VIETNAM STOCK MARKET PERFORMANCE OVERVIEW MARCH 2023              

This Vietnam stock market report is a summary guide to the major news, performance details, and discussion of other factors influencing the Vietnam stock market in March 2023.

VIETNAM STOCK MARKET NEWS TODAY MARCH 2023

The Vietnam stock market during the first weeks of March initially struggled to recover from the sharp losses seen in February. In the US the news of Silicon Valley Bank’s collapse had a ripple effect of negative sentiment onto other smaller US banks and then investor’s confidence in European banks were hit.

It was pleasing to see investors distinguish to some degree the Vietnam banking sector, and although by mid-March Vietnam stocks had came off the highs, the market overall was holding up. Vietnam banks do not look to be swept up in some of the same issues. Vietnam’s interest rates have been more relatively stable and their banks are likely more conservative in nature. Nonetheless it was not surprising to see such a global trend make some Vietnamese investors nervous and weigh on the Vietnam stock market’s sentiment earlier in March.

As the month progressed though, we saw the Fed trying to calm markets with boosting liquidity measures, likewise the Swiss national bank in trying to deal with the crisis of events at Credit Suisse. This helped the Vietnam stock market to rise around 4% later in the month.

VIETNAM STOCK INDEX LEVEL CLOSE MARCH 2023

Despite getting the wobbles mid-month, the VN Index bounced back strongly in March, after the steep decline we saw in February. The VN Index rose around 4% over the month of March, to close at 1,064 points.

VIETNAM ETF PERFORMANCE COMPARISON MARCH 2023

In USD NAV terms here is the performance of these US listed Vietnam ETFs –  The VanEck Vietnam ETF (VNM) gained 8.2% March, whereas The Global X MSCI Vietnam ETF (VNAM) rose 6.7%.

In VND NAV terms, Vietnam listed ETF The Dragon Capital VFMVN Diamond ETF (FUEVFVND:HOSE) rose 2.7% Refer below for an explanation of all the Vietnam ETFs out there.

VIETNAM ETF LIST 2023

Below is a complete up to date list of Vietnam ETFs in 2023.

WTF WITH THE LONG LIST OF VIETNAM ETFs? THE ONE GUIDE YOU NEED HERE – VIETNAM STOCK MARKET (vietnamesestockmarket.com)

VIETNAM STOCK MARKET CHART 12 MONTHS TO MARCH 2023

Source:  investing.com

VIETNAM LATEST ECONOMIC DATA MARCH 2023

The main news economic wise in Vietnam in March was the move from the State Bank of Vietnam to cut interest rates by 1%. This was quite interesting as there are still many central banks in the world debating whether they can pause hiking rates or not.

The view on inflation in Vietnam is that it has already peaked. In terms of the US we witnessed bond markets there change their tune dramatically over March, with many participants wanting to bet that the Federal Reserve will also have to change direction and cut rates this year. This likely gives comfort in terms of Vietnam’s exchange rate stability if both end up moving in the same direction on rates this year.

10-year bond yields falling in the US and across other parts of the globe has also been a recent trend in Vietnam. Its 10-year rates have fallen by more than 100 basis points from their highs a few months back.

VIETNAM ECONOMIC OUTLOOK 2023

I found it interesting tuning into VinaCapital’s quarterly review in early April. Their economist Michael Kokalari spoke of the prospects for the Vietnam economy for the remainder of this year and whether it was facing headwinds or tailwinds depended on what area we are speaking of.

For instance the activity regarding the “made in Vietnam” products is somewhat of a concern. Exports to large trading partners such as the US are already slowing in that trend looks likely to continue for the time being at least. On the other hand, the domestic consumption story of the Vietnamese remains relatively upbeat, and consumer spending is likely also to benefit further this year as tourism improves rapidly from last year. Another positive expected for the economy is more infrastructure spend this year.

WHAT IS THE STOCK MARKET FORECAST FOR VIETNAM?

Also on the VinaCapital quarterly call CIO Andy Ho discussed the stock market’s prospects for the rest of the year. They have been optimistic but make note that some key catalysts will be worth watching for to see if they can send Vietnam stocks higher in 2023. The reduction in interest rates already is a factor that could be such a catalyst. A characteristic of the Vietnam stock market is retail accounting for plenty of the turnover. In more recent times higher deposit rates might have been viewed as an attractive area to parking some money on deposit. Also many retail investors when investing in the stock market also consider margin loans, so these now become more attractive as interest rates fall.

VinaCapital still expects the heightened volatility in the market to continue this year but are bullish overall. They also note anecdotally plenty of interest from offshore institutional investors. When the Vietnam stock market had a good run over 2020 and 2021 it was interesting that offshore buying was not really much of the driver, perhaps that is set to change.

WHAT IS THE P/E RATIO OF THE VIETNAM STOCK MARKET?

According to Bloomberg, at the time of writing this March Vietnam stock market update, the P/E Ratio of the VN-Index is 14 times.

BEST VIETNAM FUNDS / STOCKBROKER COMMENTS MARCH 2023

I thought I would present a stat this month that may surprise some. Dominic Scriven, founder and chairman of Dragon Capital tweeted the below chart recently.

I sometimes wonder myself whether spending quite a bit of time in Vietnam each year makes me vulnerable with the air quality and passive cigarette smoke at times, not to mention the risks with the hectic motorbike traffic. Perhaps it’s not so bad after all.

WHICH WAS THE BEST STOCK TO BUY FROM VIETNAM JUST BEFORE MARCH 2023?

With the banking sector a hot topic globally in March, I thought I would pick out a good performing Vietnam bank stock one would have been pleased with during the month.

VP bank made headlines in March, as Japan’s Sumitomo Mitsui took a 15% stake.

https://www.reuters.com/markets/deals/vietnams-vpbank-completes-15-bln-stake-sale-japans-sumitomo-mitsui-2023-03-27/

VP Bank shares for the month of March finished approximately 23% higher.

WHAT HAPPENED WITH THE VIETNAM STOCK MARKET IN MARCH 2023 SECTOR WISE?

It is worthwhile highlighting the Vietnam banking sector’s stock market moves in March. In a month dominated by scary headlines of US bank failures and also names like Credit Suisse and its collapsing share price one may be forgiven for thinking Vietnam banks shares might have struggled during such time.

Despite such a backdrop many Vietnam bank stocks held up well and even chalked up gains for the month. This makes some sense, as issues affecting SVB in the US are not prevalent in the Vietnam banking sector. The Vietnam’s lending is more diverse, and they have less long-term government debt on their books. The Vietnamese also have confidence the government would step in if needed to protect depositors and any sort of similar crisis, making a run on banks unlikely.

ON THE GROUND NEWS AND THOUGHT SNIPPETS FROM VIETNAM FROM STEVE

I shall stick to the theme of the month regarding banking again. Whilst many have thought it seemed foolish in the past to own some Vietnam bank shares and feel safer than owning US bank shares, it is not so clear nowadays.

Vietnam banks and their management are likely to be more conservative in the business areas they dabble in. There should be enough organic growth to see good shareholder returns without them doing anything silly. For example, compared to the US a lot more Vietnamese are yet to embrace borrowing and even some yet to embrace having a bank account yet. Banks are not a bad way to play an economy in the world that is enjoying one of the highest GDP growth rates around such as Vietnam.

I would also add in recent years Vietnam’s inflation has been much closer to the target range compared to the US high CPI readings versus the Fed’s inflation targets. Therefore the interest rate curve has looked more “normal” in Vietnam in recent years. That bodes well to attract money in the form of stable and sticky deposits, also given there is confidence from the Vietnamese their money is safe.

Anyone in Vietnam who has tried to send money through the Vietnam banking channels, across borders, open accounts etc would probably say that the culture is quite conservative with following rules and paperwork, documentation etc.

I currently still own some shares directly in Vietinbank (CTG:HOSE), bought about the 27000 level in December last year.

ARE EMERGING MARKETS A BUY IN 2023?

Since I assume many readers of this blog might have an interest in other equity markets that are either considered frontier / emerging, I will occasionally provide relevant links to Seeking Alpha articles of mine.

I believe that non-members to Seeking Alpha have access to a certain amount of articles per month they can read for free. So hopefully the entire article is available and useful to some. If not, well Seeking Alpha allows me to make short exerts here so I can do that in some instances.

Below is a link with my recent thoughts back in late January on Emerging Market bonds in a closed end fund that focuses on this asset class.

Summary

At the start of 2023, emerging market equities are becoming an increasingly popular asset class. Emerging market bond valuations appear even cheaper in the context of the last two decades.

Templeton Emerging Markets Income Fund has a poor track record over the last decade. Potential investors need to actively make sure they are comfortable with the fund’s current bets.

Currently, the fund’s larger exposures to Thailand, South Korea, Indonesia and Malaysia are appealing. The historical discount to NAV suggests closer to 15% can generally be an opportunistic entry point.

If “risk-off” sentiment prevails again similar to like we witnessed last October, such a discount level might present us with a short-term buying opportunity.

Introduction

The Templeton Emerging Markets Income Fund (TEI) is a closed-ended fixed income fund focused on emerging markets. It has a mandate to invest at least 80% of its net assets in income-producing securities of sovereign entities and private sector companies in emerging market countries. In terms of corporate bonds, there is currently less than a 5% weight. More than 90% of net assets are made up of foreign government and agency securities.

If the high government bond exposures give you comfort, beware that more than half the portfolio is either unrated or non-investment grade. The fund has a yield to maturity of almost 14%, which should tell you that they are invested in the sovereign debt of relatively high-risk countries.

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Thanks for reading again, for the basics on how to invest in the Vietnam stock market check out the below link if you have not done so already.

HOW TO INVEST IN THE VIETNAM STOCK MARKET

HOW CAN FOREIGNERS INVEST IN THE VIETNAM STOCK MARKET? – A GUIDE TO ALL OPTIONS – VIETNAM STOCK MARKET (vietnamesestockmarket.com)

Thoughts welcome in the comments area as usual, good luck for the month ahead!

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