Vietnam Insight

Under pressure from persistent tensions in the Middle East and rising U.S. Treasury yields. US stock futures were little changed on Tuesday after the major averages started the week on a sour note, pressured by persistent tensions in the Middle East and rising Treasury yields. In regular trading on Monday, the Dow fell 0.51%, the S&P 500 declined 0.52% and the Nasdaq Composite lost 0.32%. Ten of the 11 S&P sectors ended lower, led to the downside by communication services, consumer staples and financials. The declines came as oil prices climbed higher on fading prospects for a new peace agreement between the US and Iran, while efforts to reopen the Strait of Hormuz remained deadlocked. The 30-year Treasury yield also climbed to its highest level since 2007, reflecting concerns over inflation and rising government spending. Investors now turn their attention to retail earnings due this week from Home Depot, Lowe’s and Walmart for fresh insights on consumer strength.

Range-Bound trading with resistance at 1,800. VN-Index ended the session at 1,727.46 points, down 1.62 points (-0.09%), with trading volume below the 20-session average. 149 stocks advanced, while 152 declined. GAS, STB, and BSR were the top positive contributors to the index, while VIC, LPB, and VPB weighed on performance. Foreign investors recorded net selling of nearly VND601 billion, mainly concentrated in VIC, VHM, and ACB.

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.

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

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