We would like to present you our monthly Macroeconomic & Stock Market Highlights for Vietnam alongside with the monthly performance update of the TIM Vietnam Actively Managed Certificate for November 2024.

Vietnam’s Update – Economy

• Streamlining governance to fuel investment and cut waste. A cornerstone of Vietnam’s economic agenda is the “anti-waste” campaign, led by General Secretary To Lam. This initiative includes merging ministries and Party organizations to reduce recurring expenses and to improve governance. For instance, the Ministry of Planning and Investment will be combined with the Ministry of Finance, while the Ministry of Transport will merge with the Ministry of Construction. These changes aim to address Vietnam’s disproportionately high recurring expenses, which accounted for 70% of the state budget in the first nine months of 2024, compared to 40-50% in most developed nations. The savings from this restructuring will be redirected toward growth-oriented investments, with final proposals expected in February 2025.
• Rising international tourism supported spending. Retail sales grew by 8.8% y/y in November, fueled by strong international tourist arrivals. The tourism sector is thriving, attracting 1.7 million visitors, the highest monthly total this year, bringing year-to-date arrivals to 15.8 million, up by 41% y/y. To further bolster consumer spending, the National Assembly approved a 2% VAT reduction, effective until mid-2025.
• Manufacturing steady despite softer external demand. Vietnam’s Purchasing Managers’ Index (PMI) dipped slightly to 50.8 in November, remaining in expansionary territory. Export and import growth decelerated but still posted impressive y/y gains of 14.0% and of 16.0%, respectively, contributing to a remarkable trade surplus of $24.5 billion for the first 11 months of 2024. Businesses remain optimistic, citing proactive cost management and expectations of stronger demand going forward.
• FDI inflows point to Vietnam’s high-tech ambitions. Foreign Direct Investment (FDI) disbursement rose by 7.1% y/y to $21.7 billion, while registered FDI increased by 1.0% y/y to $31.4 billion. Notably, South Korea’s LG Display committed an additional $1 billion to its Haiphong operations, and Nvidia reached an agreement to establish AI research and data centers in Vietnam. With the Trump administration beginning in 2025, Vietnam anticipates further FDI relocations from China, enabling a strategic shift toward high-tech and advanced manufacturing investments.
• Low inflation creates room for fiscal expansion. November’s Consumer Price Index (CPI) was a manageable 2.8% y/y, as decelerating food prices and low gasoline prices offset rising electricity costs. While the CPI is expected to rise in 2025 due to increased infrastructure spending, the current environment provides room and a stable foundation for fiscal stimulus.
• The Vietnamese dong remains stable despite global headwinds. In November 2024, the Vietnamese dong (VND) was unchanged against the U.S. dollar (USD) even as the U.S. Dollar Index (DXY) climbed by 2.1%. The VNDs resilience stems from two critical factors: the neutralized interest rate differential between Vietnam and the U.S., and strong USD inflows from Vietnam’s substantial trade surplus and increased FDI disbursements. Additionally, seasonal remittances bolstered the supply of USD, further strengthening the VND. Looking ahead, while President-elect Donald Trump’s communication suggests continued strength in the USD, a significant strengthening of the US currency appears unlikely due to the Federal Reserve’s easing stance. Vietnam’s robust economic fundamentals, including a positive trade balance and strong FDI inflows, are expected to underpin the dong’s stability well into 2025.

Vietnam’s Update – Stock Market

• The VN-Index faced volatility but showed resilience. In November, the VN-Index experienced some fluctuations before closing 1.2% lower. The month began with a continuation of October’s correction, fueled by concerns over global macroeconomic uncertainties and the U.S. election results. A stronger U.S. dollar further pressured the Vietnamese Dong, deepening negative sentiment. However, mid-month developments brought cautious optimism. The National Assembly introduced ambitious economic growth plans, including the North-South Express Railway, alongside new laws aimed at ease regulatory delays. Foreign investors’ net purchases of $45 million in the final week of November provided additional support for the market.
• Cautious trading reflects lingering market uncertainties. The average daily trading volume of the VN-Index fell to $623 million in November, below October’s $711 million daily average. Foreign investors remained net sellers, with $430 million net outflows for the month, highlighting a conservative stance amid global uncertainties. Looking ahead, geopolitical tensions and Donald Trump’s presidency, starting January 2025, may cause investors’ caution and market volatility to remain elevated for the time being.
• Strong fundamentals and structural reforms support long-term growth. Despite short-term challenges, Vietnam’s solid macroeconomic foundation and the promising corporate earnings perspectives support a constructive market outlook in our view. The government’s efforts to streamline Vietnam’s public administration and tackle regulatory obstacles causing delays are paving the way for accelerated economic growth. Legal bottlenecks in the real estate sector are being resolved, enabling developers to bring long-delayed projects to the market. At the same time, the public investment law and government restructuring are unlocking opportunities for infrastructure spending, attracting significant FDI inflows. These reforms are creating positive ripple effects across key sectors such as construction materials and industrial parks, positioning Vietnam to capitalize on long-term growth opportunities. Adding to this optimism is the expectation of Vietnam’s upgrade to a FTSE Emerging Market status in September 2025, which should further boost foreign investor interest and market activity.
• Attractive valuations and robust earnings projections bolster investor confidence. Earnings growth among Vietnam’s top 100 listed companies is projected at 16.5% for 2025. The VN-Index’s forecasted P/E ratio of 10.2x for 2025 underscores its relatively cheap valuation compared to regional peers such as Thailand (14.5x) and Malaysia (13.6x). This presents a compelling case for long-term investors seeking attractive opportunities in a growing market.

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Please download the November 2024 Factsheet for our TIM Vietnam Actively Managed Certificate. We are also offering investment advisory mandates and research services for the Vietnamese stock market. Furthermore, we offer our clients Discretionary and Investment Advisory Mandates for the purpose of investing in listed Vietnamese equities.

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