Vietnam Daily Market Recap Apr 11, 2024

Foreigners buy Vietnamese stocks despite negative US inflation news

The VN-Index gapped down by 8.7 pts at the open after US CPI for March was announced as slightly higher than expected (3.5% vs expected 3.4%). The index recovered in the morning session and even traded in positive territory in the afternoon before closing almost flat, down 0.4 points, or 0.03%, to 1,258. The HN-Index followed a similar movement but closed above its reference level, increasing 0.28 pts (+0.12%) to close at 239.1.

Foreign investors net bought VND51.7bn (US$2.1m) today despite the bearish US inflation news, extending a recent trend of foreigners buying local stocks. As of the end of yesterday’s trading session (April 10), Fubon FTSE Vietnam ETF returned to net buy three days in a row in this week, with the total value of US$18m spent on Vietnamese stock, with a focus on HPG (1.5m shares), VHM (1m shares), SSI (894m shares), and SHB (829m shares).

Positive business results of leading steel companies helped lead the sector higher today. At the AGM of HPG (+0.4%) held this morning, it was announced that the estimated revenue for the first quarter of 2024 increased by 19% yoy, reaching VND31tn (US$1.24bn), while after-tax profit increased seven times, reaching VND2.8tn (US$112.2mn). This was thanks to sales volume increasing significantly in the first few months of the year and inventory of high-priced raw materials almost selling out. Currently, the continuous decrease in iron ore prices has helped to push down the average cost of goods sold. This year, Hoa Phat Group plans earn VND140tn (US$5.6bn) in revenue and VND10tn (US$0.4bn) in after-tax profit, respectively, up 17% and 46% compared to 2023 results. Other steel stocks today also rose, including HSG (+1.1%) and NKG (+3.8%).

DGC (+1.7%) saw positive movement today as it prepares to launch a new factory with an investment of up to VND12tn (US$480mn). This investment project is the largest in Duc Giang’s history and will significantly increase productivity once it is operational. The project’s favorable location near the source of raw materials and the Nghi Son deep-sea port further strengthens DGC’s business prospects. Additionally, Dragon Capital fund group has purchased an additional 150,000 shares to become a major shareholder of the corporation, raising its total ownership from 4.99% to 5.03%.

Other large-cap stocks that rose include BID (+1.9%), FPT (+1.0%), GVR (+0.8%), and DGC (+1.7%), with BID contributing 1.4 pts to the index’s rise. On the other hand, VCB (-0.5%), TCB (-1.2%), LPB (-2.4%), BCM (-1.6%), and MSN (-1.0%) were today’s top laggards, dragging the market down by a total of 1.9 pts.

Macro note

Higher-than-expected US March inflation clouds Fed’s June pivot

According to the US Bureau of Labor Statistics, US consumer prices rose 3.5% YoY in March (vs +3.2% YoY in February), the highest in six months as Americans continued to pay more for gasoline and rental housing, leading investors to bet that the Fed will delay rate cuts to September at the earliest. Expectations for a rate cut in June plummeted, with the CME FedWatch tool now showing only a 17.5% chance, down from 61.1% last week while expectations of a September cut rose to 45.5%. Following the CPI results, DXY appreciated 1% to more than 105.2 and the 10-year US Treasury yield rose to near a five-month peak.

The latest inflation report underscores the challenges in bringing prices down. Persistent inflation continues to squeeze household budgets, delaying potential cuts. Prior to the CPI readings, FOMC’s March meeting minutes show that members have been on alert for stickier-than-expected inflation, buoyed by rising commodity prices as well as robust consumer spending.

Overall, we believe that as markets have been receiving continual macro signs of rising inflation and a resilient job market, the Fed may deliver a more circumspect tone towards the highly-awaited cut so as to avoid grappling with the repercussions of underestimating inflation.

Read the full report: HERE