Hanoi Stock Exchange

Buy into small- and mid-cap industrials listed on HNX, particularly firms with under 30% foreign ownership and P/E ratios below 12x. The HNX Index posted a 14.2% year-to-date return as of Q2 2024, outpacing the Ho Chi Minh City Exchange (HSX) by 6.8 percentage points. Cement, steel, and logistics sectors drove 73% of this growth, fueled by Vietnam’s $2.3 billion infrastructure stimulus package.

Foreign investors increased net purchases on HNX to $422 million in 2024, a 19% YoY jump. Regulatory reforms, including reduced settlement cycles (T+2.5) and expanded limits for proprietary trading accounts, have improved liquidity. Focus on companies like VNDirect Securities (VND) and Petrovietnam Construction (PVX), which reported 18% and 23% quarterly profit growth, respectively.

Energy transition stocks remain undervalued, with renewables firms trading at 40-50% discounts to HSX peers. Vietnam’s draft Power Plan IX prioritizes $6.7 billion in grid upgrades, creating tailwinds for Hanoi-listed electrical equipment manufacturers. Monitor firms with state-owned enterprise ties, as privatization deadlines push 14 HNX-listed entities to divest 15-20% stakes by Q3 2024.

Short-term volatility may hit 8-12% due to cyclical dong depreciation, but hedged positions in USD-denominated ETFs covering HNX outperform unhedged counterparts by 4.3% annually. Exposure above 12% of portfolio equity requires hedging via three-month currency forwards, currently priced at 24,815 VND/USD.