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 Q3 2023.
VIETNAM STOCK MARKET NEWS OCTOBER 2023
Over the last quarter the Vietnam stock market gained about 3% but it was a bumpy ride. The country’s stock market captured a bit of extra global attention on a couple of fronts.
In July there was tremendous excitement in the media (perhaps too much) over Vietnamese electric vehicle stock VinFast and it hitting the boards of the US stock exchange. Having said that it was a tiny float in the context of its backer, the Vingroup which is the largest Vietnam conglomerate around. It was a roller coaster ride that seemed to attract more gamblers than investors.
Shortly after we had US president’s visit to Vietnam. This also probably attracted more attention than it warranted. Still, it was important reconfirmation nonetheless of the positive relations of the two countries to the benefit of both of their economies.
I wrote a little bit on these 2 topics last month in the post below if you are interested.
The Vietnam stock market also kept a close eye on matters surrounding risks in the property market and funding pressures. To that end, the fact that Vietnam is at a different point in the monetary cycle to many other countries (recently cutting interest rates), offers some hope.
Aside from how that may relieve pressure on the property market, there were also some encouraging signs that rate cuts can see some direct positive effects on the stock market. We saw an improvement in new retail brokerage accounts and overall improving trading volumes on the stock market.
VIETNAM STOCK INDEX LEVEL CLOSE SEPTEMBER 30, 2023
The VN Index rose around 3% over the September quarter, to close at 1,154 points.
This masks the overall volatility as I alluded to earlier above. To summarize the volatility, the VN-Index surged by around 9% in July, was relatively flat in August, but declined sharply in September by almost 7%.
In light of a global trend of rising bond yields though, many global equity markets showed clear losses over the quarter. From that perspective, the performance of the Vietnam stock market in recent months has been relatively impressive.
VIETNAM ETF PERFORMANCE COMPARISON SEPTEMBER QTR 2023
In USD NAV terms here is the performance of these US listed Vietnam ETFs for the 3 months to Sep 30, 2023 – The VanEck Vietnam ETF (VNM) gained 2.5%, whereas The Global X MSCI Vietnam ETF (VNAM) rose 0.8%.
In VND NAV terms, Vietnam listed ETF The Dragon Capital VFMVN Diamond ETF (FUEVFVND:HOSE)rose 11% Refer below for an explanation of all the Vietnam ETFs out there.
VIETNAM ETF LIST 2024
Below should be a complete up to date list of Vietnam ETFs at the beginning of 2024, assuming no new ones suddenly get launched.
VIETNAM STOCK MARKET CHART 12 MONTHS TO OCTOBER 2023
Source: investing.com
VIETNAM LATEST ECONOMIC DATA SEPTEMBER QTR 2023
The September quarter Vietnam economic news was characterized again by the weak global economic backdrop, although stats relating more to domestic consumption were more positive.
With regards to the slowing global economy there were at least some encouraging signs that the slowing impact it has on Vietnam’s growth may be more in the rear vision mirror. Monthly exports for example have steadily increased since April.
Retail sales released in August showed growth of +7.6% yoy. International tourist arrivals have just recently even surpassed expectations set for the whole of 2023 which provides some assistance there. At the same time inflation is running at circa 3-4% over the last 12 months which is a comfortable level for the economy.
VIETNAM ECONOMIC OUTLOOK 2024
Recently in HCMC just last week there was a 2023 investment conference being held that I shall elaborate at a bit more on further down.
At this recent conference it was mentioned that the Vietnamese gross domestic product is projected to grow at 4.7% this year and accelerate to 6.5% in 2024.
WHAT IS THE STOCK MARKET FORECAST FOR VIETNAM FOR 2024?
Speaking of the Vietnam investor conference in early October, it was run by VinaCapital as it has been done annually since 2005.
Interestingly, this one had the highest attendance of all that time. A bit of a shame I wasn’t around in HCMC the last few weeks so I couldn’t make it, next year might be different for me with a bit of luck.
Apparently there was plenty of guests from South Korea and Japan. I see a similar influence where I have been staying in recent months in Vietnam (more on that a little further down).
Below is a link that discusses the investor conference in case you are interested.
https://www.thestar.com.my/business/business-news/2023/10/06/right-conditions-to-attract-investments
Here is a snippet from that which caught my eye in relations to a Vietnam stock market forecast for 2024.
Regarding the outlook of the Vietnamese securities market, Nguyen Hoai Thu, managing director and head of investment at VinaCapital, noted that Vietnam’s stock market currently offered attractive valuations compared to its regional counterparts.
She predicted that earnings of listed companies, which hit a low in the fourth quarter of the previous year, would gradually recover and are expected to average 25% in 2024.
Whilst the above does not specifically discuss a VN-Index level target for the end of 2024, such earnings growth if achieved would provide a solid backdrop. If one was to take that with the context of the P/E of the Vietnam stock market which I will show below, the outlook seems promising.
WHAT IS THE P/E RATIO OF THE VIETNAM STOCK MARKET?
According to Simply Wall St, at the time of writing this Vietnam stock market update shortly after Q3, the P/E Ratio of the VN-Index is 15.2 times.
I have provided a few charts below just to get some perspective of how it sits with historical Vietnam stock market valuations.
Source: Simply Wall St
BEST VIETNAM FUNDS / STOCKBROKER COMMENTS SEPTEMBER QTR 2023
I thought I would try something a little different in this section this time. Whilst Marc Faber is not a Vietnam broker or running a dedicated Vietnam fund, I thought it was interesting to note an interview he did recently about Vietnam.
MARC FABER LATEST INTERVIEW & PREDICTIONS ON VIETNAM 2023
He is quite well known generally in the global investment community, although many may not realize he has been following the Vietnam investing markets particularly closely for a long time. I used to run into him various times when I spent many months staying in Chiang Mai, Thailand. Whilst I only chatted very briefly to him on the rare occasion, I learnt that around 20 years ago he with some business partners invested directly in hotels near Danang. Although he exited them quite a while back, just prior to covid he was still travelling to Vietnam numerous times a year and keeping a close eye on some Vietnamese stocks and funds.
He was correctly not particularly keen on Vietnam stocks just prior to the very disappointing calendar year of 2022.
In this interview, it is interesting to note that after the poor 2022 performance, he sounded far more interested in Vietnam stocks as a buying opportunity and had been doing some buying.
For reference I believe this interview was about 4 or so months ago when the VN-Index was probably trading around circa 1,050 to 1,100. He describes Vietnam stocks as “reasonably good value” at the time. Sounds like he is thinking not a bad time to put your toes in to start buying. Although perhaps leave some dry powder to buy Vietnam stocks more aggressively if you see a 20-30% decline in the market led by global factors.
For context as I write this blog post now in the second week of October the index had performed well since, to be around 1,148. By the same token, Vietnam stocks are probably still close enough to the time of this Marc Faber interview to suggest they might still be in an attractive buying zone to accumulate.
Below is the link to the youtube interview..
Cuộc Phỏng Vấn Thế Kỷ Cùng Tỷ Phú Marc Faber – YouTube
WHICH WAS THE BEST STOCK TO BUY FROM VIETNAM JUST BEFORE SEPTEMBER QTR 2023?
A good stock to own through Q3 that caught my eye was Mobile World Group (MWG:HOSE), despite a major pull back from the high point reached in early September.
It gained almost 20% over the quarter, and it one stage the gains were more than 30%.
If you have travelled to Vietnam you will be familiar with their various key retail brands be it in mobile phones and IT accessories, commercial electronics and supermarkets.
If you are interested in more of the background of Mobile World Group, checkout the brief summary I made some time back below.
WHAT HAPPENED WITH THE VIETNAM STOCK MARKET DURING SEPTEMBER QTR 2023 SECTOR WISE?
Mobile World Group is a bit of a segway to discuss the retail / electronics sector in Vietnam. Earlier I mentioned the top-down view of the Vietnamese economy was that domestic consumption stories were relatively attractive.
Another stock linked to electronics and robust domestic demand that had some interesting moves throughout Q3 in Vietnam was Digiworld Corp (DGW:HOSE).
Its shares rallied more than 35% in the September quarter.
ON THE GROUND NEWS AND THOUGHT SNIPPETS FROM VIETNAM FROM STEVE
I just wanted to add a bit more in regard to where I have been generally staying in Vietnam in recent months.
It just so happens that it is in very close proximity to a major recent development, the UOA tower in district 7.
The company behind this I have discussed on this blog before, Overseas Australia (ASX:UOS). I am still a shareholder and positive for the future on this stock, which trades at about half its asset backing which consists of a plenty of cash and a strong balance sheet.
Below is the link from when I discussed it briefly in the past..
I owned the stock years before they had this development in district 7. The reasons I have been staying in Vietnam in recent months I won’t bore you with, but have nothing to do with being a shareholder here.
I just thought I would give it a brief mention because as it turns out, the surrounding district to this tower really impresses me and am enjoying staying here.
Also if any reader happens to be nearby and is up for a beer 333 or caphe sua da or whatever takes your fancy, then let me know.
ARE EMERGING MARKETS A BUY IN 2024?
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 Indian stock market and in particularly an India focused closed end fund. Essentially, I tried to tackle the question many India investors in terms of the market heading into 2024 being an election year.
ARE INDIAN STOCKS OVERVALUED IN 2024?
My conclusion was that the Indian stock market is trading at historically high valuations, meaning it is particularly vulnerable to any sudden shocks. Similar high valuations in India lead to some major drawdowns in bear markets around 2000 and 2008, so caution is warranted as we soon approach 2024. Whilst it seems highly likely the election of 2024 will see markets get their wish with Modi wining a 3rd term, other global worries could nonetheless see an excuse for investors to take profits beforehand. The Indian stock market has given investors an excellent return in recent years.
Summary
The India Fund is a closed-end fund focused on listed Indian equities with a long-established history and AUMs above $500 million.
The fund has seen a solid performance this year, but investors should be prepared for inconsistency in future distributions.
Indian equities may be overbought and vulnerable to unexpected negative news, making it an opportune time to lighten exposure to the fund.
The India Fund overview
The India Fund (NYSE:IFN) is a closed end fund focused solely on listed Indian equities. It has a very long-established history dating back to 1994 and has good sized scale with AUMs above $500 million. The expense ratio of around 1.3% is reasonable, as is their overall performance over the long term. Whilst the fund’s distribution late last year was very high, that is not at a level that is sustainable in the future. Investors should be prepared for inconsistency with the distributions they receive.
They are not afraid to deviate from their benchmark and actively manage the portfolio. At times this has proved successful, although I note no meaningful edge in their NAV returns over their benchmark in the long run.
Performance over the last 5 years has been given an extra boost because of the market price closing the discount to the NAV. This may present one of various signs that Indian equities are overbought, making them vulnerable to any unexpected negative news.
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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 in 2024?
Thoughts welcome in the comments area as usual, good luck for the month ahead!
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