US President Biden’s visit to Vietnam has all of a sudden put the Vietnam stock market more on the radar of global investors. I have been a little surprised about how much attention it has already attracted in the media. The western media is heavily negative on China in the last year, so the positive articles about “booming” Vietnam make quite a contrast.
In this post I just wanted to touch on some interesting Vietnam stock market reactions I have already observed during Biden’s visit.
Is Biden’s Vietnam visit bullish for Vietnam stocks?
Vietnam’s relationship with the US has already been strengthening for a long time prior to Biden’s recent visit. It is just that the global media decided to give it a heap of attention in the last couple of days. Suddenly various positive economic fundamentals for Vietnam are being described in lead stories as the “booming Vietnam story”, and an alternative to China.
Common headlines in the last couple of days have created positive Vietnam stock market fudnamentals headlines such as:
- Formal upgrade to “comprehensive strategic partnership”
- Mentions of companies like Apple, Intel, Nike etc investing in supply chains and boosting Vietnam economic growth
- “landmark deals” between Boeing and Vietnam airlines
- More use of the latest economist buzzwords of “friend-shoring” and “China plus one”.
- Promoting the growth of a “technology-focused” Vietnam.
Whilst I don’t deny headlines such as this do have some substance, what I would point out is that there is nothing too exciting from a fresh news perspective.
One snippet from the CNN article I linked to just above at least toned down a bit of the article about the over excitement Biden’s visit has generated. To quote directly “In recent years, their trade has already soared under an existing partnership agreed in 2013, so the elevation in relations is “just catching up with the reality that already exists,” Ted Osius, president of the US-ASEAN Business Council and a former US ambassador to Vietnam, told CNN.”
How did Vietnam stocks react to Biden’s visit?
On Monday 11th, interestingly the Vietnam stock market closed almost 1.5% lower on the day. Today (Tuesday 12th) as I write this, it looks like Vietnam stocks have climbed about 2%.
Basically a bit of a yawn from Vietnam stocks thus far. To quote from the article above after Monday’s trading “Rising sell-off force weighed on stocks across all industries, which was opposite to the market’s expectations about the positive effects of US President Joe Biden’s historic visit to Việt Nam on Sunday and Monday.”
Strange movements in Vietnam closed end funds (CEFs)
Given that Vietnam stocks have only gained by about 0.5% since the weekend, what were the moves since in some of the Vietnam CEFs that trade on the London Stock exchange?
As I write this in early trading on London on Tuesday 12th, of the three Vietnam CEFs, VEIL LSE (Vietnam Enterprise Investments Limited) is about the same, but VOF LSE (VinaCapital Vietnam Opportunity Fund Ltd) & VNH LSE (VietNam Holding Ltd) are both a bit more than 2% stronger.
SHOULD I BUY VIETNAM STOCKS AFTER BIDEN VISIT AND CLOSED END FUNDS?
Whilst my earlier points were about how occasionally with visits from the US president like this it attracts more media attention that is warranted, maybe such attention can act is a catalyst? After all, there is certainly room for the discounts to narrow amongst these Vietnam closed end funds.
A strange movement was with VOF LSE (VinaCapital Vietnam Opportunity Fund Ltd) that I just mentioned, it also has a listing in the US where liquidity is low. Someone pushed the stock up 7% on the day in which Vietnam stocks fell 1.5% after Biden’s visit!
Will Biden’s Vietnam visit mean Vietnam stocks will keep rising?
Whilst in my opinion the news flow around this Biden visit to Vietnam has been overblown and it rationally should not lead to a re-pricing of Vietnam stocks, stranger things have happened in markets before. (Refer below to my VinFast comments!) I’ll particularly be watching to see if some of these Vietnam closed end fund discounts narrow further in the next few months.
WHY DID VINFAST SHARES SURGE AND CRASH?
I forgot to quickly mention this when I first put out this post. I also wanted to comment on another strange move in a Vietnam related stock recently, Vietnamese electric vehicle stock VinFast.
Despite being a sizeable company, VinFast was only a tiny float for the US exchange. The backer of VinFast, is VinGroup which is the largest Vietnam conglomerate. You see only 0.3% of VinFast shares were available to trade, meaning it was a tiny float that served the purpose initially of a gambling stock for reddit punters. Checkout the link below that discusses some of the early moves in the VinFast stock and likens it to a trip to the casino.
SHOULD I BUY VINFAST SHARES?
They are not for the faint hearted, and only the experts on Reddit will probably give you a strong opinion either way! In fact at least in the short-term it might be more like a trip to the casino. At least at the casino there is a change to grab something to drink and meet someone interesting. Buy VinFast shares perhaps only if you think you will find a “greater fool” to sell them to.
Having said that, perhaps all the media attention also on this VinFast stock, is another small event that puts Vietnam stocks more on the radar of global investors? Time will tell.
If you are after stock market exposure to the Vietnam growth story more generally though, I would stick to the boring stuff just below.
WHAT IS THE BEST VIETNAM ETF OR FUND IN 2023?
For those that do suddenly believe the Biden visit will act as a catalyst for Vietnam stocks in 2023, there are a range of ways to get exposure. If you want to explore more, checkout my recent post about Vietnam investment fund reviews for 2023 in this link below.