Research Center

Vietnam's money market this week shows a modest but implicit move even just with two trading days. On one hand, interbank rates tend to increase when the liquidity condition seems to need more time to stabilize after a long holiday. On the other hand, USDVND is flat although one more 25bps increase in the Fed fund rate was released. Furthermore, the 10-year G-bond yield declined for the fourth consecutive week although. Therefore, we predict that participants might await more easing signals from the monetary authority after a depressed set of economic indicators for April.

This quarterly earnings report on Vietnam steel production is intended to track the earning growth trend in the steel market. We witnessed a turn-around of earnings in 1Q23. Although the turn-around was mainly attributed by the reversal of inventories provision, high-cost inventories pressure was believed to be fully relieved. We expect to continue to see the weak demand in 2Q23F but slight improvement compared to 1Q23. We forecast the total sales volume in 2Q23F will be 6.1mn tonnes -6% yoy, +10% qoq.

The seafood industry exported USD1.8bn (-24.5% yoy and -28.1% qoq) in 1Q23 due to the decrease of pangasius and shrimp export As a result, the aggregate revenue growth rate of listed pangasius and shrimp exporters declined by 19.9% yoy and 25.4% yoy. We considered that 2Q23 seafood export continues to slow down yoy due to lower demand in most markets. Yet, the high demand for seafood export to China markets would partly offset the deceleration yoy of the seafood industry in 2Q23

The VNIndex closes above the 1,050-pts threshold, showing bullish signals. However, the downside risk is still intact. Hence, traders should be careful.

Traders should stay on the sidelines in order to avoid false trading signals.

April shows the adverse impact of weak global demand, under the high-interest rate environment, on Vietnam's economy was still effective. Export decline persists this month, even with a higher rate than in March under the weak 1Q23 revenue from GVC leaders whose factories were heavily located in Vietnam, such as Samsung Electronics. Furthermore, industrial production grows modestly from reducing significantly in the previous month due to the robust domestic demand. On the upside, inflation continued to be well-controlled and retail sales performed impressively, providing support for economic growth in 2Q23.

Selling pressure has started to slow down but still faded the foreign demand, pushing the market to end up to be net sold. Net sell value was USD20mn. With ETF flow, outflow was active. Net outflow was USD1mn. There is still not a good sign for the stable inflow and outflow could be active in upcoming weeks.

Last week, trading volume dropped due to the holiday, recording at 20.2mn shares, down 50% WoW. By underlying asset, covered warrants which have HPG and STB as the underlying asset continued to attract the most of trading interest from both domestic and foreign investors.

Traders should stay on the sidelines in order to avoid false trading signals.

After the long holiday, the VNIndex still shows a bearish market due to closing below the 50-period moving average and 1,050-pts threshold. That means the downside risk is still intact. Hence, traders should be careful and reduce long positions.