Brian Jeffrey
The latest report on Vietnam’s economy by the General Statistics Office (GSO) revealed promising results, with GDP expanding by 6.93% in the second quarter, surpassing expectations. This growth rate was the highest in 13 years for a second quarter, except for the exceptional period in 2022 (+7.99%).
In the first quarter, Vietnam’s GDP growth hit 6.42%, significantly outperforming projections by the World Bank and IMF, who had anticipated growth rates of 5.5% and 6% for the entire year of 2024, respectively.
Export turnover in the initial six months climbed to $190 billion, a 14.5% increase from the same period last year, exceeding the previous record set in the first half of 2022 at $185 billion.
During the first half of 2024, foreign direct investment (FDI) disbursement reached a new high of $10.84 billion, an 8.2% rise compared to the corresponding period from the prior year.
Furthermore, Vietnam experienced a budget surplus for the first time in the first half of 2024, with total collections amounting to VND1.02 quadrillion, a 15.7% surge from the previous year, alongside budget expenditures of VND803 trillion.
The number of foreign visitors to Vietnam between January and June surged by 58.4% to 8.8 million, up 4.1% from the peak in 2019 before the Covid-19 outbreak.
Securities investors encountered a mixed market sentiment in the first half of the year. Initially optimistic in June for the VN Index to surpass the 1,300-point mark, concerns arose in the latter part of the month due to a sharp decline in the index breaking the short-term upward trajectory.
By the end of June, most stocks saw a price decrease of 5-15%, with the VN-Index finishing at 1,245 points, a 1.3% drop compared to May.
Nguyen Minh Giang of KBSV Vietnam cited various factors responsible for the halt in the short-term uptrend in June.
June marked a period for ETFs to adjust and rectify monthly and quarterly NAV. Concurrently, foreign investors were vending more than acquiring, the DXY Index ascended, and the gold market turned unpredictable.
The weakening of the Vietnam dong and the strengthening of the US dollar were primary causes for foreign investors’ net sales, reaching VND50 trillion, or $2 billion, the highest since 2011.
Advisors indicated that while foreign investors’ transactions constituted only 19% of total transactions presently, the ongoing net sales have impacted the stock market and individual investors.
Forecasts suggest a relaxation of pressure from foreign investors in the third quarter as exchange rate pressures alleviate.
Giang remains confident that following a strong economic performance in the first half, the stock market will be lively in the second half.
In the US, the core PCE (personal consumption expenditures price index), the preferred inflation gauge by the FED, displayed the weakest increase in three years in May.
This development could pave the way for a potential interest rate cut by the US FED in the latter half of 2024, potentially in September.
In Vietnam, favorable conditions bolster the stock market, such as easing exchange rate pressures due to reduced demand for dollars by enterprises and stabilized gold market post the State Bank’s sale of SJC bullion gold through four state-owned banks. Export surplus, substantial FDI inflow, and overseas remittances further contribute to the positive outlook.
Analysts foresee the stock market hovering between 1,235 and 1,285 points over the next 2-3 weeks.
