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 2024. It will also sometimes refer to other frontier or emerging markets more generally.
VIETNAM STOCK MARKET NEWS SEPTEMBER QTR 2024
In the September quarter of 2024, the Vietnam stock market showed positive momentum, with a solid positive gain of around 3.5% in local currency terms. There was, however, significant volatility during the middle of this period which mirrored global markets. The unwinding of the yen carry trade led to downward pressure on various “risk on” assets throughout the globe, and Vietnam stocks were not spared. Likewise, at least initially, softer economic data out of the US unnerved global equity market investors.
Vietnam stocks quickly recovered such losses in the back half of August, as investors soon warmed to the prospects the aggressive Fed rate cuts may boost emerging and frontier market stocks.
During September, there was release of a circular providing funding details for stock market participants, which helped consolidate gains in Vietnam stocks over the quarter. This allowed foreign investors to purchase stocks without needing upfront prefunding capital and provides an overall bullish backdrop. Upon implementation, it allows enough time looking through to paving the way for a potential upgrade of Vietnam stocks to emerging market status.
Earlier in the month of September, Vietnam stocks were concerned with the negative impacts of Typhoon Yagi, hitting Northern Vietnam. This weighed more in the insurance sector, but as the quarter ended the overall stock market closed on a solid note. The Fed cutting rates by 50bps was on the more aggressive side of expectations. As a result, confidence is building that this will pave the way for many emerging markets in the South East Asia region to be able to loosen monetary policy. There will be less worries about their own currencies weakening excessively as a result, which should be bullish for stock markets like Vietnam’s.
VIETNAM STOCK INDEX LEVEL CLOSE SEPTEMBER 30th, 2024
The VN Index rose around 3.5% over the September quarter, to close at 1,288 points. This was at the top end of the range over the quarter, after in early August it dipped below 1,200 points briefly on the back of weaker overseas markets.
VIETNAM ETF PERFORMANCE COMPARISON SEPTEMBER QTR 2024
In USD NAV terms here is the performance of these US listed Vietnam ETFs for the 3 months to September 30, 2024 – The VanEck Vietnam ETF (VNM) gained 4.9%, whereas The Global X MSCI Vietnam ETF (VNAM) rose 5.0%.
In VND NAV terms, Vietnam listed ETF The Dragon Capital VFMVN Diamond ETF (FUEVFVND:HOSE) rose 4.1%. Refer below for an explanation of all the Vietnam ETFs out there.
VIETNAM ETF LIST 2025
Below is a complete up to date list of Vietnam ETFs as we soon approach 2025.
VIETNAM STOCK MARKET CHART 12 MONTHS TO SEPTEMBER 30, 2024
Source: investing.com
VIETNAM LATEST ECONOMIC DATA SEPTEMBER QTR 2024
Vietnam’s economy has shown a robust recovery in the first nine months of 2024, with a year-on-year growth rate of 6.82%. This growth is attributed to positive developments across various sectors, including industrial production, which rose by 8.19%, and services, which increased by 6.95%. The agricultural sector also contributed positively with a growth rate of 3.2%. The General Statistics Office (GSO) reported that the economy expanded by 7.4% in the third quarter alone, surpassing government targets.
Foreign Direct Investment (FDI) Bac Ninh province has emerged as a leader in attracting foreign direct investment (FDI), securing over US$4.2 billion from January to September 2024. This influx of investment reflects growing confidence in Vietnam’s economic stability and potential for future growth.
A survey conducted by the GSO indicated that approximately 82.6% of manufacturing firms expect business conditions to improve or remain stable in the fourth quarter of 2024. This optimism signals strong business confidence amidst ongoing global uncertainties.
Despite these positive indicators, Vietnam’s economy faces challenges such as unpredictable fluctuations and the need for effective maintenance of domestic market momentum. Typhoon Yagi has had adverse effects on agricultural production and tourism, necessitating timely solutions to restore production and business activities.
The Ministry of Planning and Investment (MPI) projected an economic expansion of between 7.6% to 8% in the fourth quarter, aiming to achieve an overall growth target of around 7% for the year. To support this goal, there is a focus on enhancing cooperation with strategic partners and attracting high-tech investments.
In addition to these economic updates, Electricity of Vietnam (EVN) announced an increase in average electricity retail prices by 4.8%, effective from October 11, which may impact consumer spending and inflation.
Overall, Vietnam’s economy is demonstrating resilience and recovery despite external challenges while maintaining positive growth trajectories across multiple sectors.
VIETNAM ECONOMIC OUTLOOK 2025
The economic outlook for Vietnam in 2025 is projected to be positive, with various forecasts indicating a growth rate between 6.5% and 7.5%. The Ministry of Planning and Investment has presented three scenarios for economic growth, with the highest scenario predicting a GDP growth of around 7.5% if global conditions improve significantly, particularly regarding industrial production, exports, and foreign investment.
In the first scenario, the GDP is expected to grow at a rate of 6.5-7%, while inflation is anticipated to remain between 4-4.5%. This scenario considers the complexities of the global economic environment and acknowledges that several intrinsic issues within Vietnam’s economy may not be resolved quickly.
The Asian Development Bank (ADB) also supports this optimistic outlook, forecasting GDP growth at 6.2% in 2025, driven by robust trade recovery and improvements in industrial production. The ADB highlights that despite challenges such as weak household spending and the impact of natural disasters like Typhoon Yagi, Vietnam’s economy shows resilience due to strong export demand and ongoing investments.
Additionally, the World Bank projects a growth rate of 6.5% for Vietnam in 2025, emphasizing that enhanced public investment will play a crucial role in stimulating economic activity while addressing infrastructure gaps in energy, transport, and logistics.
Overall, while there are risks associated with external factors such as geopolitical tensions and potential changes in trade policies from major economies like the United States, the general consensus among economic experts is that Vietnam’s economy will continue to grow steadily through 2025.
WHAT IS THE STOCK MARKET FORECAST FOR VIETNAM FOR 2025?
Overall, the outlook for the Vietnam stock market appears optimistic as reforms continue to unfold alongside favorable macroeconomic conditions. A key determining factor is shaping up as whether the stock market gets upgraded to emerging market status or not.
will the vietnam stock market be upgraded to emerging market status in 2025?
FTSE Russell confirmed that Vietnam remains on its watchlist for potential upgrade to Secondary Emerging Market status as it continues to meet certain criteria for reclassification but still faces challenges regarding its settlement cycle and complexities in opening trading accounts for foreign investors.
Prime Minister Phạm Minh Chính has committed to removing barriers preventing Vietnam from meeting FTSE’s upgrade criteria by 2025 through regulatory amendments aimed at improving access for foreign investors.
Analysts predict that if Vietnam achieves emerging market status, it could attract significant capital inflows estimated at up to USD1.7 billion from exchange-traded funds alone.
WHAT IS THE P/E RATIO OF THE VIETNAM STOCK MARKET IN 2025?
As we approach 2025, 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 15.3 times.
I have provided a chart below just to get some perspective of how it sits with historical Vietnam stock market valuations.
BEST VIETNAM FUNDS / STOCKBROKER COMMENTS SEPTEMBER QTR 2024
Some of the commentary for this September quarterly report will cover the good run in Vietnam bank stocks of late, so I thought I would feature something here from PYN Fund Management.
Their fund which boasts very good long-term performance had a good quarter, as they are heavily overweight this area.
In a letter to investors in late September, they point out that “Vietnamese banks have even faster growth than US tech companies.”
Quite interesting, let’s just say forward earning’s multiples are a little lower currently when it comes to Vietnamese banks vs US tech!
WHICH WAS THE BEST STOCK TO BUY FROM VIETNAM JUST BEFORE SEPTEMBER QTR 2024?
A stock which I happen to own stood out to me this quarter was Vietinbank, that is Vietnam Joint Stock Commercial Bank For Industry And Trade (HOSE: CTG).
Whilst it may not necessarily be the biggest mover to the upside in this period, I thought it was worth a mention give that at times various fund managers and ETFs will often own sizeable weights in this bank stock.
As we can see from the chart below, it surged almost 20% in the September quarter, rising from 31,000 to almost 37,000.
I did notice shortly after global stock market weakness in early August, stockbroker VN Direct did put out a positive update that was well timed when the stock was still trading at about 32,000. They lifted their target price up slightly to 39,900 at that time. They made the point that the level near 40,000 would see the stock trade more in line with its 5-year average price to book ratio of circa 1.4 times. They also expect 2024 ROE to be about 16%, in line with its 5-year average.
A lot of this positive move in Vietinbank shares can simply be put down to widespread confidence returning to the banking sector from Vietnam stock market investors in general. I have commented on this from the sector aspect below.
WHAT HAPPENED WITH THE VIETNAM STOCK MARKET DURING SEPTEMBER QTR 2024 SECTOR WISE?
In the September quarter of 2024, Vietnam’s bank stocks exhibited a positive performance, driven by several key factors. The overall banking sector was buoyed by expectations of continued low interest rates and an increase in credit demand. According to various market strategy reports released during this period, many experts recommended bank stocks as a safe haven for investors.
The VN-Index was in an upward trend in Q3 this year, and this encouraged funds to shift from safer investment channels like savings deposits into equities, particularly banking stocks. Analysts from Vietnam International Securities (VIS) forecasted that credit demand would accelerate in the latter half of 2024 due to low interest rates stimulating borrowing.
Several banks were highlighted as promising investments during this quarter. For instance, VIS projected that banks such as BIDV, VietinBank, MB Bank, LP Bank, Techcombank, OCB, and ACB would show significant profit growth. Some banks were expected to achieve pre-tax profit growth between 10-15% for the year.
The non-performing loan ratio within the banking sector was anticipated to decrease slightly in the remaining months of 2024. Furthermore, VNDIRECT Securities noted that the current price-to-book ratio for banks was below its five-year average, indicating attractive valuations for investors. They specifically recommended buying MBB (Military Commercial Joint Stock Bank) with a potential price increase of around 15%, while VPB (VPBank) was expected to see an increase of up to 25%.
Yuanta Research maintained a positive outlook on several banking stocks including Vietcombank and Techcombank based on their capital adequacy and asset quality metrics. The report suggested that pressures related to provisioning might ease as some banks had already set aside significant provisions.
ON THE GROUND NEWS AND THOUGHT SNIPPETS FROM VIETNAM FROM STEVE
If I was better organized, I could have written here a bit about the VinaCapital Investor Conference I attended in HCMC last week, however it unfortunately slipped my mind, and I did not end up attending!
It got me thinking though, that if the bullish trends in many ASEAN equity markets of late are not capturing my attention too much, maybe the same is for global investors in general?
To be honest I am struggling to find many news stories talking about the recent rises, it made me wonder if I was imagining some of the gains. I tried therefore to come up with some charts or figures to put this into context. This was not easy, still I wonder if this is quite a good sign that a bull market in this region could have many legs even from here?
Anyway it took me awhile, but I found an article from mid-September below that covers this area:
Global Investors Flock to Southeast Asia as Markets Outperform (substack.com)
By the way the above is a good substack to follow I think if you are interested in Southeast Asia equities, I have not had any contact with the author but have liked many articles that come across to my inbox from here.
Circling back to VinaCapital and the presentation they had which you can access from their site, I must admit I am surprised the large discount to NAV it still trades at. Likewise with rival Vietnam CEFs on the London exchange. Is that also yet another argument to my point here? i.e. Southeast Asian stocks despite a recent rally are very much still a contrarian trade, and the global investing public is disinterested still?
ARE EMERGING MARKETS A BUY IN 2025?
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 iShares MSCI Thailand ETF.
Summary
Thailand stock market underperforms due to weak tourism, exports, and political instability, leading to a significant decline.
The decline has seen some cheapening up of valuations, particularly compared to some of its Southeast Asian neighbors.
Government measures coming up soon include cash handouts, relaxed visa rules, and specific measures to boost stocks.
Despite recent challenges, the potential for GDP recovery in Thailand may make iShares MSCI Thailand ETF worth considering for future returns.
The iShares MSCI Thailand ETF (NYSEARCA:THD) was launched in 2008 and tracks the MSCI Thailand IMI 25/50 Index. There are over 130 constituents, and it covers approximately 99% of the free float-adjusted market capitalization in Thailand.
I first covered THD last year, noting that valuations were not very compelling. Whilst a potential rebound in tourism was a potential catalyst, the outlook for their exports was cloudy. Adding to uncertainty, was that I wrote that article just prior to their election.
A lot has happened in Thailand since then, with their stock market declining significantly. The tourism rebound seen thus far has been somewhat disappointing, and likewise their weakening exports contributed to slowing economic growth. The common political instability has also plagued the nation and worried markets.
Even as recently as last week, we still don’t seem to be seeing improvements in Thai politics. Nonetheless, Thai stocks took this in their stride, in what was a volatile week for markets.
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HOW TO INVEST IN THE VIETNAM STOCK MARKET in 2025?
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