Vietnam Insight

Highlights:

• Exchange rate up 4.9% since the beginning of the year, the State Bank of Vietnam sells foreign exchange to intervene for credit institutions with negative status.
• The tension in the Middle East continues to escalate as both Israel and Iran continue to make tough statements threatening and warning each other.

Assessment: We believe that the trigger for a sharp decline of VNINDEX this week comes from the following two factors: (1) Increasing exchange rate pressure: Since the end of February, the DXY index has shown signs of strong increase and reached 106 points today (19/04) (+2% in the past week), putting great pressure on the domestic exchange rate. Since the beginning of the year, the free exchange rate has increased by 4.2%, putting pressure on Vietnam's continued pursuit of an expansionary monetary policy. (2) Geopolitical tensions between Iran and Israel then escalated on the evening of April 13, acting as a catalyst for the sharp decline of nearly 60 points on April 15, followed by a continued decline in the market.

Technical view: On the weekly chart, VNINDEX closed at 1,174 (-101.75 points, -7.97%) with high liquidity. The market has broken through key support levels and is trading in the EMA 200 zone. In the Friday session, the market formed a long-tailed candle, indicating strong volatility and a tug-of-war between supply and demand.

Investment Ideas: Investors should stay calm and take advantage of rallies to reduce their stock weighting to a safe level. They should not try to catch the bottom as the market has not shown any signs of stopping its decline.

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