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 September 2024.

Vietnam’s Update – Economy

• The Yagi typhoon, which was the strongest storm in Asia this year, had a major impact on Vietnamese economic activities in September. Heavy floods and rainfall lasted till the mid of the month, led to infrastructure damage and temporarily disrupted manufacturing, services, and trading activities in the north of Vietnam. Total damage is estimated at around $3.3bn. The government has been implementing remediation measures such as rebuilding infrastructure, arranging new shelters for people, asking banks to cut lending interest rates to clients impacted by the storm. Thanks to that, 98% of manufacturers located in industrial parks where the storm passed through, have restored operation. Economics activities in the central and the south of Vietnam did not suffer a serious impact.
• Despite the Yagi typhoon, Vietnam posted a robust GDP growth of 7.4% in the third quarter of 2024, better than our expectation. The agricultural sector, contributing 10.4% of the GDP, increased by 2.6% y/y. Such a solid growth happened because farmers rushed to harvest agricultural products before the storm, so the output was not yet impacted. The industrials and services sectors also delivered a solid growth of 9.1% y/y and 7.5% y/y, respectively. Strong performances in July and August did mitigate the slowdown in September. Overall, Vietnam’s economy expanded by 6.8% y/y in 9M/2024.
• Total trade continued to accelerate with a year-to-September increase of 15.4% y/y, resulting in a trade surplus of $20.8bn. Strong momentum is expected to persist as 83% of the firms expect new orders to either improve or remain stable in Q4/2024, according to a survey of the General Statistics Office (GSO).
• The September PMI declined to 47.3 from 52.4, as the typhoon caused a reduction in output because firms scaled back their purchasing activities. However, as the impact is expected to be temporary only, manufacturers remain optimistic about their output in the following months with business sentiment ticking up to a three-month high. The employment index remained solid as firms continued to expand their staffing level in September.
• Retail sales increased by 8.8% y/y. Although domestic consumption has not yet seen a swift recovery, retail sales continued to be supported by the arrivals of international tourists, which grew by nearly 43% y/y
• Foreign Direct Investment (FDI) disbursement reached $17.3bn, an 8.9% y/y increase. Registered FDI rose by 11.6% to $24.8bn with the manufacturing industry taking the lead, accounting for two-thirds of the total. In September, Samsung Display, a subsidiary of Samsung, has said that it intends to invest another $1.8bn in the Bac Ninh province for expansion. Meta is also planning to produce its newest reality headset in Vietnam, which is expected to create 1,000 jobs.
• The Consumer Price Index (CPI) remained stable in September at 2.6% y/y as transportation costs (10% of the CPI basket) declined by 5.3% y/y, following lower global oil prices. Price increases for accommodation and construction materials (18% of the CPI basket) also slowed down as construction materials prices remained at low levels. For instance, rebar construction steel is still down 9.4% y/y. Going forward, we expect somewhat higher inflation toward year-end because the impact of the Yagi storm on agriculture industry may start to reflect on food prices, while construction material prices might pick up, following the recovery of commodity prices.
• The Vietnamese Dong (VND) remained strong in September by appreciating 1.3%, narrowing the year-to-date depreciation to 1.4% against the USD. As the FED’s easing cycle has started and is expected to continue till 2025, the State Bank of Vietnam (SBV) will have room to maintain an accommodative monetary policy. In fact, the SBV injected VND worth of $2.4bn into the banking system in September via open market operations, which was the highest amount since May. Hence, although credit demand has showed signs of a rebound, we only expect a slight increase of 30bps in deposit rates towards year-end.
• In September, To Lam, the General Secretary and President of Vietnam, visited the United States, where he met with President Biden and other national leaders during a United Nations event. This visit followed his inaugural trip abroad to China just one month earlier, reinforcing Vietnam’s “bamboo diplomacy” policy, which emphasizes maintaining friendly relations with all nations.
• While there are concerns about the new Party Chief of Vietnam lacking an economic background, his recent trip to the United States showed his commitment to attract investments via meetings with major American companies, including Google, Meta, and SpaceX. Domestic infrastructure is another prime focus as disbursement to key projects such as the Long Thanh International Airport and the North South highways are being pushed. Another significant recent development is the Politburo’s decision to seek for opinion from the Party Central Committee on an investment plan for a north-south high-speed railway. This project has an estimated total investment value of $67.3 billion and aims for completion by 2035.
• As the new five-year term of the National Assembly will commence in 2026, we anticipate an acceleration of infrastructure investments leading up to that time to bolster economic growth.

Vietnam’s Update – Stock Market

• In September, the VN-Index rose by 2.1% with market performance displaying two contrasting periods. The first half of the month was characterized by corrections and lower liquidity, as concerns about the Yagi typhoon and uncertainties surrounding the Federal Reserve’s (FED) interest rate policy weighed on sentiment. However, in the latter half of the month, market confidence rebounded following the approval of the “non-prefunding trade” which will allow foreign institutional investors to engage in non-prefunded trades starting in November. Additionally, external factors such as China’s economic stimulus measures and the FED’s 50 basis points rate cut further bolstered both domestic and foreign investor sentiment, propelling the VN-Index to its highest level of the year.
• Trading volume remained steady compared to the previous month, with an average daily turnover of $720 million. Foreign investors continued to be net sellers, recording net outflows of $88 million. However, this marked the smallest net sales volume since February 2024. A notable transaction during the month was the large put-through deal involving Vietnam International Bank (VIB), where foreign investors offloaded $100 million worth of shares.
• In terms of sector performance, Financials (+4.0%) and Materials (+3.0%) led the market in September. Bank earnings are expected to remain resilient, supported by robust credit growth and encouraging economic fundamentals. Securities brokerage firms are also poised to benefit directly from increased trading activity following the non-prefunding news. The materials sector, meanwhile, gained momentum due to positive developments in commodity-related stocks. For instance, Hoa Phat Group (HPG) saw a boost from optimism surrounding China’s economic stimulus. Although iron ore and coking coal prices have bounced back recently, they are still 8.3% and 15.0% lower year-on-year respectively. The accumulation of low-cost inventory could suggest gross margin expansion for the company in the following quarters. While Vietnam Rubber Group (GVR) benefited from rising global rubber prices.
• Looking ahead, we maintain a positive outlook on the Vietnamese stock market. The recent approval of the non-prefunding circular sets the stage for a favorable assessment in FTSE’s annual market classification review in October. While an immediate upgrade is not anticipated, we expect Vietnam’s potential reclassification to an Emerging Market status by September 2025. Hence, large-cap stocks with significant weightings in the FTSE Vietnam Index may enjoy stronger inflows from both active and passive funds in the near term.
• Beyond these heavyweight stocks, we continue to see value in sectors with secular growth potential, particularly those that benefit from Vietnam’s current relatively low economic base compared to other countries in the region. Among our preferred sectors are healthcare (per capita spending of USD 220 per year still lags regional peers), construction materials and housing development for the low-to-mid income population (Vietnam’s urbanization rate stands at 42%, compared to higher rates in countries like Thailand and China).
• As of the end of September, Vietnam’s top 100 stocks were trading at a forward P/E ratio of 12.8x, at a P/B ratio of 1.7x, and at a forecasted EPS growth rate of 16.6% for 2024.

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Please download the September 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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