Vietnam Daily Market Recap Apr 12, 2024

Overwhelming purchasing power over the session

The VN-Index rose 1.46% (+18.4 points) to close at its intra-day high of 1,276.6, with trading volume reaching more than VND17,000bn (US$0.71bn). The index also rose 1.71% for the week. The HNX-Index lost 2.27 points (+0.95%) to close at 241.34, with its trading value reaching more than VND1,600bn (US$66m).

After a large-scale decline last week banks (+2.3%) recovered strongly today, including MBB (+3.79%), TCB (+5.10%), CTG (+3.06%), VIB (+3.06 %) and STB (+0.87%), which contributed nearly 8.5 points to the Index and were its strongest supporters.

The rally in bank shares came as the SBV proposed to reduce the required reserve ratio by 50% for those banks receiving mandatory transfers of weak credit institutions. This is a very important factor that could shift the interbank market from being liquidity-constrained to having a surplus compared to its previous condition. This action from the SBV could address two things at once: first, withdrawing money in aggregate to cool down the exchange rate and also reducing the scarcity of interbank market liquidity. Although only lowering the required reserve ratio for the four banks undergoing mandatory transfers (VCB, HDB, VPB, MBB), the interbank market principles of lending to each other will improve overall liquidity across the interbank market. Simply observing the interbank interest rates, if they do not increase further in the near future, it will indicate that this argument is reasonable.

The SBV has net absorbed VND113,050bn (US$4.7bn) since it began selling T-bills on March 11.  This week, about VND51,000bn (US$2.1bn) was net pumped through OMO. The T-bill bidding interest rate was 3.5% today vs. 2.5% last week. Interbank interest rates all currently increased at short terms, overnight interest rates are at 4.3% today, the highest in nearly a year. Rates for tenors below 1-month range from 4.0-4.2%, 6-month term rates increased strongly from a flat 3.9% last week to 4.72% today.

The Warehousing & Transportation sector had the strongest recovery today of 3.51%, in which VJC (+5.00%), HVN (10.63%), GMD (+4.74%), SCS (+3.46%) and HAH (+0.36%) increased well along with the recovery of exports. March’s preliminary merchandise export turnover reached US$34bn (+14.2% yoy). Exports increased sharply with the outstanding growth of agricultural products and industrial processing and manufacturing goods such as phones, computers, machinery and equipment had a clear breakthrough when reaching a turnover of more than US$1bn each.

O&G were supported by oil prices rising to their highest level since Oct 2023 to around US$91/barrel today although turning down today amid persistent inflation and hopes of a Fed cut decrease. PVS (+0.7%), PVD (+2.66%), PVT (+1,575), GAS (+1.14%) had good gains during the session.

Foreign net sold more than VND538bn (US$22.4m) on HOSE today, focusing on VHM (VND231.77bn), MSN (VND73.88bn), HSG (VND60.82bn) and PDR (VND58.98bn). On the contrary, foreign investors net bought nearly VND13bn, focusing on IDC (VND25.12bn) and LAS (VND4.95bn). For the week, foreign investors net sold VND1,194bn (US$XX). This is their sixth consecutive week of net selling. Since the beginning of the year, foreign investors have net sold VND14,772bn (US$615.5m).

On the afternoon of April 11, 2024, the State Securities Commission worked with representatives from FTSE Russell and Morgan Stanley to discuss upgrading the market from Frontier Market status to Secondary Emerging Market in 2025. At the meeting, Chairman Vu Thi Chan Phuong provided information about the results achieved by the Vietnamese stock market in recent times and the policies that the Government and Ministry of Finance of Vietnam have been implementing to promote the development of the stock market and create the most favorable conditions for foreign investors to participate. To date, Vietnam has achieved seven of the nine criteria, while there are two remaining criteria that need to be completed: pre-transaction deposit for foreign investors and foreign investor ownership ratio limits. The World Bank estimates that upgrading the stock market could bring up to US$25bn of new investment capital from international investors into the Vietnamese market through 2030.

The market as whole reacted positively to this news, but Financial Services stocks (+1.83%) were particularly impacted.  SSI (+2.04%), HCM (+4.61%), VCI (+4.83%), VIX (+1.04%), FTS (+5.67%) all recorded strong gains.

Read the full report: HERE.