in an increase in earnings per share (EPS) This rise in EPS can lead to a lower P/E ratio, indicating that the stock may be undervalued and presenting a potential buying opportunity.
Earnings per share (EPS) showed a modest increase in 2019 but experienced a significant rise in 2020, reaching a robust level of 1,452, indicating strong company performance Additionally, a current ratio greater than 1 suggests that the company's short-term assets exceed its short-term liabilities, reflecting a healthy financial position in the near term.
A fast ratio of less than 0.5 indicates that businesses may struggle to meet their short-term debt obligations promptly, highlighting potential financial challenges in managing immediate liabilities.
In 2019, the company experienced negative growth, likely influenced by the COVID-19 pandemic; however, by 2020, it rebounded to achieve positive growth.
API's financial ratios generally fall below the real estate industry average, with the exception of its Return on Assets (ROA), which not only surpasses the industry average but is also on an upward trend This indicates that the company is more efficient at converting investments into profits Despite other financial metrics being lower than the industry average, they remain stable, providing a sense of security for both the company and its investors.
Reputable real estate enterprises excel in delivering high-quality products on schedule, offering clear competitive advantages such as consistent pricing and timely project implementation Their experienced leadership team, comprised of senior management with extensive international experience in real estate and construction management, further strengthens their position in the market Supported by a robust governance system and professionally managed departments, these companies prioritize sustainable development with a focus on community welfare and environmental protection.
The lack of diversification in product types, primarily focusing on real estate development for sale, makes the business vulnerable to unfavorable housing and apartment market conditions Additionally, the reliance on substantial financial resources and a large land fund heightens the risk of operational challenges during economic downturns.
The real estate market in Vietnam is poised for stable growth starting in 2017, driven by increasing demand for home ownership, particularly among foreign buyers The issuance of guidelines for the Law on Real Estate Business No 66/2014/QH13 is expected to further support this trend Additionally, the Group's land holdings are primarily located in Ho Chi Minh City, positioning them to capitalize on the region's economic growth and favorable demographic trends.
The progress of real estate projects is significantly influenced by legal procedures, market conditions, and the overall economic climate As the market shows signs of recovery, competitive pressure is intensifying, particularly in the middle and high-end segments, with a surge in supply from established developers and new investors However, raising capital poses challenges, as it heavily relies on loans and customer mobilization, especially if the market begins to reverse The rapid growth within a short timeframe also presents difficulties in maintaining quality in corporate governance, products, and customer service, particularly when human resources struggle to keep pace In response, the Group has prioritized training and preparation to uphold consistent product and service quality, while gradually aligning with the ASEAN Corporate Governance Scorecard standards.
The debt-to-equity ratio for the company is 2.3%, well below the maximum threshold of 5, indicating strong financial health In 2020, the company experienced positive growth, marking a significant turnaround from previous negative trends This improvement suggests potential for increased income, which is likely to boost the stock price Additionally, the earnings per share (EPS) for 2020 is projected to surpass that of prior years, while the API stock price is currently on an upward trajectory.
Company name: Military Commercial Joint Stock Bank (MCSB)
Volume of outstanding shares: 2,798,756,872 shares
Business areas: Banking products and services
Type of bank: Joint Stock Commercial Bank
Established in 1994, Military Commercial Joint Stock Bank (MB) aimed to provide financial services to military enterprises, starting with a charter capital of under 20 billion VND In November 2011, MB's stock (MBB) was listed on the HOSE at a reference price of 13,000 VND per share Over two decades, MB has experienced significant growth and market expansion, leading to a consistent increase in total assets year after year.
Main activities of the Bank:
Mobilize short, medium and long term capital in the form of term deposits or demand deposits.
Dealing in bonds and valuable papers.
Trading foreign currencies, gold, making international payments.
Providing short, medium and long term loans to organizations and individuals
Money brokerage services; electronic banking;…
Products and services: Deposit products, loan products, money deposit, international payments, other products and service (foreign currency trading, collection-payment services,foreign currency conversion, ) b Fundamental analysis
Table 3: Financial ratios of MBB
Earnings per share for the last 4 quarters (EPS) 3.596 3.329
Book value of shares (BVPS) 17.150 18.066
Market price index to book value (P/B) 1.21 1.27
Overall, MB's growth indicators show a positive trend, reflecting the company's strong capacity to attract investment and deliver solid profits to shareholders However, profitability is expected to decline in 2020 due to adjustments in interest rates by the State Bank of Vietnam in response to the economic climate Despite this, MB demonstrates effective utilization of its assets and capital resources.
MBB's financial ratios exceed the industry average, indicating strong performance and long-term growth potential, which is favorable for investors All metrics are positive, reflecting the company's overall health However, the Return on Assets (ROA) is below the industry average and is on a declining trend, suggesting inefficiencies in asset management compared to its peers.
S1: Strong brand has great prestige
W1: Distribution network has not yet counted
Management capacity: management capacity, operating still limited compared to requirements, cumbersome and ineffective management apparatus Products are not diverse yet
The low competitiveness within Vietnam's banking sector, coupled with financial ambiguity, is leading to an increase in the number of banks equipped with financial, technological, and managerial capabilities, intensifying competitive pressure Additionally, banks face the challenge of adapting to advanced technologies and techniques to keep pace with foreign competitors As a result, the profitability of most commercial banks in Vietnam remains low, which restricts their capacity to establish adequate risk reserve funds.
O3: Technology and electronics are abundant development potential
O4: The economy is being created many conditions for recovery
O2: Human resources, talent and talent, proving position; Highly trained, continuously. d The reasons to choose stocks
Use technical methods to forecast the price of 2 stocks
Figure II-1: Stochastic Chart-API
In early January 2021, the fast stochastic line was positioned between 80 and 100 However, by the end of January and into February 2021, this line experienced a downward trend, falling into the range of 20-50.
By the end of February 2021 and early March 2021, the fast stochastic increased in the range of 80-100.
By March 2021, the stochastic line dropped to 20, indicating a balanced low stochastic level This decline prompted a market signal to sell, resulting in a decrease in price.
API – MACD (12,26,9) Histogram: MACD: EMA:
Figure II-2: MACD Chart-API
In March 2021, the MACD line initially rose above the signal line (EMA), but by mid-March, it crossed below the EMA By the end of March and into early April 2021, the MACD remained below the signal line while still being above zero, signaling the end of the uptrend and a gradual increase in selling volume, which suggests a future decline in price.
Figure II-3: Price Chart-API
In early 2021, API stocks experienced a significant price surge, followed by a sharp decline by the end of January However, from February to March 2021, there was a slight upward trend in API stock prices.
Observing the simple moving average, from the beginning of January 2021 to the beginning of April 2021, the SMA (20) surpassed the SMA (50) line, showing the long-term uptrend of the stock.
In conclusion, the technical analysis indicates that API stock is likely to experience a short-term decline, followed by a stabilization period, ultimately leading to a potential upward trend in the future.
Figure II-4: Stochastic Chart-MBB
In early January 2021, the fast stochastic line was positioned between 80 and 100 However, from mid-January to mid-February 2021, this line experienced a downward trend, dropping below 80 and fluctuating within the 20-80 range Notably, in mid-January 2021, the line fell below 0.
By the end of February 2021 and early March 2021, the fast stochastic increased in the range of 80-100.
By March 2021, the stochastic line dropped to 20, indicating a balanced low, which prompted a sell signal in the market This led to a decrease in prices, followed by a subsequent increase.
MBB – MACD (12,26,9) Histogram: MACD: EMA:
Figure II-5: MACD Chart-MBB
In mid-February 2021, the MACD line was positioned above the signal line (EMA), indicating a bullish trend However, in March, the MACD crossed below the EMA, and by late March to early April 2021, it remained below the signal line while still above zero, signaling the end of the uptrend and a gradual increase in selling volume This shift suggests that future prices are likely to rise.
Figure II-6: Price Chart-MBB
In early 2021, MBB stocks experienced a decline, but by the end of January through February, there was a modest recovery in prices From March to April 2021, MBB stocks exhibited slight fluctuations.
Observing the simple moving average, from the beginning of January 2021 to the beginning of April 2021, the SMA (20) surpassed the SMA (50) line, showing the long-term uptrend of the stock.
In conclusion, the technical analysis indicates that MBB stock price is likely to experience a short-term decline; however, it is expected to stabilize thereafter and trend towards future growth.
The expected rate of return of the two stocks and Vn-index
Below is the expected rate of return, variance, standard deviation that we have estimated over three years 2019, 2020, 2021 However in 2021 historical data was used only from January 1, 2019 to April 2, 2021.
Table 4: The expected rate of return of two stocks and Vn-index (2019)
IN 2019 MBB API VN-INDEX
Table 5: The expected rate of two stocks and Vn-index (2020-2021)
IN 2020 MBB API VN-INDEX
IN 2021 MBB API VN-INDEX
From there, we estimate the annual average expected rate of return, the annual average variance, the annual average standard deviation of these 3 years.
Table 6: the expected rate of return of the two stocks and Vn-index average 3 years
AVERAGE 3 YEAR MBB API VN-INDEX
The covariance and correlation of the two stocks
The minium variance frontier and the efficient frontier
The investment proportion for each risky asset in the portfolio is determined based on values of E (Rp) ranging from 47.14% to 91.17% This process identifies a series of portfolios that achieve the lowest variance while meeting the expected return criteria for each corresponding E (Rp) Consequently, these portfolios collectively establish the minimum variance frontier.
To determine the effective frontier on the minimum variance frontier, we identify portfolios with the smallest overall variance Utilizing a solver with three conditions—minimizing standard deviation, ensuring total proportions equal 1, and maintaining proportions greater than or equal to 0—we find that the optimal portfolios achieve an expected return of 52.62% with a standard deviation of 1.90% The portfolio composition consists of 87.72% in MMB and 12.28% in API.
In the return-risk space, portfolios with the smallest variance lead to higher returns, creating a set of portfolios that exhibit two key characteristics: for a given level of risk, these portfolios yield the highest returns, and for a specified return level, they present the lowest risk This collection of optimal portfolios is known as the efficient frontier.
Table 9: The variance frontier and the efficient frontier
Optimal portfolio
The Optimal portfolio that we recommend for our customers to invest in is to invest 73.67% in MBB securities and 26.33% in API securities.
Table 10: Weight investment into stocks
That also means that if clients have 100 milions dong, they should invest money like the table below to get the optimal portfolio.
Table 11: Proportion of investment capital into stocks
Closing price of MBB is 31.250 VND/share and closing price of API is 27.300 VND/share on 04/05/2021, that mean you should buy 2 357 MMB shares and 964 API share
Table 12: Parameter of risk portfolio
Figure II-7: The minimum variance frontier and the efficient frontier
BUILDING THE ABOVE PORTFOLIO FOR CLIENTS
Our portfolio is better than the market portfolio
Table 13: Slope of CAL and slope of CML
The rate of return of the VN-INDEX 0,06%
Standard deviation 1,23% slope of the CML 0,03
The rate of return of the portfolio 0,24%
Standard deviation 0,13% slope of the CAL 1,59
Our portfolio outperforms the VN-Index, demonstrating a higher rate of return and a superior reward-to-risk ratio compared to the market portfolio With a lower risk level (σP < σM), it is evident that our portfolio is a more advantageous investment choice than the VN-Index.
When were clients lender/borrower
We base on the CAL
Table 14: The expected rate of return and the standard deviation y 0 0,25 0,5 0,75 1 1,25 1,5 1,75 2
If clients can borrow at a risk-free interest rate of 8%, they can build the investment projects located on the right of point P on the capital allocation line.
Clients who choose not to invest their entire initial capital and instead lend the remaining funds at a risk-free interest rate of 8% will find themselves positioned on the left side of point P along the capital allocation line.
Figure III-8: Capital allocation line
3 The maximum fee in percentage
F% rate of fee is payable on investment amount
Maximum fees that can be collected = Rate of F% * invested capital
Table 15: Maximum fees that can be collected
The reward-to-risk ratio of the risk portfolio 1,59
The reward-to-risk ratio of the market portfolio 0,03
The expected rate of return of the customer 0,03%
F% of the fee payable on the investment amount 0,207%
The maximum number of charges F can be collected 207.0 D
If you invest 100 million dongs into our portfolio, you have to pay the maximum fee to us of 207 000 dongs
After conducting a comprehensive macroeconomic analysis of the global and Vietnamese economies, as well as an in-depth industry and company analysis, our investment group has selected two stocks: API and MBB Based on our technical analysis and long-term investment objectives, we anticipate that both stocks will appreciate in value and maintain stability in the future We believe this portfolio will experience significant growth due to the independence of these non-dominant stocks Additionally, both stocks exhibit high profitability ratios and relatively strong correlation coefficients, reinforcing our investment strategy.
The group undertook a comprehensive analysis and calculation of data to meet the demands of the large exercise, akin to the work of a professional stock investor Acknowledging their limited knowledge, they recognize that there may be several errors in their findings Constructive feedback is welcomed to help the group enhance their performance in future exercises.