Vietnam Insight

US Treasury yields declined, supporting a recovery in equities. US stock futures edged higher on Thursday after posting a modest rebound in the previous session, as a sharp decline in Treasury yields helped improve investor sentiment. In regular trading on Wednesday, the Dow and S&P 500 rose 0.22% and 0.21%, respectively, while the Nasdaq Composite advanced 0.16%, with all three benchmarks snapping a three-day losing streak. The consumer discretionary, materials and consumer staples sectors outperformed the broader market, while industrial, technology and financial stocks lagged. Yields on longer-dated US Treasurys pulled back from multi-year highs after the government announced plans to more than double repurchases of 10-, 20- and 30-year debt over the coming months. The move came after the 30-year Treasury yield surged to its highest level since 2007 earlier this week. Investors now turn their attention to retail giant Walmart’s earnings later in the global day, along with the latest weekly jobless claims data.

Range-Bound trading with resistance at 1,800. The VN-Index ended the session at 1,726.69 points, down 5.33 points (-0.31%), with trading volume below the 20-session average. 97 stocks advanced, while 220 declined. LPB, VNM, and HPG were the top positive contributors to the index, while VCB, CTG, and BSR weighed on performance. Foreign investors recorded net selling of nearly VND710 billion, mainly concentrated in VIC, VPB, and STB.

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: MBB, POW; Watchlist: HPG, REE, NVL

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