Besides, investors in vietnamese stock market often over react with rumors and make quick decisions without scanning the information

INVESTMENT POLICY STATEMENTTarget clients: People who age from 35 to 50 Time horizon: 5-10 years Overall risk level: Moderate in relative to Vietnam stock market Asset allocation: 100% i

INVESTMENT POLICY STATEMENT

Target clients: People who age from 35 to 50

Time horizon: 5-10 years

Overall risk level: Moderate in relative to Vietnam stock market

Asset allocation: 100% invested in stocks listed on HOSE

Objectives:

Long term growth and capital preservation

Level of risk: Conservative

Short term liquidity needs: None

Target return for portfolio: 7% (based upon historical rates of return)

Portfolio selection guidelines:

In general, long term investment performance is determined by asset performance.Historically, stock assets offer higher rates of return along with greater volatility Fixedassets generally yield lower rates of return, lower correlation with equities and less risk.Diversification across asset geography and size is recommended

Legal and regulatory issues:

Vietnamese stock market is still young and not yet well-regulated It is considered to be lack of information transparency and the information, which is available, does not fulfill its tasks in supporting investors to make accurate decisions Corporation may provide enough

information as required by law but not on time For example, corporation does not makeinformation public on the corporation’s website at the same time it sends thoseinformation to State Securities Commission of Vietnam This causes inside informationwhich destroys the fairness in the market Besides, investors in Vietnamese stock marketoften over-react with rumors and make quick decisions without scanning the information.

FUNDAMENAL ANALYSIS

I MACRO ECONOMY

After a sharp decline in 2018, the pace of global economic activity is still quite weak Thedriving force in manufacturing activity, in particular, has weakened dramatically, to a levelnot visible since the global financial crisis Increased trade and geopolitical tensions haveincreased uncertainty about the future of global trading system and internationalcooperation in general, losing confidence in global business and investment decisions Anoticeable change on the side of monetary policy that increased accommodation throughboth action and communication has reduced the impact of emotional stress and financialmarket activity, while a service industry typical cases have supported job growth.Emerging market economy groups have partially driven the projected growth slowdown in

2019 and accounted for the majority of the expected recovery in 2020 including thosewho have suffered severe or ineffective stress compared to the previous average

The world economy is expected to grow at 3.0% in 2019 before recovering to 3.4 percent in 2020.

A slightly higher growth rate is expected for 2021–2024 This global growth model reflects a major

In contrast, growth is expected to moderate among a group of systematic economies likeEurope, United State, China, and Japan (Firgue 1).

Over the past 30 years, Vietnam has experienced significant changes in social andeconomic development Vietnam underwent the Doi Moi program, launched in 1986, theeconomy has experienced rapid growth and transformed from one of the poorestcountries in the world to a lower middle-income country

In the 21st century, Vietnam is in the process of integration into the global economy Most

of Vietnamese businesses are small and medium enterprises (SMEs) Vietnam has become

a leading agricultural exporter and an attractive destination for foreign investment inSoutheast Asia

In 2019, in the context of complicated fluctuations in the world and regional economies, Vietnam's economy is still on impressive growth momentum Vietnam's GDP grew at 7.02%.

Despite high economic growth, the economy still ensures macro stability The consumerprice index is at 2.79%, ensuring the target of controlling the consumer index below 4%.The current per capita income is about 2740 USD (if the economy scale is omitted, it isover 3000 USD) which will narrow the gap with the high-middle-income country(according to the World Bank's 2019 price benchmark) of 3,996 USD Real GDP growth isforecast to remain robust at around 6.9% in 2020 and 2021.

The economic impact of the improved transportation system, along with a series of broad-based economic reforms, became evident in the 2000s Average economic growth grew sharply by 7.4% per year from 1998 to 2007 and the poverty rate decreased from 35% in 2000 to 16% in 2006.

The benchmark interest rate in Vietnam was last recorded at 6% From 2000 to 2019, the interest rate in Vietnam was 7.21% on average, reaching an all-time high of 15% in June 2008 and a record low of 4.80%

in August 2000 The annual inflation rate in Vietnam rised to 5.23 percent in December 2019 from 3.52 percent in the previous month This is the highest inflation rate since January 2014, when inflation accelerated for housing and construction materials (5.12% compared to 3.73% in November); food and catering service (9.17% compared to 5.61%); education (4.25 percent vs 4.23 percent), while transportation costs rebounded (3.52 percent vs -2.13 percent) Meanwhile, inflation decreased for textiles, footwear and hats (1.49% compared to 1.59%) The annual core inflation, excluding volatile commodities, increased to 2.78% in December from 2.18% in November, the highest level since the chain started in April 2015 On a monthly basis, consumer prices increased by 1.40%, the highest since September 2012 Inflation Rate in Vietnam averaged 6.22% from 1996 to 2019, reaching an all-time high was 28.24% in August 2008 and a record low of -2.60% in July 2000.

II STOCK MARKET ANALYSIS

Despite some fluctuations, Vietnam’s domestic economy is in good shape and provides afloor for the stock market in 2019 This economic expansion is driven by strong growth inproduction and stable expansion in consumption, and is underpinned by an increase inFDI, urbanization, and infrastructure costs The role of FDI industries in promotingmanufacturing industry growth is likely to increase as the pace of relocation of factoriesfrom China to Vietnam is increasing across a range of industries However, the growingimportance of emerging domestic corporations such as Vingroup that are expanding theirfootprint into the industrial sector

Vietnam has increased by 73 points or 8.22% since the beginning of 2019, according toCFD, following this benchmark from Vietnam Historically, the Ho Chi Minh Stock Index ofVietnam reached an all-time high of 1211.34 in April 2018 The Ho Chi Minh StockExchange in Vietnam is expected to trade at 961.43 points By the end of this quarter,follow the global macroeconomic model of Trade Economics and analysts expect Lookingahead, we estimate it will trade at 933.96 over a 12-month period

III INDUSTRY ANALYSIS

Currently, 37 different industries listed on Ho Chi Minh Stock Exchange (of 11 sectors) Based on our analysis and forecast of the macro economy and the industry itself, the most potential ones (in

5 to 10 years) are: Insurance, Diversified Finance, Banks, Materials, Consumer Durables & Appear Energy, Software and Computer Services,,…

INDUSTRY POTENTIALS

Insurance The life segment was the most lucrative

market in 2017, with a total written

premium of $ 2.9 billion, equivalent to61.6% of the overall market value Agrowing middle class with an improved

awareness of insurance products has led to

demand in the market in recent years Theincrease in disposable income of the

population, in line with the strong growth

of the domestic economy, has boosted the

demand for insurance products

Diversified Finance

Bank Vietnam's banks have cleaned up their

balance sheets and the quality of theirsupport assets and we expect the

problematic lending rate across the system

to fall to 4.8% by the end of 2020 from the

5.1% at the end of 2018 Profitability will be

improved as banks increase lending to more

productive retail segments and small andmedium enterprises, while credit costs will

be stable as banks continue to deduct.make provision for assets with inheritanceproblems

Energy and Materials Vietnam has become a hot spot for energy

investors to spend up to $ 150 billion overthe next decade to meet rising energydemand, with coal going to dominate

despite signs of efforts Government forces

to green With a population of about 100

million and an annual GDP growth of about

7%, Vietnam forecasts that electricity

output will need to increase from

approximately 47,000 megawatts (MW) to60,000 MW in 2020 and 129,500 MW in

2030

Consumer Durables & Appare Energy Vietnam's consumer market is constantly

evolving, driven by changes in lifestyle,income and behavior of consumers The

country has experienced a steady growth in

disposable income in recent years, whichcan see a rapid growth of total consumerspending from US $ 80 billion to US $ 171billion since 2010 to 2018 This shows thatVietnamese consumers have more money

to spend In fact, in the first nine months of

2018, the country experienced 11.3% ofadditional spending This growth in

consumer activity has certainly created

opportunities for businesses to provide new

products and services available toconsumers

Software and Computer Services Vietnam's information technology industry

is experiencing high growth, driven by lowcosts and high quality labor Vietnam hasnow become the eighth largest IT serviceprovider globally The IT industry is

supported by the government with tax andlabor incentives, further promoting its

growth

METHODOLOGY

I STOCK PICKING

Based on industry analysis above and combined with top-down process, we decided to

choose 30 stocks with potential growth in the future with high expected return Choosing

30 companies allow us to significantly reduce the systematic risk and well diversified our

portfolio With deep and clear analysis about Vietnam economy, stock-market, industry

and company, we find out the safe and potential companies to invest in

We listed out stocks of the best performance companies basing on valuation historical

data including ROA, ROE, and net income

ROA and ROE are high compared among other companies in same industry

Net income has increased in 3 latest consecutive years, earnings growth and stability

After identifying 30 good companies in various industries, data about their stock price from

November 22nd to December 20th, 2019 had been collected In order to evaluate

their historical performance over one year period, historical mean return, historical

standard deviation, and historical variance for each security were calculated

TIEU LUAN MOI download : skknchat@gmail.com

The estimation of a stock’s mean return and market mean return is not only based on its

historical return but also our forecast and subjective judgment By using Solver analysis,

we came up with the followings stock in our portfolio with minimum variance:

The portfolio performance will be evaluated in order to answer these following questions:Does portfolio’s return outperform market return with the same given of risk?

Is the portfolio completely diversified from all unsystematic risks relative to the portfolio benchmark (VN-Index)?

Can manager’s skills bring higher portfolio’s return?

In order to answer above questions, we will apply some technical measurements (Treynor ratio, Sharpe ratio and Jensen’s measure) to evaluate the performance of the firms

In general, the portfolio we conduct has a lower average return than the VN-Indexbenchmark From calculation, we can easily observe that our portfolio risk is less than themarket More specifically, the portfolio average return is -0.058% compared with -0.032%

in market average return; the portfolio standard deviation is 0.624% while it is 0.537% forthe market

1 TREYNOR RATIO

Treynor ratio is a risk-adjusted measurement of return based on systematic risk Itindicates how much return an investment, such as a portfolio of stocks, a mutual fund, orexchange-traded fund, earned for the amount of risk the investment assumed

The higher Treynor ratio is, the better portfolio performs A high Treynor ratio shows thatthe investors can receive high return for each unit of market risk they have to face with.Treynor ratio is calculated as follow:

Like the Treynor measure discussed above, the greater a portfolio's Sharpe ratio, thebetter its risk-adjusted performance is

Sharpe ratio is calculated as follow:

Sharpe ratio =

Just like the Treynor ratio discussed above, Sharpe ratio is lower reveals more loss thanmarket over one unit of total risk.

According to the methodology, there are totally four steps to build a portfolio, whichcomprises market timing, asset allocation, sector selection, and security selection.However, our group just had the ability to carry out only the last two steps in this studywithout considering the time entering into the market as well as the asset allocation whichare always considered to have big influence on the results of any investment activities.Therefore, if we have more choice in the time and asset allocation decisions, we hope toconstruct an investment bringing out a better return

Appendix 1: Investment Policy Statement

The Investment Policy Statement with the promised required rate of return and moderate level of risk will be reflected consistently in the construction of this portfolio We will use the Investment Policy Statement as a guideline during the investment period and frequently review it to adjust the portfolio characteristics and investors’ references.

Appendix 1.1: Investment Objectives

This strategies focus on long term total return strategy Total return accounts for two categories of return: income and capital appreciation Income includes interest paid by fixed-income investments, distributions or dividends Capital appreciation represents the change in the market price of an asset This type of fund is suitable to investors who still want to make a profit, but accept the average returns various asset classes produce With the long term investment, they have the rights to hope that Vietnam economy will have positive signal especially the following industry that we will concern about.

Appendix 1.2 Target return for portfolio

As the nature of risk–return tradeoff and the downward trend of the market, the investors require

an appropriate return to compensate to their risk taken As we follow the total return strategy, we demand for moderate rate of return instead of aggressive return.

The target return for portfolio is 7%.

Appendix 1.3 Level of risk

The risk is defined as both unsystematic risk and systematic risk and is measured by standard deviation and beta variables The risk level of the portfolio,however, is standardized as the beta