Vietnam Insight

Lower-than-expected PPI, easing concerns over monetary tightening. US stock futures were little changed on Friday after the major averages advanced in the previous session, with the S&P 500 reaching fresh record highs. In regular trading on Thursday, the S&P 500 and Nasdaq Composite rose 0.65% and 0.81%, respectively, putting both benchmarks on course for their third straight weekly gains. The Dow also climbed 70 points, although it remained set to finish the week lower. Seven of the 11 S&P sectors ended in positive territory, led by communication services, real estate and technology stocks. The gains came after headline and core producer prices rose less than expected in July, reinforcing the previous day’s tame CPI report and easing recent concerns over hawkish signals from FOMC members. Investors now turn their attention to July retail sales data for further clues on the strength of the economy. Meanwhile, no major earnings reports are scheduled for Friday.

Range-Bound Trading with Resistance at 1,800. The VN-Index closed the trading session at 1,765.63 points (down 27.55 points, or 1.54%), with trading volume hovering around the 20-day average. During the session, 85 stocks advanced while 227 declined. GVR, BCM, and TCB exerted a positive influence on the index, whereas VIC, VHM, and GAS weighed it down. Foreign investors were net sellers of over VND 570 billion, focusing their sales on TCB, VHM, and VIC, while net buying GEX, LPB, and SSI.

Trading Strategy: Investors may take advantage of market pullbacks to gradually accumulate positions while maintaining a prudent cash allocation to manage risk and preserve flexibility to increase exposure once a market recovery is confirmed. Investors should avoid using margin to bottom-fish, as the market may still be in the process of forming a second bottom. In addition, technical rebound sessions provide an opportunity to rebalance portfolios by reducing exposure to companies whose business performance has fallen short of expectations.

Current portfolio: LPB, PAN, MBB, POW; Watchlist: HPG, REE, NVL

High-risk stocks to avoid: Real estate (PDR, KDH, NLG), HDG and PNJ