invest in a two risky asset portfolio and risk free asset

Global growth forecast for 2022 of some ASEAN countries...4Figure 3.. As of December 2022, most internationalorganizations have adjusted global economic growth in 2022 compared to previo

THE UNIVERSITY OF DANANG

Phan Thi Thuy Duong Tran Thi Y Lan Tran Thi Nhu Binh

-Da Nang, 11/

2023 -TABLE OF CONTENT

INTRODUCTION 3

I FUNDAMENTAL ANALYSIS 4

1 Macroeconomic analysis 4

1.1 The global economy: 4

1.2 The domestic macroeconomy: 5

2 Industry analysis: 8

2.1 Technology industry 8

2.2 ICT retail industry 9

3 FIRM ANALYSIS 10

3.1 About FPT 10

3.2 About FRT 11

II INVEST IN A TWO-RISKY-ASSET PORTFOLIO AND RISK-FREE ASSET .13 1 Daily rate of return of each stock and vn-index (Data covers from 01/01/2022- 13/10/2023) 13

2 The expected rate of return of the two stocks and the Vn-index: 13

3 The covariance and correlation of the two stocks: 14

4 The minimum variance frontier and point out the efficient frontier: 15

5 Allocate 100 million dong to the portfolio, with a risk-free rate of 7%: 16

III THE OPTIMAL PORTFOLIO FOR THE CLIENTS 17

1 The portfolio and the market portfolio (Vn-index) 17

2 The clients are borrowers and the clients are lenders: 17

3 The maximum fee in percentage for the portfolio 18

CONCLUSION 19

REFERENCES 20

TABLE OF FIGURES

Figure 1 Global growth forecasts for 2022 and 2023 by international organizations 3

Figure 2 Global growth forecast for 2022 of some ASEAN countries 4

Figure 3 Vietnam's growth forecast by a number of international organizations 5

Figure 4 Vietnam's inflation rate 6

Figure 5 Vietnam's benchmark interest rate 6

Figure 6 Total ICT industry revenue in the period 2021 - 2025 8

In recent years, the number of investors in the stock market has been huge andthis number is likely to increase in the future This will be a good signal for thecorporate capital market On the other hand, many investors have suffered heavylosses when investing in unsuitable stocks It seems that these investors do notunderstand future returns and the risks that may be involved in investing in thesestocks

Therefore, in this report, our team decided to analyze to provide informationthat helps investors make decisions easier and build optimal investment portfolio forcustomers to bring the greatest benefits to customers

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I FUNDAMENTAL ANALYSIS

1 Macroeconomic analysis

1.1 The global economy:

The outlook for the macroeconomics of the global economy is subject to a widerange of factors and can change over time As of December 2022, most internationalorganizations have adjusted global economic growth in 2022 compared to previousforecasts The International Monetary Fund (IMF) maintains its global economicgrowth forecast at 3.2% in 2022 compared to July 2022 but reduces its growthforecast for 2023 by 0.2 percentage points , reaching 2.7% The Organization forEconomic Cooperation and Development (OECD) forecasts that world economicgrowth in 2022 will reach 3.1%, an increase of 0.1 percentage points compared to theforecast in September 2022, and will slow down to 3.1% 2.2% in 2023 Fitch Ratings(FR) adjusted its 2022 economic growth forecast by 0.2 percentage points compared

to the forecast in September 2022, reaching 2.6% before decreasing to 1.4% in 2023

Figure 1

Inflation has surged to its highest level in decades, forcing governments totighten monetary policy, and causing households to tighten spending amid a decline infinancial support related to the Covid-19 pandemic gradually At the same time, theconflict between Russia and Ukraine significantly increases the likelihood of globalgeopolitical disruption Although the impact of the pandemic has subsided in most

countries, its lingering waves continue to disrupt economic activity, especially inChina According to the IMF, the global growth forecast for 2022 will reach 3.2%(remaining the same as the forecast in July 2022), 0.4 percentage points lower than theforecast made in April 2022 and reaching 2.7% in 2023

Although the challenges remain like the epidemic or geopolitical instability,many forecasts that it would not last long, and generally, in the short or medium-termgrowth prospects of the international economies are likely to be still on track forrecovery

1.2 The domestic macroeconomy:

In Vietnam's Macroeconomic Update in December 2022, the WB said thatboth growth drivers, exports and domestic demand, are slowing down Vietnam'sexports are affected by weak external demand Post-Covid consumption also seems torecover slowly In addition, tighter financial mobilization conditions and risinginflation may affect domestic demand shortly

Inflation reached 4.4% in November (compared to the same period) andreached 4.3% over the previous month, of which food prices and housing prices werethe two main contributing factors Core inflation increased from 4.5% in October(compared to the same period) to 4.8% in November 2022 (compared to the sameperiod)

Vietnam's currency appreciated slightly in November 2022, although the priceincrease of the dong was still the lowest compared to major currencies and currencies

of neighboring countries

Coordinating fiscal and monetary policies is an important condition tomaintain price stability in the context of rising core inflation in the country A moreprudent and prioritized spending strategy to ensure investment in human capital, greeninfrastructure, and climate adaptation will help increase the resilience and potential ofthe economy

Figure 2 Global growth forecast for 2022 of some ASEAN countries

a) GDP

Overview:

GDP growth in the second quarter of 2023 is estimated to increase by 4.14%over the same period in 2022, only higher than the growth rate of 0.34% in the secondquarter of 2020 in the period 2011 - 2023 GDP growth in the first 6 months of 2023reached 3.72%, only higher than the growth rate of 1.74% in the first 6 months of

2020 in the period 2011 - 2023

Forecasts:

In the Asia-Pacific Economic Update Report in October 2022, the WB statedthat Vietnam's GDP growth in 2022 will reach 7.2% and decrease to 6.7% in 2023 According to the IMF, Vietnam leads ASEAN-5 with a growth forecast toreach 7% in 2022, but will decrease to 6.2% in 2023

According to forecasts of the Development Bank (DBA), Vietnam's GDPincreases by 7.5% and decreases to 6.3% in 2023

Figure 3

b) Inflation

Overview : According to General Statistics Office:

Average CPI in the fourth quarter of 2022 increased by 4.41% over the sameperiod For the whole year 2022, CPI increased by 3.15% compared to 2021, reachingthe target set by the National Assembly

Forecast: The World Bank (WB) forecasts that inflation will reach 4.4% in

November (compared to the same period) and reach 4.3% over the previous month, ofwhich food prices and housing prices are two main contributing factors Core inflationincreased from 4.5% in October (compared to the same period) to 4.8% in November

2022 (compared to the same period)

In the Asian Development Outlook, inflation forecasts are revised downfrom 4.5% to 3.8% for 2023 and from 4.2% to 4.0% for 2024

Figure 4

c) Interest rate and monetary policy :

Interest rate: The benchmark interest rate in Vietnam was last recorded at4.50 percent

Figure 5.

Monetary policy:

The Government has formulated a socio-economic recovery and developmentplan (Decision No 11/NQ-CP of 30 January 2022)

The plan aims to:

- Revive and rapidly develop manufacturing and business activities

- Boost growth drivers, prioritize some key industries and sectors

- Achieve targets for 2021-2025: average GDP growth of 6.5-7%/ per year, lowpublic debt targets At the warning line approved by the National (assemblyResolution No 23/2021/QH15, the urban unemployment rate is below 4%)

- Maintain macroeconomic stability and ensure a large balance in the mediumand long term This shows that the government is creating many conditions for therecovery and development of enterprises This is a positive factor for investing indomestic companies

=> From the above analysis, our group found positive points in the domestic stockmarket Therefore, we decided to choose domestic stocks for our portfolio

d) Exchange rate:

In the first 6 months of 2023, the VND stabilized in the context of the StateBank continuously reducing operating interest rates and abundant foreign currencysupply According to the National Bank, the VND to USD exchange rate fluctuates in

a narrow range, between 23,610 - 23,755 VND/1 USD, up 0.4% compared to the end

of 2022 The USD index still maintains its strength when the FED gradually increases

at the end of the interest rate cycle

In the coming time, the FED will maintain interest rates at a high level and maytighten monetary policy further as difficult international developments continue to putpressure on exchange rates and the market domestic foreign currency

2 Industry analysis:

2.1 Technology industry

When the industrial revolution 4.0 was taking place strongly around the world,the development of the Information Technology industry is the "key" to change,contributing to the growth of the country in many fields

Information Communication Technology (ICT) has become one of theindustries with significant contributions to the State budget This helps Vietnamtransform itself into one of the leading countries in the production of hardware andelectronics - telecommunications technology with the 2nd position in mobile phoneproducts and the 10th position in electronic products Along with that, Vietnam alsoranks 9th in software outsourcing

In 2021, total ICT industry revenue will reach 136.15 billion USD, growingabout 9.20% over the same period in 2020 Of which, revenue mainly comes from thehardware and electronics industry, reaching 121 billion USD, accounting for 121billion USD nearly 90% of total ICT industry revenue

The Ministry of Information and Communications forecasts that in theremaining period from 2022-2025, the ICT industry will maintain double-digit growthand achieve revenue from 155 billion USD to 240 billion USD

Figure 6 Total ICT industry revenue in the period 2021 - 2025

2.2 ICT retail industry

According to reports from many market research units, 2023 is predicted to be

a year of many difficulties and challenges for the ICT retail industry During theCovid-19 pandemic, people have stepped up their purchases of phones and computers

to work and study online, so now there is no need to replace them

In fact, the slowing global economic growth is also causing clear impacts onthe domestic economy Businesses lack export orders, many places cut working hours,lay off workers, especially in the group of labor-intensive businesses such as textiles,garments, footwear, etc., causing people's income to decline

However, the growth rate of the retail industry is still recovering and continues

to be above the growth rate of GDP According to the Ministry of Industry and Trade

of Vietnam, by 2025, the added value of Vietnam's trade industry will contributeabout 13.5% of GDP and total retail sales of goods and service revenue will increaseabout 9 - 9.5% each year until 2025 [1] [2]

+ FPT's position globally has been recognized and affirmed through acustomer list of more than 700 large enterprises in the world, especiallynearly 100 customers on the Fortune 500 list

+ With a pioneering orientation in researching and applying the latesttechnology trends, FPT will continue to be a leader in digital transformationfor customers, bringing new technologies such as AI, Big Data, IoT, solutions in all fields such as smart transportation, smart health, digitalgovernment,… [3]

b) Financial ratios analysis [4]

- Liquidity ratios (2022):

- Cash ratio: 0.26 The index shows that the company does not have enoughcash to pay short-term debts

- Quick ratio: 1.18 With a level > 1, the business is in a safe zone to be able

to pay short-term debts

- Short-term ratio: 1.26 The enterprise is paying debts are quite good

- Profitability ratios

+ Net profit margin: 15%(2021 ), 14.75%( 2022 )

+ ROE: 21.67% (2021), 22.71 % (2022)

+ ROA: 9.09% (2021); 10.08 % (2022)

=> FPT company has created very good profits and always maintained itsoperating efficiency.

c) Risk analysis

- Obsolescence Risk: Obsolescence risk is the risk that a company's operationsand business model will become obsolete and lose its competition, especially inthe technology industry This risk is extremely important, business enterprisesmay slip and collapse because they cannot keep up with their competitors.Thebiggest risk of obsolescence is that someone might find a way to make a similarproduct for less

- Legal risks: Legal risks are related to the relationship between the governmentand the business Specifically, it is the risk that government policies restrict theoperation of a company or industry Thereby adversely affecting the investor'sstock holdings in that company or industry lawsuits, new regulations orstandards, specific taxes or patent laws, intellectual property rights

- Competition risk: Great competition from domestic and internationaltechnology corporations Regarding software export, FPT Software has almost

no domestic competitors, but it faces great competition from technologycorporations in India and China, which also have developed softwareoutsourcing activities In terms of telecommunications, FPT has to compete formarket share with two other big players, VNPT and Viettel Telecom

- Security Risks: These are the risks associated with information technologicalknow-how and trade secrets may be disclosed or leaked

- In addition, there are many other types of risks such as disaster risk,relationship risk, communication risk, and risk in information technologyapplication

Retail is also a major retailer of Apple products in Vietnam, holding the highest level

of Apple authorized reseller status [5]

- FPT Retail has a strong physical presence in Vietnam, with over 700 retailstores across the country The company's stores are located in major cities andprovinces, as well as in smaller towns and rural areas FPT Retail also has a strongonline presence, with a website and app that reach over 10 million users per month

- FPT Retail is a well-known and respected brand in Vietnam, recognized forits high-quality products, competitive prices, and excellent customer service Thecompany's flagship brand, FPT Shop, is ranked among the Top 10 Most TrustedBrands in Vietnam by Vietnam Report for several consecutive years [6]

b) Financial ratios analysis [7]

- Liquidity ratios (2022)

+ Cash ratio : 0.09 The index shows that the company does not have enoughcash to pay short-term debts However, this does not mean that the company will gobankrupt because there are many ways to raise more capital

+ Quick ratio: 0.34 The index shows that the company will have problemspaying off short-term debts quickly

+ Short-term ratio : 1.1 This ratio shows that the company currently hasenough short-term assets to pay off all its short-term debts

Increased competition: FRT Retail faces increasing competition from other ITretailers, both domestic and international

Internal Risks

Inventory management: Excess stock can tie up capital and lead to losses,while stockouts can frustrate customers and damage the company's reputation