Investors should 'slow down to see further': Kafi Securities analyst

Investors in Vietnam should “slow down to see further,” as this is the time to reassess portfolios, reduce leverage, and prioritize companies with sustainable domestic operations that are less exposed to global trade risks, said Luong Duy Phuoc, head of market research at Kafi Securities.

Ongoing global trade policy tensions are casting a shadow over economic prospects worldwide, making this year’s shareholder meeting season more heated than ever.

Speaking at the “Financial Street” talkshow on Monday, Phuoc noted that the impacts of trade tension and tariffs are inevitable. However, Vietnam, with its advantages and synchronized development policies in the new era, still has strong growth potential. "Several sectors are expected to remain resilient and even grow amid the turbulence."

According to the analyst, Vietnam’s high trade openness, especially with the U.S. being a major export destination, presents certain vulnerabilities. If the proposed 46% reciprocal tariff comes into effect, Vietnam’s GDP growth could decline by 2-3 percentage points. This would directly affect export-dependent sectors such as textiles, wood products, seafood, and electronic components.

Nevertheless, the 90-day tariff delay and ongoing negotiations for a lower rate of 10-15% with a commitment to reducing trade surplus offer some breathing room. This may help limit the negative impact and enhance investor confidence.

In this landscape, domestic policies - particularly public investment, consumer stimulus, and business support - are poised to become the main growth drivers. Opportunities lie in sectors that serve the domestic market, infrastructure, and technology.

A GDP growth target of 7.5-8% remains achievable, though less reliant on exports than in the previous years. Investment capital is likely to shift toward companies with low U.S. exposure and supply chain adaptability, and those benefiting from public investment.

“This is also an opportunity for Vietnam to reposition itself within the global value chain and solidify its attractiveness to FDI, a factor that could significantly influence medium-term stock market valuations,” he noted.

In the short term, most exporters have yet to feel the full brunt of new tariff policies, particularly in Q1 and early Q2. Some even reported growth due to a pre-tariff inventory buildup by U.S. partners.

However, the second half of 2025 could pose serious challenges if the 46% tariff is upheld. In that scenario, profit margins in textiles, wood, seafood, and electronics could drop by 5-20%, impacting orders, production costs, and logistics.

Sector divergence ahead

The Kafi Securities expert said Vietnam’s stock market has been highly volatile in response to the U.S. tariff policy, with investor sentiment increasingly driven by external factors.

He noted a clear divergence: export-oriented and industrial park stocks are under pressure, while those of defensive and domestically focused companies are holding up better, reflecting the market’s sensitivity to policy risks.

The 90-day tariff delay is acting as a “psychological buffer,” allowing investors to refocus on fundamentals such as Q1 earnings, shareholder meetings, and notably, the rollout of the new trading system KRX in May.

Phuoc described KRX as a milestone for Vietnam’s market, saying the system will not only enhance trading quality with products like T+0 settlement, short selling, and odd-lot trading, but also lay the foundation for a potential upgrade to emerging market status.

Although a market status upgrade in 2025 is unlikely, KRX represents a strategic step toward attracting more medium- and long-term foreign capital, he noted.

Risk management is key

With the market shifting based on policy risks and cautious sentiment, the analyst emphasized the importance of risk management and investment discipline. Investors should take this time to reevaluate portfolios, lower leverage, and focus on resilient domestic companies, he advised.

Patience will also be essential as the outcome of trade negotiations unfolds - an important factor for reassessing both directly and indirectly impacted stocks, he added.

As global trade tensions escalate and U.S. tariffs become more diverse, Vietnam’s stock market will likely experience further sector divergence. Key export sectors - textiles, seafood, and wood - will bear the brunt of any post-deferral tariffs, with noticeable margin compression starting in Q3. Industrial park developers may also face indirect impacts from a slowdown in FDI.

However, some sectors remain defensive in the current landscape. Commercial banks like MBBank (MBB) and Asia Commercial Bank (ACB), with stable ecosystems and a focus on domestic lending, are benefiting from policies that boost public investment, personal consumption, and NPL resolution.

Those relating to infrastructure and construction materials, especially leaders like steel maker Hoa Phat Group (HPG) involved in national projects such as the North-South Expressway, are also poised to gain. Kafi’s research team forecast earnings growth of 15-20% for this group in 2025.

Phuoc said other sectors with limited U.S. dependency such as technology, software, digital services (for instance, FPT Corporation), and consumer staples like food, beverages, and pharmaceuticals are expected to maintain positive momentum.

Companies with stable value chains, balanced markets, and domestic scalability will be safe havens for investment capital, he added.