Vietnam Insight

Key highlights:

Oil prices surpassed $100/barrel as the US-Iran conflict escalated again.

The US inflation report released on the evening of September 11 could become the key data point determining whether the Fed raises interest rates or remains on hold at next week’s meeting.

US Treasury yields approached 5% ahead of the Fed’s decision, with markets pricing in the possibility of a rate hike.

The ECB decided to raise its key deposit rate by 25 basis points, from 2.25% to 2.5%, in line with most investors’ expectations. This marked the ECB’s second rate hike since June.

Assessment: The market is clearly reacting to signals of a potential Fed rate hike, with multiple indicators reinforcing this expectation. Following the PPI data, the probability of a 25-bp Fed rate hike in September, according to CME FedWatch, increased to around 70%, from 62% before the report was released. August PPI increased by more than 5% YoY, above the Fed’s 2% target. In addition, elevated oil prices and higher US Treasury yields are warning signs of a potential rate hike. Investors are now awaiting tonight’s US CPI data. The high-interest-rate environment is no longer limited to the US but has become a global story, with similar developments in the EU and Japan, putting pressure on Vietnam as well. Although the domestic market has benefited from foreign capital inflows, negative sentiment appears to be exerting stronger influence.

Technical View: The VN-Index ended the week at 1,795.2 points (-57.8 points, -3.12%), with low liquidity on the weekly chart. However, the daily chart shows relatively strong selling pressure in the real estate and banking sectors. There has been no structural change in the market, which continues to trade within the 1,680–1,900 range.

Investment Idea: Investors should remain patient and wait for market volatility to accumulate stocks gradually. Given the numerous unpredictable and conflicting factors, an increasingly cautious and disciplined equity investment strategy is warranted. Corrections of 5-7% could occur at any time; therefore, investors should prioritize risk management.