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 Q1 2024.
VIETNAM STOCK MARKET NEWS MARCH QTR 2024
The Vietnam stock market had a rather impressive quarter to begin 2024 both in a nominal sense, and relative to the rest of the globe. It rose more than 10% in USD terms, with bank stocks leading the way.
The bulk of the market’s gains came in February, where Vietnam stocks surged almost 7% for the month. Recent reporting results comforted investors in the banks, and with cheap valuations late in 2023 investors flocked to the sector.
The resignation of Vietnam’s President made major news during the quarter, although the stock market did not view this as a major event. After some initial nervousness, markets soon shrugged off this news.
Vietnam’s president resigns, raising questions over stability | Reuters
Vietnam’s stock market is still shrugging off a period over the last couple of years where it navigates the balancing act of taking a hard line on corruption. On the one hand this is a good step longer term, however in the shorter term it can be unsettling to see examples of various scandals being highlighted.
Changes in political leadership in Vietnam are probably another example highlighting how the country needs to be seen as making hard decisions when necessary. The reality is that power is not as concentrated in one individual as many foreign investors may think, so markets have brushed aside any concerns for the moment.
The global and domestic backdrop also assisted the Vietnam stock market in Q1. Investors still expect the Fed to cut rates towards to the middle of this year. Meanwhile, Vietnam’s economic growth and earnings forecasts show some improvement, with valuations still looking very reasonable.
VIETNAM STOCK INDEX LEVEL CLOSE MARCH 31, 2024
The VN Index gained almost 14% over the March quarter, to close at 1,284 points. Gains were a few percent lower than that in USD terms, as we witnessed some weakness in the Vietnam Dong during the quarter.
VIETNAM ETF PERFORMANCE COMPARISON MARCH QTR 2024
In USD NAV terms here is the performance of these US listed Vietnam ETFs for the 3 months to March 31, 2024 – The VanEck Vietnam ETF (VNM) rose 7.6%, whereas The Global X MSCI Vietnam ETF (VNAM) gained 7.7%.
In VND NAV terms, Vietnam listed ETF The Dragon Capital VFMVN Diamond ETF (FUEVFVND:HOSE) surged by almost 20%. 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 MARCH 31, 2024
Source: investing.com
VIETNAM LATEST ECONOMIC DATA MARCH QTR 2024
In January improvement was noted within the Vietnam economy by way of trade activities gaining momentum. Data released showing exports +6.7% MoM and +42%
YoY while imports +0.1% MoM and +33% YoY. Also the manufacturing PMI climbed back to growth territory.
In February the PMI continued this trend once again edging up to 50.4, and exports continued to show great improvement. Retail sales showed slight improvement at +8.5%, versus 8.1% in January.
Q1 GDP in Vietnam came in at 5.6%. This was an improvement to the 5% growth recorded over 2023, and as alluded to above the improving exports story was the key.
CPI rose in March by almost 4% yoy, although the core measure was more well-behaved running at 2.8% yoy.
VIETNAM ECONOMIC OUTLOOK 2024
Vietnam GDP is generally forecasted to be for around 6% growth in 2024. This would be a solid improvement to last year, albeit maybe short of what the government targets at 6.5%.
This GDP outlook from Vina Capital’s recent presentation made in February shows Vietnam’s growth with perspective of the pre-covid averages and what is driving things.
WHAT IS THE STOCK MARKET FORECAST FOR VIETNAM FOR 2024?
I found the bullish outlook from the most recent investment letter in late March from the Pyn Elite Fund very interesting reading.
To quote directly, “In light of the 2024 forward earnings, the gap in the P/E ratio between Vietnam and India has grown too wide, with Vietnam having a P/E of 11 while India’s P/E is 22. We believe that the valuation gap between the two markets will narrow. As regards the macroeconomy, it should also be noted that India relies on external borrowing, whereas Vietnam generates surpluses, which means that India’s current account is in deficit, while Vietnam has a current account surplus. When the economy is booming, India is likely to attract inflows of money, thus ensuring adequate financing for growth, but risk factors should also be taken into consideration when evaluating expected returns.“
I have also been extremely surprised at the degree to which global investors are happy to pay up for the Indian growth story. Amongst other factors, Pyn Elite notes how Vietnam has deliberately limited growth in bank lending to encourage stability of the economy.
Source: Pyn Elite investor letter March 2024
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 Q1, the P/E Ratio of the VN-Index is 15.7 times.
BEST VIETNAM FUNDS / STOCKBROKER COMMENTS MARCH QTR 2024
A topic to keep a close eye on this year is any commentary surrounding how Vietnam is shaping up with their hope to be upgraded from frontier to emerging market status.
Dragon Capital had this to say on the topic recenty.
Source: Dragon Capital Monthly newsletter March 2024
WHICH WAS THE BEST STOCK TO BUY FROM VIETNAM JUST BEFORE MARCH QTR 2024?
One of the large banks, and one that I have commented on here I own before is Vietinbank (CTG). The Vietnam themed stock portfolio I have been running on this blog has overall been disappointing (shall post something on that another time), but Vietinbank at least did well this last quarter.
The stock rose a bit over 30% for the quarter. Despite that, forward PE is around 8 times 2024, or closer to 6 times 2026 forecasts.
WHAT HAPPENED WITH THE VIETNAM STOCK MARKET DURING MARCH QTR 2024 SECTOR WISE?
Banks had a good run during Q1 2024, and I put that down to a variety of reasons such as:
- Cheap bank valuations leading into 2024.
- Solid reporting numbers from banks indicating non-performing loans probably having peaked late last year.
- NIMs are improving to a very attractive level.
- The “noise” surrounding the scandal at unlisted Saigon Commercial Bank weighing on sentiment the last couple of years, with the realization now the issues are relatively contained.
ON THE GROUND NEWS AND THOUGHT SNIPPETS FROM VIETNAM FROM STEVE
A talking point during the start of 2024 has been the ONGOING TRIAL OF SOUTHEAST ASIA’s LARGEST FINANCIAL SCANDAL.
Vạn Thịnh Phát chairwoman faces death penalty for region’s largest financial crimes (vietnamnews.vn)
A tip for young players is perhaps that fraud in the order of tens of billions of dollars will probably be detected at some point!
Cyber attacks on Vietnam stock broking firm VNDirect also created news with their platform being down for many days.
VNDirect granted trading reconnection – EIN Presswire (einnews.com)
As it happens, this of course was the broker I had a few stocks with! Maybe I picked the wrong broker, having said that they have nearly a ten percent market share from memory so many were affected.
I have had some accounts in Australia where trading was down virtually the whole day, so I guess this experience is not totally surprising. Still, with Vietnam trying to get upgraded to emerging market status it is hardly news they like to see.
On the tourism front, some have been a little disappointed with Vietnam’s bounce back post covid. They are not the only one in the region that is probably disappointed with the numbers if they were asked what they expected a couple of years ago. The time it is taking for China’s outbound travel to return in a big way has been frustrating.
Thailand and Cambodia I know have been working hard to make it easier for Chinese tourists lately. In general, Thailand’s relatively simple visa requirements (or in many cases not requiring a visa), seem to give them an advantage. I noticed a few in the comments section in the below news story again bringing this up.
Thailand gets double Vietnam’s foreign tourist numbers – VnExpress International
It does appear that Vietnam are on the way to continue increasing the number of tourists that can come in for short stays and not require a visa, although this is taking some time.
I myself had to duck out to Chiang Mai for a week only a week or so ago and a small thing like not having to worry about a visa makes it easier. Hence, I can relate to the above news article and their tourist friendly policies. The small things there, even if it’s an afternoon special brownie with your coffee can make a trip relaxing.
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.
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 the Korea Fund. Heading into 2024 in terms of the frontier / EM space I considered Vietnam and South Korea my preferred picks.
Summary
The Korea Fund is a closed-ended fund focused on South Korean equities with performance that is slightly ahead of its benchmark over the last decade.
The fund has a discount to NAV of over 17% in the last 6 months, which may contract substantially in a bullish run in South Korean stocks.
South Korea is taking cues from Japan’s corporate governance reforms, potentially leading to improved shareholder activism and better market performance.
The Korea fund overview
The Korea Fund (NYSE:KF) is a closed-ended fund that is focused on South Korean equities. Its performance in NAV terms over the last decade has slightly beat its benchmark.
From that perspective, I would normally consider the expense ratio of nearly 1.5% too high. The Korea Fund discount to NAV has averaged more than 17% in the last 6 months though, offering enough appeal to go with this active manager. There is scope for the discount to contract substantially in the event of a bullish run in South Korean stocks. Aside from that, a discount of this magnitude continuing throughout 2024 may lead to more pressure from activists.
How did South Korean stocks perform in 2023?
Heading into 2023, I was bullish on the Korea Fund when I last covered this fund here. Whilst it has shown modest positive returns since, I would describe this as a little disappointing. One reason I was optimistic back then was the potential for an increase in shareholder activism and improvement in corporate governance.
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HOW TO INVEST IN THE VIETNAM STOCK MARKET in 2024?
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