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 Q4 2023.
VIETNAM STOCK MARKET NEWS DECEMBER QTR 2023
The market was troubled over some companies Q3 results updates. Recent weakness in the VND to the USD, as well as news flow surrounding the investigation of the corruption and losses in the Saigon Commercial Bank also did not help. As I shall discuss further down though, it is worth noting though such high-profile news is considered my many market participants as something in the rear vision mirror and factored in.
This “sell on the rumor, buy the fact” I alluded to above may then explain the big bounce in Vietnam stocks in November, which almost erased October’s sharp losses. Also weakness in the VND was short-lived in the quarter, as markets suddenly took the view that they could see the Fed pivoting to rate cuts.
VIETNAM STOCK INDEX LEVEL CLOSE DECEMBER 31, 2023
The VN Index fell around 2% over the December quarter, to close at 1,130 points. It was a volatile quarter to finish 2023 for the Vietnam stock market. October saw double digit percentage losses and the largest monthly fall for over a year. November largely erased these losses and December was flat.
VIETNAM ETF PERFORMANCE COMPARISON DECEMBER QTR 2023
In USD NAV terms here is the performance of these US listed Vietnam ETFs for the 3 months to Dec 31, 2023 – The VanEck Vietnam ETF (VNM) fell 4.6%, whereas The Global X MSCI Vietnam ETF (VNAM) declined by 1.0%.
In VND NAV terms, Vietnam listed ETF The Dragon Capital VFMVN Diamond ETF (FUEVFVND:HOSE) fell by 1.1% Refer below for an explanation of all the Vietnam ETFs out there.
VIETNAM ETF LIST 2024
Below is a complete up to date list of Vietnam ETFs in 2024.
VIETNAM STOCK MARKET CHART 12 MONTHS TO DECEMBER 31, 2023
Source: investing.com
VIETNAM LATEST ECONOMIC DATA DECEMBER QTR 2023
Foreign Direct Investment in October showed a 15% yoy growth rate, with the manufacturing sector being a key highlight there. The government proposed in October to extend the VAT cut program to June 2024.
November saw the 3rd consecutive reading of export growth for Vietnam. November also saw comforting economic data in the way of further FDI growth, together with solid public investment figures and retail sales.
The international arrivals data reached a post pandemic high. They easily have surpassed government targets, however admittedly such targets were ultra conservative. On a cautious note, in November the PMI unexpectedly dipped to a five-month low of 47.3.
Vietnam GDP for the year came in at 5%, much slower than the 8% in 2022. The weaker global economy was the main reason for the slower growth. Having said that, Vietnam’s growth of 5% still makes it one of the fastest growing economies in the world, albeit lower than the 5.9% average of the last decade it is used to.
VIETNAM ECONOMIC OUTLOOK 2024
Vietnam GDP forecasts seem to be for 6% growth next year, or a little higher even perhaps 6.5%. The improvement in some of the exports data in recent months is leading to some confidence that Vietnam will see stronger growth next year compared to closer to 5% in 2023.
WHAT IS THE STOCK MARKET FORECAST FOR VIETNAM FOR 2024?
December inevitably brings about journalists reaching out to stockbrokers to predict the level of the share market in the next calendar year. It is no different in Vietnam, with lots of such opinions shared in this article from December 21st below:
To summarize, the consensus appears to be that with p/e ratios at fairly typical levels, the favorable backdrop in terms of lower interest rates and good earnings growth should lead to higher prices for Vietnam stocks.
WHAT IS THE P/E RATIO OF THE VIETNAM STOCK MARKET IN 2024?
According to Simply Wall St, at the time of writing this Vietnam stock market update shortly after Q4, the P/E Ratio of the VN-Index is 14.7 times.
BEST VIETNAM FUNDS / STOCKBROKER COMMENTS DECEMBER QTR 2023
From Pyn Elite Fund investor letter December 28th, “During the global shock sell-off caused by the Covid-19 crisis, the valuation of the Vietnamese stock market plummeted to an absurdly low level, with the price-to-sales (P/S) ratio dipping below 1.0. In periods of moderate interest rates, the P/S ratio should rise to around 2.0 when you consider the fact that, in bullish periods, the price-to sales ratio for the Vietnamese stock market reflects a revenue growth of over 20% per year.”
Chart below via Pyn Elite and Bloomberg:
WHICH WAS THE BEST STOCK TO BUY FROM VIETNAM JUST BEFORE DECEMBER QTR 2023?
SHS is one of the largest brokers in Vietnam and has a good record in investment banking. They are currently debt free and leveraged to a pickup in overall markets. It was interesting to see that despite the shares declining sharply in October by more than 20%, the stock gained 10% over the course of the December quarter.
WHAT HAPPENED WITH THE VIETNAM STOCK MARKET DURING DECEMBER QTR 2023 SECTOR WISE?
The easier interest rate policy environment for Vietnam in 2023 is leading to strong gains in many stocks in the financial services sector. Also assisting has been the expectations of the launch of the new KRX platform.
KRX system expected to run at the end of 2023 (vietnamnews.vn)
Financial services have therefore been the standout sector for 2023.
SAIGON COMMERCIAL BANK SCANDAL AND THE VIETNAM STOCK MARKET
Vietnam’s banking sector unfortunately was making international news for all the wrong reasons in November. This was thanks to chairwoman Van Tinh Phat withdrawing a staggering $44B from lender Saigon Commercial Bank.
As is commonplace these days, international news reporters did their best to generate clicks. The amounts were compared to Vietnam’s GDP and mentioned as 20% worth of GDP. I certainly don’t want to dismiss this story is trivial, it is a very significant issue. What I would point out though is various factors why the Vietnam stock market actually finished up on the day this created all the headlines!
- These issues have been known for about a year at least which is when they were contributing to weakness in Vietnam stocks more broadly at the time.
- The comparisons to GDP often failed to note that they were comparing to the Vietnam GDP figure (to date recorded thus far in the incomplete 2023 year) and were taking these loans from the chairwoman above that were generated since 2011. Hence the percentage figure very high to such GDP.
- Saigon Commercial Bank has not been a participant in interbank lending and hence contagion to other Vietnam banks should not be an issue.
- At the time this scandal broke last year Vietnam reassured depositors and injected liquidity into the system as necessary to limit any sentiment risks at the time.
ARE EMERGING MARKETS A BUY IN 2024?
In the past I have often included some snippets from a Seeking Alpha article in this section I have written over the last quarter that has some relevance to EM. The last few months I have focused there more on activist fund managers such as Saba Capital, so I shall include a link to that instead.
Whilst Hong Kong is not EM it is often correlated to the Chinese market which many EM fund managers use as part of their benchmark. I discussed the prospects of the Hong Kong market for 2024 in my last blog post here.
I’ll link to that again below via my substack. Some prefer the substack model and app over blogs and twitter these days so feel free to follow me there also if you wish. The articles there will all be free and include the posts I do on this blog, as well as some occasional other stuff on the Australian and other global stock markets.
Value Investing For A Living ’s Substack | Event Driven Investing | Substack
Below is now a link to some of the research I have done on activist fund managers such as Saba Capital.
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 quarter on Saba Capital and their closed end fund, and prospects for shareholder activism in that space in general.
Summary
Saba Capital Income & Opportunities Fund is a closed-end fund that invests in global opportunities across various asset classes.
BRW uses both public and private instruments, including CEFs and SPACs, and may use derivatives to enhance returns or reduce portfolio risk.
BRW offers a high distribution yield of approximately 12% and trades at a discount of around 11%, making it attractive to income-seeking investors.
BRW overview
Saba Capital Income & Opportunities Fund (NYSE:BRW) is a closed-end fund that seeks to add value by investing in global opportunities across various asset classes. It can also use both public and private instruments, private funds, and may use derivatives. Closed-End Funds “CEFs” and Special Purpose Acquisition Companies “SPACs”, often represent a large part of their investments. A range of derivatives instruments can be used either to enhance returns or reduce overall portfolio risk.
Some of the above strategies are beyond the efforts of private investors to implement themselves so that is one reason to consider BRW. Such strategies are not expected to be highly correlated to equities markets generally, yet may still have scope for high returns. Saba Capital is renowned for its shareholder activism. This is also an alpha source that is beyond the scope of the average individual investor to implement.
Income investors may be attracted to the high distribution yield of circa 12%, with monthly payments. BRW trades at a discount of approximately 11% at the time of writing, investors can check the BRW website for updates.
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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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