Vietnam Insight

The market is pricing in a 60% probability of a Fed rate hike. US stock futures stabilized on Wednesday after the major averages declined in the previous session, pressured by rising oil prices that heightened concerns over inflation and the potential for higher interest rates. The moves came after the US struck five Iranian tankers near Kharg Island in retaliation for attempted missile attacks on a US warship. Investors are also awaiting key US inflation data this week, which could provide further insight into the Federal Reserve’s rate path ahead of its meeting next week. Markets are currently pricing in roughly a 60% probability of a 25-basis-point rate hike. During Tuesday’s regular session, the Dow fell 1.18%, while the S&P 500 and Nasdaq Composite declined 0.58% and 0.32%, respectively. Credit-sensitive software stocks came under pressure, with Microsoft falling 1.1%, Palantir dropping 2.3%, and Amazon slipping 0.6% ahead of its sterling bond offering.

Sideways trading within a wide range, with resistance at 1,900 points. The VN-Index ended the trading session at 1,830.44 points, up 8.8 points (+0.48%), with trading volume remaining below the 20-session average. There were 152 advancers and 158 decliners during the session. The stocks contributing positively to the index were VIC, GAS, and BSR, while VHM, LPB, and VRE weighed on the index. Foreign investors were net sellers of VND398 billion, with selling activity mainly concentrated in VCB and VPB.

Trading Strategy: Investors should remain patient and wait for market pullbacks or short-term volatility on relatively low trading liquidity to identify more attractive entry points. The preferred strategy is to focus on stocks that have yet to rally significantly relative to the broader market, but have solid business fundamentals, positive growth prospects, and reasonable valuations. This approach can help mitigate the risk of chasing stocks that have already experienced sharp rallies. Meanwhile, investors should avoid excessive optimism when the market moves up strongly and refrain from increasing their exposure too aggressively at elevated price levels. Maintaining an appropriate cash position will provide greater flexibility to deploy capital during market corrections while allowing investors to better manage downside risks.

Buy Recommendation: VRE; Sell Recommendation: POW; Current portfolio: MBB, POW, NVL; Watchlist: HPG, REE, BVH, GAS and securities stock (HCM, SSI, VCI…)