VNDirect expert talks about US inflation risks in Trump's new term

The expert from VNDirect left open the risk that the State Bank of Vietnam will have to raise interest rates if exchange rate pressure gets out of control due to fluctuations in Trump's trade policy next year.

VNDirect experts discuss the risk of US inflation in Trump's new term.

The expert from VNDirect left open the risk that the State Bank of Vietnam will have to raise interest rates if exchange rate pressure gets out of control due to fluctuations in Trump's trade policy next year.

US Variables: Opportunities Come with Risks

On December 12th, the Investment Newspaper organized a seminar themed “Investment 2025: Decoding Variables - Identifying Opportunities”. The seminar featured leading economic experts assessing existing and potential investment channels, offering recommendations to the business community and investors regarding opportunities and risks. Sharing his insights at the seminar, Mr. Barry Weisblatt David, Director of Analysis at VNDirect Securities Joint Stock Company, assessed the impacts following Donald Trump's election and inauguration as President of the United States.

"Regarding whether the US will impose additional tariffs on Vietnam, I think probably not. The reason Trump imposed tariffs is not only based on the trade surplus with the US but also on other issues such as US-China competition or immigration issues with Mexico," said Barry Weisblatt David. He also noted that Trump has good relations with Vietnam, and the recent phone call between General Secretary To Lam and Trump is a positive sign.

During his first term, VNDirect representatives believed that Mr. Trump was still not convinced of his success as President of the United States. However, with four years of preparation for his return, the Director of Analysis at VNDirect believes that Trump's upcoming policies will increase tariffs on goods from China, Mexico, and Canada, creating opportunities for Vietnam. Export growth from Vietnam to the US during Trump's first term increased by 25% annually after the US-China trade war broke out, particularly thanks to the export activities of B2B businesses likeFPT .

Mr. Barry Weisblatt David, Director of Analysis, VNDirect Securities Joint Stock Company

Mr. Barry Weisblatt David said that instead of tariffs, the US will focus more on trade defense measures, especially the origin of goods exported to the US. Therefore, the issue of countries taking advantage of Vietnam to avoid US taxes needs special attention.

At the same time, this expert also believes that the biggest risk is not from trade but from inflation. The biggest reason for the Democratic Party's defeat is the American people's disappointment with the inflation situation in the US. Regarding the Fed, Chairman Powell will be relatively independent in monetary policy. “Our previous scenario of forecasting the Fed potentially cutting interest rates three times next year is being challenged by the inflation risk from Trump's policies. With the DXY index pegged high, the USD/VND exchange rate will be under significant pressure and affect the performance of the domestic stock market,” said Barry Weisblatt David. At the same time, this expert also left open the risk that the State Bank of Vietnam might have to raise interest rates if exchange rate pressure gets out of control due to fluctuations in Trump's trade policies next year.

Public investment stock opportunities: Bright spots ACV, HHV

Sharing his perspective on investment opportunities in the new context, Barry Weisblatt David stated that the National Assembly has set a high growth target (7.5%) for 2024. Meanwhile, the consumer sector, which contributes 60% to GDP, has not met expectations despite recovery. VNDirect estimates that GDP growth could reach 6.9%, but if public investment disburses 100% of the plan, GDP could potentially reach 8-9%. Businesses related to public investment, such as HHV and ACV, will benefit from public investment, suggesting investment opportunities for next year.

Furthermore, along with expectations of an upgrade in the stock market, an upgrade in Vietnam's national credit rating is a crucial factor. According to Fitch and S&P, borrowing costs could decrease by 2% if Vietnam's credit rating is upgraded to investment grade. In direct interviews with rating agencies like Fitch and S&P, Barry Weisblatt David stated that these organizations assess Vietnam's fiscal foundation as very strong. However, the minimum capital adequacy ratio (CAR) in the banking sector has not yet complied with Basel III, coupled with the incidents at SCB. Therefore, according to the Head of Analysis at VNDirect, improving the CAR is very important, especially for state-owned banks.

Source: https://baodautu.vn/chuyen-gia-vndirect-noi-ve-rui-ro-lam-phat-my-o-nhiem-ky-moi-cua-trump-d232309.html