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 May 2023.
VIETNAM STOCK MARKET NEWS TODAY MAY 2023
It was an impressive month in May for the Vietnam stock market. Quite solid gains given the backdrop a relatively flat Wall Street, or a US market that is relying on a very narrow set of leaders. To be precise, in VND terms the VNI Index gained 2.5% for the month.
Some of the domestic stimulatory measures undertaken from Vietnam policy makers in May could have provided some of the catalysts to help Vietnam’s stock market to perform relatively better. Further down I shall elaborate a bit more on that dynamic and a better month for the real estate sector, which has been a worrying part of the market for more than a year now.
VIETNAM STOCK INDEX LEVEL CLOSE MAY 2023
The VN Index rose 2.5% in May, to close the month at 1,075 points.
VIETNAM ETF PERFORMANCE COMPARISON MAY 2023
In USD NAV terms here is the performance of these US listed Vietnam ETFs – The VanEck Vietnam ETF (VNM) rose 3.0% in May, whereas The Global X MSCI Vietnam ETF (VNAM) gained 2.4%.
In VND NAV terms, Vietnam listed ETF The Dragon Capital VFMVN Diamond ETF (FUEVFVND:HOSE) gained 0.9% 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.
VIETNAM STOCK MARKET CHART 12 MONTHS TO MAY 2023
Source: investing.com
VIETNAM LATEST ECONOMIC DATA MAY 2023
The main story on the economics related front was another cut in interest rates, which I elaborate on further down.
VIETNAM ECONOMIC OUTLOOK 2023
Last month I referred to recent Vietnam GDP estimates of around 6.5% for 2023. I thought I would now give some more context to this, in terms of the medium-term outlook. In particular, context around medium term drivers and importantly GDP per capita trends.
Where I am from in Australia, the media tends to under report the GDP per capita trends. An issue currently there is an attempt to boost economic growth via major immigration at a time where rental inflation is extremely high.
Back to Vietnam, firstly below are recent GDP forecasts.
Source: spglobal.com
To quote direct from S&P Global’s Asia Pacific Chief Economist “The economic outlook from 2023 to 2026 is for rapid economic expansion, with GDP growth forecast to grow at a pace of around 6.5% in 2023, with sustained strong growth at a pace of around 6.7% per year over 2024-2026. However, Vietnam’s economy faces near-term risks from the slowdown in key export markets, notably the US and the EU.
Over the medium-term economic outlook, a large number of positive growth drivers are creating favorable tailwinds and will continue to underpin the rapid growth of Vietnam’s economy. This is expected to drive strong growth in Vietnam’s total GDP as well as per capita GDP.
With strong economic expansion projected over the next decade, Vietnam’s total GDP is forecast to increase from USD 327 billion in 2022 to USD 470 billion by 2025, rising to USD 760 billion by 2030. This translates to very rapid growth in Vietnam’s per capita GDP, from USD 3,330 per year in 2022 to USD 4,700 per year by 2025 and USD 7,400 by 2030, resulting in substantial expansion in the size of Vietnam’s domestic consumer market.”
WHAT IS THE STOCK MARKET FORECAST FOR VIETNAM?
As we are now approaching the halfway mark of calendar year 2023, this often brings with a chance for stockbrokers to gain more attention in the media with their crystal ball forecasts of where the VN-Index will finish up at.
According to Vietnam stockbrokers asked in May where the market was headed at least, there seemed to be a consensus that the second half could now be more bullish. The main points cited were that worries about the US tightening cycle could clear some time later in the year. Likewise, we may see concerns clearing for the Vietnam property and corporate bond markets as policy measures from Vietnam takes effect.
WHAT IS THE P/E RATIO OF THE VIETNAM STOCK MARKET?
According to Simply Wall St, at the time of writing this May Vietnam stock market update, the P/E Ratio of the VN-Index is 14.5 times.
BEST VIETNAM FUNDS / STOCKBROKER COMMENTS MAY 2023
A feature of the month of May was the government approving the long-awaited Power Development Plan VIII (PDP8), which outlines the country’s electricity generation and distribution strategy for the period 2021-30 with a vision to 2050.
Here is a link to VinaCapital’s take on this..
20230601-VinaCapital-Insights_Vietnams-Power-Development-Plan-VIII-Has-Been-Approved.pdf
WHICH WAS THE BEST STOCK TO BUY FROM VIETNAM JUST BEFORE MAY 2023?
Vinhomes jumped an impressive 8% in May, where sentiment at least in the short run seems to have recovered a little in the real estate sector. Some perspective is needed though in the context of the tough time shareholders have had in the last year. It is still down around 37% from its peak about a year ago.
WHAT HAPPENED WITH THE VIETNAM STOCK MARKET IN MAY 2023 SECTOR WISE?
For most of May, the one of the struggling sectors over the last year or so was holding up very nicely, that being real estate. The general consensus is that the sector is not suffering from an oversupply like for example what has been witnessed in China in their boom years. Rather, many of the recent woes in the Vietnam real estate sector have been brought about by problems with securing financing. Such problems can be dealt with reasonably if measures are taken to stabilize the corporate bond market and banking sector. Perhaps bargain hunters are warming to the idea of betting on this trade.
ON THE GROUND NEWS AND THOUGHT SNIPPETS FROM VIETNAM FROM STEVE
Last month I made comments that the theme around the local Vietnam consumption story was probably the safer way to play the stock market this year. A couple of announcements in May have reinforced that idea if anything.
Vietnam are standing out now as a country which is able to provide interest rate relief earlier than most. Another move was made to lower rates as you can read below:
Central bank continues to reduce policy interest rates | Business | Vietnam+ (VietnamPlus)
In addition to that, the consumer might be helped through pass on effects by a move to lower the VAT rate from 10% to 8%, which is also a rare thing to see these days.
Vietnam plans to cut VAT to boost domestic spending | Nasdaq
Now I must admit when I am in Vietnam I am probably not the best person to ask whether anecdotally there is an inflation problem or not. Things naturally always seem cheap to me and maybe I don’t do enough of the shopping. For what it is worth, my beer / coffee / banh mi CPI basket doesn’t seem to be affected too much and some rents I was looking at also didn’t seem too bad versus last year.
The fact though that these two policy decisions could take place in May indicate perhaps the CPI numbers reported by Vietnam are somewhat relatively honest.
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 last month the Brazil stock market.
Summary
Emerging Markets, in general, and Brazil, in particular, are trading at extremely low P/E multiples in the context of the last two decades.
Brazilian stocks are cheap for many reasons; but this may not warrant such a large discount. It may lead to a bullish run like in the early 2000s.
Poor sentiment is seeing Brazilian stocks likely in a bottoming-out pattern. Yet, later this year might present a better entry point, given the challenging outlook for commodities this year.
The iShares MSCI Brazil Small-Cap ETF has less concentrated bets on commodities versus the MSCI Brazil Index. It may provide good risk/reward and diversification for one’s portfolio.
iShares MSCI Brazil Small-Cap ETF overview
The iShares MSCI Brazil Small-Cap ETF (NASDAQ:EWZS) was launched in 2010, offering investors exposure to the MSCI Brazil Small Cap Index. It now has assets of approximately $90 million, and the expense ratio is 0.58%.
It currently consists of 98 holdings, with the largest weight representing no more than 5% of the fund. Sector wise, the largest weight is the industrials categorically at about 20%. It can offer more diversification compared with the main MSCI Brazil Index, which has circa 21% sector exposure to materials. Although there is more diversification with the EWSZ ETF in that respect, one must weigh up the riskier nature of the smaller capitalized stocks it holds.
To continue reading click here..
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Thanks for reading again, I may go quiet on this blog for a few months otherwise I might end up getting repetitive with the Vietnam economic and stock market themes updating on a monthly basis. Also with the AI craze sweeping the world now it seems like people are more interested in what robots say rather than me! I might look at doing a quarterly wrap up in October for events in the third quarter.
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
Thoughts welcome in the comments area as usual, good luck for the month ahead!
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