Trump tax deal ends, “Vietnam stocks” shine ahead of ASEAN

Who is currently stuck on the mountain of Vietnamese stocks? Recently, we have seen the Vietnamese stock market recover and bounce back strongly for the first time in 3 years, both after news of a successful trade deal with the United States and economic figures for the second quarter that have skyrocketed, amidst a fierce trade and tariff war. You probably want an answer to whether the Vietnamese stock market can continue, whether you should have it in your portfolio or how to adjust your portfolio in a time when the world is in turmoil.

Let me project a picture of what the world situation will be like under the New World Order.

Today, the world is entering a new trade game as President Donald Trump announced the adjustment of US import tariffs for various countries, which will be effective from August 1, 2568 onwards, after the first deadline was extended on July 9. A few days before the first deadline, “Vietnam” became the first country in ASEAN to successfully negotiate a trade deal with the United States on July 3.

After the first deadline of 90 days from April 2, when the US declared Liberation Day, to July 9, it turned out that the results of negotiations between the US and more than 100 trading partners, only 2 countries successfully closed the deal. That is, the "United Kingdom" was the first country to successfully close the deal with the US on May 8, in which the UK gave the US an import tariff of 10%, which was the same rate as scheduled on April 2. And "Vietnam" was the second in the world. While Thailand entered into negotiations with the US but was told to go back and make a new offer, it missed the deadline of July 9.

The United States has announced new import tariffs on 14 countries, effective August 1. Trump has announced that he will send letters to over 100 trading partners, stating that if any country does not enter into negotiations or does not have a new trade agreement, the US import tariffs previously announced on April 2, 2568 will be applied. The world is watching to see whether the US will use Vietnam's trade agreement formula as a "model" for other countries that have not yet reached a successful negotiation. In addition, Trump has also threatened to impose an additional 10% import tariff on all countries that join or support the BRICS group, of which China is one. Meanwhile, China has temporarily suspended its new tariffs with the US until August 12.

The latest news is that the Chinese government sent a clear warning to President Donald Trump on July 8th not to resume tariffs on Chinese goods this August, and threatened to retaliate against any country that chooses to “join hands” with the United States in a tariff deal aimed at cutting China off from the global supply chain. In addition, the People's Daily, the official newspaper of the Chinese Communist Party, clearly emphasized that “dialogue and cooperation are the only correct path.” If the United States insists on using tariffs as a tool to pressure China as it has in the past, it will be considered “bullying”, and China will stand firm in retaliation to protect its own interests.

In June, China and the United States reached a preliminary trade framework agreement, in which the United States agreed to temporarily reduce the new import tariffs on China until August 12 from 75% to 51%, helping to prevent the situation from escalating and easing investment market tensions.

According to data from the Peterson Institute for International Economics, the average tariffs the US is currently charging on Chinese goods are 51.1%, while China is charging an average tariff of 32.6% on US goods, covering all trade between the two countries, showing the level of conflict that has not yet been resolved.

Of course, after China's recent moves, investors and analysts are worried and are still keeping a close watch because the first round of truce still has many details that are unclear and there is a risk that everything could collapse at any time if the "deadline" set by the US on August 12 becomes a real deadline, not just a pressure tool like in the past. And the risk to the investment market will definitely return to chaos again.

I believe everyone remembers the haunting images from April to May. China, the biggest competitor of the United States, was hit with the highest retaliatory tariffs in the world at 125% and retaliated against each other by raising tariffs, causing the United States to raise tariffs to 145%, shocking the whole world because it meant an increase in trade costs that would follow, since China is the world's largest producer and the United States is the world's largest consumer, while trading partners are part of China's supply chain. If China is hit with very high new tariffs, the prices of various goods will increase and affect the world economy, including the United States.

The investment atmosphere at that time was extremely tense. Investors lost confidence and rushed to sell risky assets to reduce their holdings of the US dollar. Stock markets around the world plunged. In a few days, US stocks plunged by 20% and the US bond market was dumped, causing "Trump" to announce a 90-day postponement of new tariffs so that each country could negotiate with the US. They had to offer a trade advantage in exchange for the US after previously having a huge trade deficit with its trading partners.

The current situation, global risks are more uncertain, both from the deadlines of August 1 and August 12. There are still issues that need to be closely monitored, namely, Trump announced that the trade negotiation deal was successful, but there are no clear details yet. At the same time, the world is watching to see whether the US will use Vietnam's trade agreement formula as a "model" for other countries that have not yet succeeded in negotiating.

In the eyes of the United States, Vietnam is still seen as a country with potential to become the world's factory. In the past 10-20 years, investors from around the world, including China, Japan, Korea, Taiwan, Europe, and even American capital, have flowed in to invest directly (FDI) in Vietnam to use it as a production base for various supply chains for export around the world, making it a country with one of the highest export values in the world, especially in the American market.

At present, Vietnam has been able to upgrade its value-added exports, with the proportion of electrical appliances, notebooks, and mobile phones being the top exporters, accounting for 50% of total exports, while the proportion of textiles, footwear, clothing, and furniture, which are low-value products, has been greatly reduced.

Looking back at Vietnam's economy over the past 10 years, it has grown at a double-digit rate or 2% due to the main driving force of investment from foreign investors who have continuously moved their production bases in, making it an important production base in the region, as well as a transit route for exports to countries around the world. In addition, the depreciation of the dong has driven the growth of the export sector to a level of more than 10%.

The US is Vietnam's largest export market, and is a regional manufacturing hub that is home to multinationals such as Samsung Electronics and Foxconn. However, last year the US had a trade deficit with Vietnam of $123,000 billion, the highest in the world's history. Vietnam is also home to many Chinese companies, which analysts say are likely to be the main targets of the 40% import tariff.

Vietnam's economic structure is still a country that relies mainly on the export sector, followed by the continuously expanding consumption sector. With a population of 100 million people in the working age, the economy has expanded rapidly and the stock market has reached a new high, with many Thai investors investing. However, after the real estate and stock market bubble crises, as well as the crackdown on corruption in the old government, Vietnam has had to reset itself again. In 2567, the new Vietnamese government announced an acceleration of economic reforms to digitalization and turned to focus more on investment in domestic infrastructure. It aims to become a relatively high-middle-income country by 2030.

In 2568, Vietnam's economy returned to strong growth. In the second quarter, the economic growth rate (GDP) was as high as 2%, higher than the market expected and the fastest growth rate in many years. The main factor was the continuous growth of exports, especially the export core from electronic products, which played an important role in driving economic growth and were able to generate a trade surplus.

Vietnam's National Statistics Office (NSO) said the economy in the first half of the year was positive and close to target amid global and regional economic uncertainties, and the government maintained its full-year GDP growth target of no less than 8%, while looking forward to reaching a trade deal with the United States.

In the long run, Vietnam may face the problem of a “smaller surplus” in the current account due to a reduced trade surplus with the United States after having to open its market to the United States from July 1st onwards. In addition to exempting import taxes from the United States from 0%, Vietnam has also signed an MOU to purchase goods from the United States worth about 2-3 billion dollars. Therefore, Vietnam will have a smaller trade surplus with the United States. Most of Vietnam’s current account surplus comes from the trade balance.

I think that the trade agreement between the United States and Vietnam has both positive and negative effects on the economy. Although Vietnam will be able to export more goods to the United States, which is good for the country's economy, the negative effect is on investment. It is expected that some investors will delay their investment due to the uncertainty of special taxes on the transportation of goods and the impact on trade relations with other countries, especially China. In the future, Vietnam will remain vulnerable to changes in US trade policy because it relies heavily on the US market.

Another concern is the impact on the exchange rate of the Vietnamese Dong, as Vietnam’s trade surplus is expected to decrease, which will result in a decrease in the current account surplus. After Trump announced that he had reached an agreement with Vietnam, the Dong depreciated to a record low of 26,195 Dong per dollar. Previously, Vietnam had already faced capital outflows from the stock and bond markets over the past two years due to problems in the financial and real estate sectors. However, analysts believe that the Dong’s depreciation may help alleviate some of the impact of the tax.

In terms of the movement of the Vietnamese stock market, the conclusion of the trade agreement with the United States has created positive sentiment for Vietnam and is a positive factor for the Vietnamese stock market only in the short term, as investors are still following the details of the trade agreement between the United States and Vietnam to see how the United States will close the loopholes in various products to be exported.

On July 3, the VN index rose 0.49%, reaching its highest level in more than 3 years since April 2565. The US stock market also rose, with the S&P 500 +0.47%, hitting an all-time high, while the Nasdaq Composite Index rose 0.94%, while the Dow Jones fell 0.02%.

If you follow the global stock market after the deadline, you will see that US stocks are very active and have made all-time highs continuously.

The Vietnam-US trade deal will boost US stocks, but the positive signals may not be felt across other Asian stock markets and economies, said Vishnu Varathan, head of macroeconomic research for Asia outside Japan at Mizuho Securities. The deal with Vietnam highlights the imbalance of bargaining power that is not good for Asian exporters.

Therefore, this is the answer that the Vietnamese stock market has adjusted up only for a short period of time. However, the market cap of the Vietnamese stock market will have the main weight in 2 groups: financial institutions, accounting for 40% and real estate groups, 20%. When combined, these 2 groups have a weight of 60% of the entire market, which is more than half of the market. While the stocks affected by the new trade tax will be in the automotive parts, electronics and textile groups related to the export sector.

Although the Vietnamese stock market is still classified as a “frontier market”, the Vietnamese government is still reforming the financial market to upgrade its status to an “emerging market”. The State Securities Commission of Vietnam is preparing to officially launch the “Central Counterparty Mechanism” (CCP) in early 2570 to attract more foreign investors to invest in the country. Compared to Thailand, the Vietnamese stock market may be smaller at this time, but in terms of liquidity, it is higher than Thailand and Singapore. Therefore, the overall picture of Vietnam still looks bright and has high growth potential in the long term.

For investment advice, I still emphasize the Core & Satellite portfolio principle, with the Core portfolio accounting for 80%, focusing on investing in low-risk assets and spreading around the world, including bonds and stocks from developed countries such as the United States, Europe, and Japan, which provide consistent returns, and the Satellite portfolio accounting for 20%, focusing on diversifying investments in emerging market stocks, growth stocks such as China, Vietnam, and industrial themes related to megatrends such as AI innovation or gold, to generate high returns under acceptable high risks. Now, for the proportion of Vietnamese stocks in the Satellite Port, I think that if you are a beginner, having about 5% should be appropriate. However, if you can accept higher risks, you can gradually accumulate about 10% of the total portfolio, which should be enough.

​But more importantly, portfolio adjustment or Rebalancing is important, especially during this time when the world is still highly uncertain and there is still a big issue of the trade tax deadline in early August. In a situation where the investment world is increasingly risky, long-term investors should regularly check the health of your Core & Satellite Port and don't forget to do Rebalancing to help reduce the volatility of the portfolio to an appropriate level.

If you are wondering why we need to rebalance at this time, it is because many stock markets are rallying, especially the US stock market which has been making all-time highs continuously. Recently, the Warren Buffett Indicator has jumped 208% for the first time, indicating that stocks are “the most expensive in history”.

And that may cause the US stocks in the portfolio to increase to a higher proportion than previously planned. I recommend selling to reduce portfolio volatility. Similarly, Vietnamese stocks in Satellitte, if the proportion has increased significantly, should be sold to reduce volatility.

For the money sold, it is recommended to park it in the money market first, or you may invest more in global debt instruments, which will benefit from the current global uncertainty, including the trend of US interest rates that are expected to decrease by the end of this year, or wait to assess the situation before returning to invest in risky assets. It is recommended to “accumulate gradually”, which may be done by dividing the investment when stocks drop sharply. For example, dividing the investment, the stock market has negative news until it is heavily negative. It is recommended to first invest 10-20%, and if it drops again, gradually buy an additional 30% until the period when it drops very heavily, then increase to 50%, etc. Because no one can predict in advance whether the stock market is right or not, or if it adjusts up and continues without stopping like US stocks.

For new investors or those who do not want to catch the timing of investment, I recommend investing in average or DCA. Because if you invest consistently according to the specified period, when 1 year is up, it will help average the cost. When the stock market comes back up strongly, you will have the opportunity to get the full return. And if you continue to invest in DCA for 3-5 years, you will see the power of compounding that makes the investment grow faster than expected.

At a time of high market uncertainty, even the IMF has described the current situation of developing countries as “like sailing a ship in a sea of fog”, where the direction of trade policies and volatility in global financial markets are unclear.

Therefore, “Don’t try to guess the market because no one can guess correctly every time. What you should do is to understand yourself first, how much risk you can accept, and spread the risk well.”

Strong portfolio management will help you survive. That is, diversifying your investments across various assets around the world to balance it out to support all future volatility.

Let me share a mantra to unlock your fears. No matter how many crises there are, how many rumors and bad news there are, we should be more mindful, trust, be neutral, step back and see the bigger picture. Because if we are too focused or involved, we may overlook important issues and make wrong decisions.

Therefore, you should be mindful and analyze the big picture carefully. You may find hidden opportunities. And mindfulness will help you overcome all fluctuations, pass through traps, and eventually win the long-term investment battle.