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APRIL 2025 MONTHLY MARKET MONITOR: AS UNCERTAINTY NOW BECOMES FORESEEABLE

By Mar-end, the global market had begun to reflect concerns about slowing US economic growth and persistent inflation amid "uncertain" tariff policies: stock market indices in major markets fell sharply (Figure 2), while foreign capital flows retreated sharply from Asian markets (Figure 15-16). The upward momentum of the Vietnam’s stock market also stalled somewhat as domestic capital flows continued to offset the net selling pressure from foreign investors. We believe April is the moment when "uncertainty" turns into "quantifiable risks" from external factors as the US announces its retaliatory tariff policy. Additionally, the market is entering earnings season. This will also be a key driver of market volatility next month.
The imposition of higher-than-expected tariffs by the US (46%) is surprising news. The market may continue to discount this information, as it did in 2018-2019, reflecting expectations of the negative impact of tariff policies on economic growth prospects. In the meantime, we maintain our view that tariffs will remain a negotiating tool for the US administration with its partners to reduce the trade deficit. This tariff event is likely to either escalate trade tensions or lead to negotiations to find common ground. As a result, we believe that the market will continue to be volatile at least until there are signs of mutual understanding. In terms of information, we believe that the "bottom of the negative" from this policy has already been reached and positive signals from the Vietnam-US negotiating rounds could act as a catalyst for a market recovery, especially as Vietnam has no ambition to escalate trade tensions compared to China, the EU, Japan and Canada.
For Q1 2025, results are expected to continue to show high-risk. Our top-down methodology estimates that NPAT-MI will grow by 10% YoY. Our watched portfolio of 58 stocks, representing around 70% of market capitalization, recorded growth of 11% (see detailed forecasts here). Among these, key sectors such as Banking (12% YoY) and Real estate (+193% YoY) will be the main drivers of the market's earnings growth. However, the earnings outlook for Q2 2025 is likely to be impacted by the new tariff policy if the negotiated solutions do not yield timely results.
Given the quick and strong market reaction immediately following the news of the Trump administration's tariffs, we expect the VN Index to soon find a balance after falling to the 1140-1165 range, before recovering to the 1285 level thereafter. The basis for this expectation comes from (1) a lower valuation compared to the 2018-2019 period, and (2) the absence of a strong rally in safe-haven asset markets (gold, DXY) following this risk event. At the same time, we do not rule out the possibility of a trade agreement between Vietnam and the US being reached before 9 April, which would bring back positive expectations and support the index's recovery.
The Trump administration's new tariff policy will have a significant impact on Vietnam's long-term economic growth prospects. Therefore, until we know more about the outcome of the negotiations between Vietnam and the US, we believe that prioritizing portfolio management should take precedence. Investors can take advantage of market rallies to reduce leverage and restructure their investment portfolios. For investors with high cash holdings, we believe the current market correction provides an opportunity to accumulate shares in leading companies whose business is not heavily dependent on imports and exports. Stocks to watch include CTG, VCB, BID, MBB, REE, POW, HPG, GEG, NT2, HAH and KDH. In addition, investors with a high-risk appetite may wish to consider increasing their short-term exposure to high-beta stocks (see appendix) during the initial market rally to enhance investment performance before returning to a strategic allocation.
In April, we present a new investment idea with NT2 (TP: 23,500 VND), which operates in a highly defensive industry and offers a recovery story in production output after a challenging year in 2024.