The stock market has undergone the trading week to record the strongest decline in the past 3 years, after receiving the tax information up to 46% that the US imposed on Vietnamese goods. The VN-Index in the last two sessions of the week has reduced shock of more than 100 points, but was fortunate to return to the threshold of 1,200 points when the bottom-praying force increased in the session on Friday (4.4).
The market had a sharp decline last week, with the impact of US tariff news. However, there are still positive highlights, such as strong increase in general liquidity, creating a record trading volume, while some mineral industry codes have reversed and recorded remarkable increases.
According to the analysis of experts from PHS Securities Company, the most worrying thing is not export growth, but the impact on FDI capital flows. In fact, FDI enterprises account for more than 70% of Vietnam's total export value. Vietnam is in dire need of FDI capital to implement its strategy of rising in the new era as well as reduce foreign currency dependence on trade.
In the short term, the USD/VND exchange rate has had a strong increase, currently around the price of 25,800 VND (+0.62% compared to the previous session and up 1.37% since the beginning of the year).
"We think that the exchange rate will still be under pressure and can approach the 26,000 VND mark. FDI disbursement flows may slow down while waiting for negotiation results," PHS said.
PHS experts believe that the stock market will certainly face a lot of pressure in the short term, at least until the official tariffs take effect (9.4). However, PHS experts still believe that Vietnam's good diplomatic policies along with the Government's initiative will help Vietnam soon reach a better agreement on tax policy.
The sharp decline in the index has made the stock market valuations very attractive, even the day's decline almost equivalent to the decline due to COVID-19 - the period when the economy had to "lock-down".
PHS experts believe that the strongly affected industry groups will be industrial park real estate, textiles, and seafood, while the remaining industry groups will be less affected and the current discount level opens up long-term accumulation opportunities for investors in the market.
MBS Securities Company commented that the tax rate for each item has not been announced. The impact on manufacturing industries will vary depending on the proportion of exports to the US in total export value as well as Vietnam's competitors in the same segment. In addition, some items are still subject to the committed tax rate applied under the Vietnam - US Trade Agreement effective in December 2001.
Therefore, MBS believes that the textile, seafood, wood furniture, industrial park real estate, and logistics industries are the most negatively affected. The rubber, paper, electric cable, etc. industries are affected on average due to low exports to the US. Meanwhile, the group of steel products is not affected because they are not on the list of products subject to counterpart tax.
