Special Report - Sectors outlook in the 2H2019
GDP growth can be lower in 2019, but key macro indicators are well controlled. In which, we assume headline inflation will be lower than four percent. Meanwhile, GDP growth rate can be around 6.8% YoY. Moving on to 2020, contribution from private investment to GDP can reduce slightly. Rising in public investment in big projects such as North-South highway and Long Thanh airport will take the lead.
US and China trade war has impacted positively and negatively on Vietnam. Vietnam’s trade surplus with US has increased by 30% YoY after 1H2019. Although Vietnam can participate more deeply into supply chains, exporting to the US, a concern about being of a transit for Chinese goods to the US is rising. We suppose that camera, basic materials, wooden, plastic, other means of transportation and parts, fabric, and animal products are on the list. However, the export value increase in these products to the US accounted for only one to two percent of total value export to the US. Hence, we think this is not a big risk.
Risk of VND depreciation is not big in the 2019. While VND dropped sharply following CNY’s movement in 2015, VND has not changed much since CNY has broken its psychological level of 7.0 this year. We think the value of VND is kept stable because of (1) Vietnam’s trade surplus has reached USD 2.9 bn or 21% YoY as of August 15th and (2) High demand on VND given that total capital from disbursed FDI and equity contribution reached VND 19 Tn (+30% YoY) after 8M2019. Hence, we believe that risk of a sharp depreciation in VND is not likely in 2019.
The market could face challenges in short term due to the limited of money supply and high external risks. We anticipate that VN-Index will not successfully reach 1,000 in 2019. The VN-Index will more likely to fluctuate around the PER of 16.7x.
The government’s main target is a stable macroeconomic; and it has succeeded recently. Even though global trade is among uncertainties, we think Vietnam’s macroeconomic is still good for domestic companies to do business. Thus, we suppose a short-term sideways of the market will create opportunities for investors to do research and accumulate stocks that are independent with the global trade.
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