Vietnam Insight

Key highlights:

The 30-year U.S. Treasury yield surged to 5.47%, the highest level since 2004, as rising oil prices and concerns over inflation and public debt spread globally. The sell-off has also spilled over into other major global bond markets.

SMBC is reportedly “in talks to acquire an additional” 5% stake in VPBank. VPBank wants to sell the shares to its partner at a price above the current market price. Previously, in 2023, SMBC paid approximately 40% above the market price, equivalent to around USD 1.5 billion, to acquire a 15% stake in the Vietnamese bank.

Masan Group will sell a 4.99% stake in mining company MSR to U.S.-based Elmet, with the partnership involving committed production worth USD 1.5 billion.

Assessment: The first trading week following the market upgrade has arguably fallen short of most investors’ expectations, as foreign investors continued to record strong net selling. This could be explained by the reallocation of capital from Frontier ETFs having a stronger impact than the gradual deployment of capital from Emerging Market ETFs. In addition, the rise in U.S. Treasury yields to their highest level since 2007 also contributed to a sharp decline in market liquidity. Market movements have been relatively out of sync, with individual stocks driven by company-specific developments, notably HDB, VPB and MSR, while the broader market remained highly divergent and edged lower.

Technical View: The VN-Index ended the week at 1,785 points (-30.55 points, -1.68%) on the weekly chart, accompanied by declining liquidity. As such, liquidity has yet to show signs of improvement and has generally remained on a downward trend since the beginning of the year. During the week, most of the major movements came from the VIC group, while other sectors showed mixed performance. The 1,800 support level, corresponding to the 50-day moving average (MA50), is at risk of being breached.

Investment Idea: Investors may consider accumulating large-cap stocks at lower levels, particularly those expected to attract capital following the market upgrade, with attractive valuations and strong fundamental (FA) profiles. However, investors should remain cautious and avoid chasing prices at elevated levels, as the primary trend remains range-bound.