Vietnam stocks gains and losses from Russia-Ukraine crisis

The crisis will not directly affect the Vietnamese economy since trade with the two countries accounts for less than 2 percent of Vietnam’s exports-imports.

The main impact on Vietnam would be from the conflict’s effect on energy prices, according to BSC.

But it would benefit the oil and gas sector as global demand surges and supply is disrupted, it said.

Russia is the world’s third largest oil exporter. The conflict, which can disrupt Russian oil supply to Europe via pipelines, will affect global supply.

Speaking of the U.S.’s plan to release stocks from its oil reserves to cool down the market, BSC said this is a temporary measure and would be difficult to sustain for long, and so global prices are unlikely to decline.

Last week prices topped US$100 per barrel for the first time since 2014.

The demand is expected to drive the prospecting for oil in Vietnam, which would benefit oil exploration and drilling companies, BSC said.

It named PetroVietnam Drilling & Well Services Corporation (PVD) and PetroVietnam Technical Services Corporation (PVS) as likely gainers as as result.

The oil refining, transportation and distribution sectors are also expected to gain as domestic demand recovers after Covid-19 and gasoline prices have already risen to all-time highs.

This would drive up stocks like Vietnam National Petroleum Group (PLX), Petrovietnam Transportation Corporation (PVT) and PetroVietnam Oil Corporation (OIL), BSC said.

It was also upbeat about the fertilizer sector amid a global supply shortage as Russia and China restrict exports of fertilizers and key chemicals.

Russia, which accounts for 62 percent of the world’s ammonium nitrate supply, has halted exports for two months starting Feb. 2 to ensure domestic supply. The chemical compound is widely used in the agriculture industry as a fertiliser to improve yields for crops such as corn, cotton and wheat.

Last October, China had announced the suspension of fertilizer exports until June 2022 to ensure domestic availability amid food security concerns.

Its exports of DAP (diammonium phosphate) and urea account for a third and a tenth of global trade, and so this move caused a jump in global fertilizer prices.

BSC said the rising prices and increased production could drive up Vietnamese fertilizer stocks, including DPM of PetroVietnam Fertilizer & Chemicals Corporation and DCM of Petro Vietnam Ca Mau Fertilizer JSC.

BSC also named Vietnam’s steel industry as a potential beneficiary of the conflict since it could supply Europe instead of Russian and Ukrainian producers.

Russia was the second largest steel exporter to the EU with a 15.7 percent share in 2020, and Ukraine was the sixth largest with 5.7 percent.

It is extremely likely that, due to the conflict, Russian steel will be embargoed in the EU market while Ukraine’s steel output will decline.

Vietnam was the 10th largest flat steel exporter to the EU in 2021 with a 2 percent share.

The bloc is imposing a definitive safeguard measure on certain steel products, and it currently consists of a tariff increase if a country’s exports to it exceeds 3 percentof the total.

Vietnam’s animal husbandry sector is likely to be hurt due to the increase in animal feed prices, BSC said.

Russia and Ukraine are the world’s top and third largest wheat exporters, and their conflict has driven prices up by 17.8 percent.

Ukraine is also the fourth largest exporter of corn, accounting for 22 percent of global supply. Corn prices have risen by 8.4 percent since fighting began.