Vietnam Insight

Highlights

US futures mixed ahead of major bank earnings, European stocks rise for a second straight session, crude oil holds above $93 per barrel. US market: US stock futures traded mixed on Tuesday as investors prepared for major bank earnings reports that could shape the direction of the third-quarter earnings season. S&P 500 and Nasdaq 100 futures slipped 0.1% and 0.2%, respectively, while Dow futures edged up 0.05%. JPMorgan, Goldman Sachs, Citigroup and Wells Fargo are set to release their latest quarterly results today. Other major companies due to report include Johnson & Johnson and UnitedHealth. Investors will also assess existing home sales data and remarks from Federal Reserve officials Christopher Waller, Tom Barkin and Susan Collins. These developments come ahead of Wednesday’s September inflation report, which could influence the Fed’s next policy decision. In Monday’s regular session, the S&P 500 and Nasdaq Composite fell 0.06% and 0.44%, respectively, pressured by a selloff in memory chip stocks. Meanwhile, the Dow gained 0.38%.

Sideways with sharp divergence. The market declined but breadth improved, with 158 advancing stocks against 154 decliners. The decline was driven mainly by VIC and VHM, while the banking group performed positively. The market is currently testing support at 1,720, which also coincides with the support levels of the VIN group. We expect a rebound here as Q3 earnings news begins to be priced in, while the Vingroup stocks are expected to trade sideways in the base case.

Trading strategy: Favor defensive, low-beta names with strong cash flow, high dividends and low borrowings given high interest rates. With thin liquidity the market can fall suddenly, so this is a better time to buy on weakness than to chase prices. Pay more attention to individual sectors and stocks than to the headline index in a sharply divergent market. Favor sectors with strong cash flow together with expectations of outstanding Q3 earnings.

Current hodling portfolio: REE; Watchlist: TCH BVH, GAS, HPG; High risk stocks to avoid: PNJ NVL