Vietnam Insight

Treasury yields and oil prices rebounded, putting pressure on US equities. US stock futures hovered near weekly lows on Friday after major averages faced heavy selling pressure in the previous session, as Treasury yields rebounded amid concerns that the government’s plan to lower borrowing costs may offer only a temporary solution. Rising oil prices, as the US and Iran remain deadlocked over the Strait of Hormuz, also stoked inflation concerns. In regular trading on Thursday, the Dow fell 1.32%, the S&P 500 declined 0.87% and the Nasdaq Composite dropped 1%. Nine of the 11 S&P sectors finished lower, with consumer staples, health care and consumer discretionary stocks leading the declines. Long-term Treasury yields reversed Wednesday’s drop following the Treasury Department’s announcement of larger debt buybacks. In corporate news, Ross Stores jumped more than 8% in extended trading after the retailer posted stronger-than-expected second-quarter results.

Range-Bound trading with resistance at 1,800. The VN-Index closed the trading session at 1,734.24 points, up 7.55 points (+0.44%), with trading volume remaining below the 20-session average. A total of 165 stocks advanced, while 137 stocks declined during the session. The main positive contributors to the index were VIC, MBB, and VCB, whereas DMX, LPB, and LPS weighed on the index. Foreign investors recorded a net sell value of nearly VND 616 billion, mainly concentrated in VIC, VPB, and VIX

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