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 Q2 2024. It will also sometimes refer to other frontier or emerging markets more generally.
VIETNAM STOCK MARKET NEWS JUNE QTR 2024
The Vietnam stock market had eased back a few percent in the June quarter after a meaningful rally in Q1. In local currency terms the market fell by about 3%, and we saw quite a bit of volatility in the period.
In April Vietnam stocks fell sharply by approximately 8%. Worries from a global perspective included rising geopolitical tensions in the Middle East, and doubts about whether a Fed rate cutting cycle is coming soon. Domestically investors continued to be nervous about the ongoing anti-corruption campaign and potentially instability around high-ranking government officials.
Such worries were eventually put aside by mid-April, when Vietnam stocks stabilized for the rest of the quarter and clawed back a lot of April’s steep losses. Relatively upbeat Vietnam economic data and encouraging companies results tempted investors back towards sectors such as materials and consumer discretionary. Such enthusiasm in May was particularly led by Vietnam’s retail investors, who dominated turnover.
The month of May also saw the new president Mr. To Lam elected. On the global political stage, the June quarter saw the continued approach of Vietnam’s “bamboo diplomacy” juggling act. In June, Putin arrives in Vietnam as Russia seeks support in face of Western isolation | CNN. In the last year Vietnam as also seen high profile visits from both Chinese leader Xi Jinping and US President Joe Biden.
The article below touches on how this has been a strength in the past, but nonetheless is a key longer-term risk that is out there.
Vietnam’s foreign policy faces balancing act – GIS Reports (gisreportsonline.com)
The quarter saw continued solid demand for gold particularly earlier in the quarter. It saw the price premium on state owned Saigon Jewelry Company’s gold bars to hit 20%. The State Bank of Vietnam followed by intervening with various measures which saw the price pull back.
June continued the trend that has generally been around for years now, where foreign investors were mostly selling stocks but was met with continued strong buying by local individual investors.
VIETNAM STOCK INDEX LEVEL CLOSE JUNE 30th, 2024
The VN Index declined by about 3% over the June quarter, to close at 1,245 points. Losses were almost double that in USD terms however, as we witnessed some weakness in the Vietnam Dong during the quarter.
VIETNAM ETF PERFORMANCE COMPARISON JUNE QTR 2024
In USD NAV terms here is the performance of these US listed Vietnam ETFs for the 3 months to June 30, 2024 – The VanEck Vietnam ETF (VNM) fell 11.6%, whereas The Global X MSCI Vietnam ETF (VNAM) lost 10.2%.
In VND NAV terms, Vietnam listed ETF The Dragon Capital VFMVN Diamond ETF (FUEVFVND:HOSE) fell slightly by 0.4% for the quarter. 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 JUNE 30, 2024
Source: investing.com
VIETNAM LATEST ECONOMIC DATA june QTR 2024
Vietnam tourism numbers continued to recover, for example in Apri the numbers were 3.9% higher on a comparative basis to pre pandemic levels in 2019. This can’t hurt retail sales which also showed solid numbers. Stripping out the inflation effects, April retail sales were up 5.3% yoy.
May export data showed growth of almost 16%, which is a big turnaround from the equivalent export data we were seeing about a year ago. May however did see the country post a rare trade deficit, and there has been some noticeable weakness in the Vietnam’s currency.
Inflation is running at the lower end of the 4-4.5% annual target range.
Overall, for the first half of 2024, Vietnam experienced GDP growth of 6.4%. Pleasingly the recovery from last year is broad based, with good stories surrounding exports, consumption and FDI.
VIETNAM ECONOMIC OUTLOOK 2024
In general, forecasts for Vietnam’s economy for the remainder of 2024 are either being kept firm or nudged up.
Vietnam Economy in H1 2024: Strong Performance in Key Indicators (vietnam-briefing.com)
To quote from the above link, “The United Overseas Bank (UOB), The Asian Development Bank, Standard Chartered, and HSBC have all maintained their growth forecasts for Vietnam at 6 percent for 2024. In June, a team from the International Monetary Fund (IMF) led by Paulo Medas noted that Vietnam’s economy had rebounded and grew by 6.4 percent year-on-year in H1.
Meanwhile, in a July ASEAN+3 regional outlook report, AMRO revised its GDP growth forecast for Vietnam upward to 6.3 percent from 6 percent in its April report while maintaining a 6.5 percent increase for the 2025 projection.“
WHAT IS THE STOCK MARKET FORECAST FOR VIETNAM FOR 2024?
The outlook appears to be upbeat, with solid economic growth outlined above, in conjunction with reasonable valuations. Whilst the PE ratio often quoted (chart further down below is close to long term average levels), forward P/Es are lower, underpinned by the very good EPS growth expected.
In Dragon Capital’s update in mid-June for example, they cited a “2024F PE of 11.6x and EPS growth of 18.5%” for the overall Vietnam market. Additionally, they noted “The private sector, in particular, is showing strong recovery momentum and is expected to continue driving the economy and market forward.“
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 Q2, the P/E Ratio of the VN-Index is 16.5 times.
BEST VIETNAM FUNDS / STOCKBROKER COMMENTS JUNE QTR 2024
I found the below chart interesting from Asia Frontier Capital.
Foreign investors are still making up a much smaller share of overall trading volumes compared to what we saw 5-10 years ago. I consider this a positive story because I am confident of more foreign investor interest in the years ahead. The likely main catalyst for that is at some point in time an upgrade of the Vietnam stock market from frontier market to emerging market status.
Another reason for the chart above though is simply the average retail domestic investor interest from Vietnam has grown substantially. As I mentioned above, further evidence was seen of this in the last few months,
This was a theme I touched on a few years ago as likely to be a long term structural favorable story for the Vietnam stock market. i.e. The number of Vietnam retail brokerage accounts should grow at a high rate in the years ahead.
A very small number of Vietnamese have a local brokerage account so there is plenty of room for future growth.
WHICH WAS THE BEST STOCK TO BUY FROM VIETNAM JUST BEFORE june QTR 2024?
Mobile World Investment Corp had an impressive move in the quarter, gaining about 22%. As I write this in mid-July the gains are more than 50% YTD. It is a top 20 stock in Vietnam with broad exposure to consumer confidence with retail operations across supermarkets and electronic stores including e-commerce. Quite some time ago on the blog I wrote this summary, link below:
VIETNAM STOCK INDEX COMPONENTS REVIEW – MOBILE WORLD (HOSE:MWG) – VIETNAM STOCK MARKET (vietnamesestockmarket.com)
Their Q1 results released to the market earlier in the quarter showed numerous positive signs. Their supermarket chain is experiencing very high growth and is poised for more store expansion. Margins are health and improving and they are outperforming their competitors.
WHAT HAPPENED WITH THE VIETNAM STOCK MARKET DURING june QTR 2024 SECTOR WISE?
With Mobile World Group being such a bellwether type stock for the Vietnam consumer market, it assisted in consumer discretionary being a good place to be invested in the June quarter.
Phu Nhuan Jewelry (PNJ) is another stock that perhaps illustrates the consumer is in good shape. Although fairly flat the last few months, is up my more than 20% in the last 12 months. It seems to be holding up ok even though the volatility in the gold price made plenty of news recently in Vietnam.
VIETNAM STOCK MARKET REACTS AFTER LEADER TRONG DIES
Earlier above I made note of what is viewed as Vietnam’s “bamboo diplomacy”. A key person involved in this regard unfortunately passed away early on Friday afternoon.
Vietnam’s Communist leader dies aged 80 creating power vacuum | Vietnam | The Guardian
He was known for his strong anti-corruption campaigns in recent years, which were often the focus of Vietnam stock market investors.
There has been speculation about Trong’s health in recent months, so that in itself may lead investors to not react in a major way to this news.
Having said that, it has created some uncertainty, which markets never like.
ON THE GROUND NEWS AND THOUGHT SNIPPETS FROM VIETNAM FROM STEVE
Unfortunately, in early June Andy Ho, CIO of VinaCapital sadly passed away from a stroke. I would like to express my condolences to his family and friends. I have discussed VinaCapital a lot on this blog including a review of Andy’s book, “Crossing the Street”, which I thought was a fantastic read. I wish the team well there during this tough time.
Turning our attention back to the political coverage from within Vietnam on both a domestic and global front, I do notice major differences on coverage of world leader’s visits here. The Biden visit last year seemed to come with a lot more fanfare compared to visits from the leaders of China and Russia.
Biden’s visit by the way seemed to potentially assist in a decision soon about Vietnam being upgraded by the US possibly to an “emerging market”. Note that this is separate from my comments earlier about whether or not Vietnam’s stock market one day gets upgraded to emerging market status. Having said that, this can’t hurt and is a decision to watch out for soon potentially.
Just quickly, in the past on the blog I have tended to note if I added any Vietnam stock market exposure recently. I still track how such “Vietnam flavored stocks” have been performing and will update that in the future. (note – pretty flat and dull so far against a bull market in major US stocks unfortunately!).
Anyway, recently I made my first small direct company stock purchase in Vietnam when it comes to companies well outside of the top 20 or so.
I have had a bit of a theory that there could be some nice opportunities for a growing company that one day has the potential to progress to a larger market cap which may attract more institutional interest. I also like the idea of a relatively simple thesis and one with a cash rich balance sheet that has returned capital to shareholders in the past. In other words a pretty “boring story”. The purchase recently at a price of around 88,000 was Saigon Cargo Service Corporation, let’s see if I have any luck this time. Not advice of course, be careful out there!
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.
I think Mexico is an interesting market as it became very popular in recent years to investors seeking a “China plus one” growth story. In my view markets like this and India ran a bit too hard with enthusiasm on the back of this. In the last quarter there was volatility surrounding surprising political developments in both Mexico and India.
Despite some pointing to political uncertainty in Vietnam, one could argue there is relatively ok stability in comparison. After all, even in developed countries like the US, there is uncertainty as we saw with certain events in recent months there!
Below is a link with my recent thoughts last quarter on the Mexico Fund.
Summary
The Mexico Fund, Inc. aims for long-term capital appreciation through equities listed on the Mexico Stock Exchange.
The fund has experienced a large discount to NAV, but this may present an opportunity for investors.
Risks in the short term are emerging though due to currency movements and upcoming elections.
Mexico fund overview
The Mexico Fund, Inc (NYSE:MXF) is a long standing CEF that aims to achieve long term capital appreciation via equities listed on the Mexico Stock Exchange.
The Mexico Fund’s website tells us that the management team is very experienced and has overseen a respectable investment track record. Whist nominal returns over the last decade have been low, it has been a tough decade for Mexico stocks. The fund’s NAV returns still exceed their benchmark over that time.
Frustratingly for investors during this time, they have seen the fund continue to trade at a large discount to NAV, at around 20% over the last year.
For prospective investors considering the Mexico Fund however, this may represent an opportunity to see a tighter discount in the future. The are no obvious structural weaknesses with the fund suggesting that the discount should widen significantly further beyond 20%.
Some actions by the company aimed at addressing the discount issue include a cap on the expense ratio, and a very modest on-market buyback of shares.
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HOW TO INVEST IN THE VIETNAM STOCK MARKET in 2024?
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