Tariffs remain a key factor swaying markets

The Star

22-05-2025

New order: Motorcyclists pass the Hanoi Stock Exchange. Vietnam's proactive negotiation stance with Washington positions it favourably in the evolving trade landscape. — AFP
HANOI: As global trade tensions subside, stock markets, including Vietnam's, are seeing a positive response.
Recent developments in tariff negotiations, especially between the United States and major trading partners, are playing a crucial role in shaping market dynamics.
Ongoing trade discussions have shown encouraging progress, highlighted by a significant agreement between the United States and the United Kingdom, the first since the US administration implemented reciprocal tariffs earlier this year.
These negotiations have alleviated trade tensions and sparked a notable increase in foreign investment.
Data from Bloomberg showed that global funds have purchased a net US$9.64bil in stocks across emerging Asian markets, excluding China, over the past three weeks, marking the longest streak of inflows since March 2024.
In Vietnam, the stock market reflects this renewed optimism.
The Ho Chí Minh City Stock Exchange reported trading liquidity exceeding US$1bil on May 14, with the VN-Index surpassing the 1,300-point threshold.
Tyler Nguyen Manh Dung, chief market strategist at Ho Chí Minh City Securities Corp, identified three critical factors driving this recovery: valuation adjustments, easing tariff fears and stability in key export sectors.
Following a period of sell-offs, stock valuations have become increasingly attractive, with price per earning ratios now below the five-year average, prompting investors to reconsider market entry.
Meanwhile, as concerns over tariffs diminish, investor anxiety regarding potential price hikes on Vietnamese exports has lessened.
Vietnam's proactive negotiation stance with the United States positions it favourably in the evolving trade landscape.
He added that industries such as seafood, textiles and timber, vital to Vietnam's export economy, are expected to remain largely unaffected by US tariffs, bolstering investor confidence in related equities.
After a period of panic selling, foreign investors have returned to net buying, driven by the rising prices of major stock groups such as banks.
In the first half of May, the net buying value by foreign investors exceeded 4.2 trillion dong.
Despite the positive market trends, tariffs continue to be a significant concern.
Bui Nguyen Khoa, deputy director of the BIDV Securities Analysis Centre, noted that while the risk of a US economic downturn appears to have diminished, upcoming negotiations will present challenges.
The US government maintains a firm stance on certain sectors, particularly pharmaceuticals and semiconductors, suggesting that tariffs will remain a strategic tool for domestic manufacturing incentives.
Nguyen Thi My Lien, chief analyst at Phu Hung Securities, emphasised that the baseline tariff of 10% imposed by the United States is likely to persist, creating ongoing pressure on global economic growth.
In light of these evolving conditions, investors are urged to reassess their portfolios.
Khoa recommends increasing exposure to sectors less impacted by tariff policies, such as banking and infrastructure, while also considering cash positions as the VN-Index approaches short-term resistance levels between 1,320 and 1,340 points.
Lien anticipates that the market will shift toward a phase of informed assessment rather than fear, highlighting opportunities in domestically focused sectors that are less reliant on international trade. — Viet Nam News/ANN