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Market Movement – JUNE 2026: NAVIGATING THE TURBULENCE
22/06/2026 - 4:54:21 CH- The recent US-Iran agreement mitigates near-term geopolitical downside in the Middle East. However, a complete cessation of hostilities remains contingent on the upcoming 60-day negotiations regarding Strait of Hormuz administrative mechanisms, sanction removal sequencing, and the nuclear program. While energy flows to Asia face fewer immediate disruptions, physical supply recovery will likely lag due to structural frictions in operations, insurance underwriting, maritime transport, and inventory replenishment. Under our base case, Brent crude will trade within the US$80–90/bbl range, sustaining upward pressure on headline inflation through the second half of the year.
- Resurgent global inflation has forced a recalibration of monetary policy expectations. Markets are pivoting away from an imminent rate-cut cycle, pricing in a “higher for longer” scenario with the potential for further tightening should energy-driven price pressures broaden. Tightening financial conditions continue to weigh on broader risk appetite. Equity market gains remain heavily concentrated in AI-adjacent technology and semiconductor equities. While this narrow leadership sustains aggregate index levels, it elevates downside volatility risk as the cost of capital and long-duration yields remain elevated.
- On the trade policy front, the US continues to deploy tariffs as a structural negotiation tool following the expiration and legal constraints of previous measures. The Office of the United States Trade Representative (USTR) proposal to levy 10–12.5% Section 301 tariffs across 60 trade partners, including Vietnam, indicates that tariff risks are secular rather than transitory. Vietnam’s bilateral trade deficit with China, compounded by a substantial surplus with the US and a heavily FDI-reliant export base, leaves the domestic export, industrial park, and logistics sectors—alongside the exchange rate—sensitive to ongoing investigations into rules of origin, intellectual property, and labor standards.
- Domestic data for May revealed a divergent growth profile. Inflation accelerated, with headline CPI reaching 5.60% YoY and core CPI at 4.67% YoY. Industrial production maintained momentum, reflected in the PMI rising to 52.8. However, import growth outpaced exports, resulting in a US$5.2bn trade deficit for the month. Despite these mixed signals, systemic growth catalysts persist. These include front-loaded public investment disbursement scheduled for the second half of the year, the implementation of the high-quality FDI development resolution, and potential improvements in monetary accommodation should the drafted amendments to Circular 22 receive approval.
- The VN-Index exhibited sustained volatility through May and the 1H2026. The market lacked immediate growth catalysts, exacerbated by a contraction in trading liquidity and persistent foreign net selling. Valuations have compressed to attractive levels, particularly within the Midcap and Smallcap segments. However, a sustained rerating requires confirmation from 2Q26 and 3Q26 earnings deliveries, alongside stabilization in inflation, the exchange rate, and the interest rate environment. The optimal near-term strategy necessitates maintaining a prudent cash buffer while executing selective capital deployment. Target allocations should focus on sectors with visible earnings momentum, specifically Banks, Oil & Gas, Fertilizers, and Seaports, as well as public investment beneficiaries including Steel, Building Materials, and Infrastructure.
