Vietnam Insight

Weekly Highlights

Public debt strategy to 2030 adjusted: public debt capped at 60% and government debt at 50% of GDP.

According to Thanh Nien (15/10), Samsung's subsidiaries plan to invest nearly KRW 8,000 bn (about USD 6 bn) in Vietnam; LG Innotek has a USD 1 bn semiconductor plant project in Hai Phong; Intel is investing about USD 1.5 bn in Ho Chi Minh City's high-tech park; and BYD Electronics is adding USD 479.8 mn at Phu Ha Industrial Park, Phu Tho.

At a meeting with leading enterprises on 12/10 on the occasion of Vietnam Entrepreneurs' Day, General Secretary and State President To Lam stressed the need to substantively remove difficulties and cut costs for businesses, strengthen confidence and build a stable, transparent and favourable business environment.

Assessment: The market dipped but recovered on Friday, marking the fourth consecutive weekly decline. Basic Resources and Financials rebounded well, while Real Estate (mainly the Vingroup stocks) and Oil & Gas fell sharply. Money flow tends to take profits in the groups that rallied strongly 1-2 weeks ago and rotate into groups with cheaper valuations. Mr. To Lam's emphasis is also opening a signal of interest rate cuts to support businesses, which could create momentum for Real Estate, currently trading at low levels. In addition, the Q3 earnings season is expected to support further rebounds in many groups that have not yet risen and improve the spillover, although we still believe market liquidity will remain low.

Technical View: VN-Index closed the week at 1,705.9 points (-29 points, -1.68%) on the weekly chart with lower liquidity. The market continued to decline, approaching the 1,700-point area, and bounced slightly on Friday. Foreign investors net sold about VND 500-700 bn per session. The market needs to be watched further at the 1,700-point level; although this is only a psychological level, a decline to the lower bound of the trading range at 1,660 is possible.

Investment Ideas: Prioritise defensive groups with low beta, strong cash flow, high dividends and low debt structure amid elevated interest rates. Insurance and Utilities (electricity and water) can be considered. The market may decline further in the short term, so short-term traders should prefer to stay on the sidelines.