Performance down, foreign funds still have positive expectations for Vietnam's economy

AFC Vietnam Fund recorded a 3.6% decrease in performance in October 2024, but still gave positive assessments on the economic and stock market prospects of Vietnam.

AFC Vietnam Fund recorded a 3.6% decrease in performance in October 2024, but still gave positive assessments on the economic and stock market prospects of Vietnam.

AFC Vietnam Fund's updated report said that the Vietnamese stock market in October 2024 continued to experience low liquidity, similar to September 2024 with the VN-Index down 4.7%.

In this context, the AFC Vietnam Fund was also affected, the fund's performance decreased by 3.6% in the month. Accumulated for 10 months, the fund's performance is +5.3%, in which April was the most affected with a performance of -3.72% and the best performance was in May (+7.35%).

Investment performance of AFC Vietnam Fund.

The fund said that the decline in the Vietnamese stock market in October was mainly due to the depreciation of the VND against the USD, as the dollar increased by 2.9% during the month. However, AFC Vietnam Fund believes that the recent depreciation of the VND is only temporary. The expected Fed rate cut, strong FDI inflows, trade surplus and remittances will be the support for the VND in the fourth quarter of 2024.

The decline in the stock market in October was partly due to investors' expectations that FTSE could upgrade Vietnam to emerging market status this month. Judging from the non-prefunding regulation - an important requirement for the upgrade - effective from November 2, 2024, AFC Fund expects FTSE to announce the upgrade of Vietnam to emerging market status at the semi-annual review in March 2025 or September 2025.

Not only expressing its impression of Vietnam's economic growth in Q3/2024 despite the impact of Typhoon Yagi in September, AFC Fund also believes in the solid political stability in Vietnam.

“The stability in Vietnam’s political environment has certainly strengthened economic momentum, paving the way for continued growth,” the fund said.

HSBC has revised its forecast for Vietnam’s GDP growth in 2024 to 7%, reflecting its confidence in the country’s economic momentum, according to its Vietnam Quarterly Economic Report released in October 2024. HSBC expects the recovery to continue across sectors in the coming quarters. This 7% forecast is the most optimistic growth estimate given by any international financial institution for the Vietnamese economy this year.

In addition, S&P Global Market Intelligence identified Vietnam as one of the fastest growing economies over the next decade, forecasting an average annual growth rate of 6.2%, followed by India at 5.9%, the Philippines at 4.8% and Indonesia at 4.7%. Although long-term forecasts are subject to uncertainties, S&P Global Market Intelligence's forecasts underscore a high level of confidence in Vietnam's economic potential.

At the same time, China's economic stimulus package is also expected to have a positive impact on Vietnam, especially the export sector. In mid-September, China announced a significant support package worth about 6% of its GDP in 2024, aiming to boost economic growth, focusing on recovering the real estate industry, increasing consumption and recovering the capital market.

China is Vietnam’s largest trading partner and second-largest export market, making China’s economic health essential to Vietnam’s exports. From 2010 to 2019, China’s robust GDP growth of 7.7% per year helped boost Vietnam’s exports to China by 25% per year. As China’s growth slows to 4.7% from 2020 to 2023, Vietnam’s export growth to China will fall to 10.4% per year. Therefore, any measures to boost China’s economy could provide significant support to Vietnam’s exports, reinforcing China’s important role in Vietnam’s economic outlook.

With the above factors, AFC Fund affirmed: “Overall, our portfolio profit growth is in line with forecasts for exports, consumption and public investment sectors. We remain confident in capturing growth opportunities in Vietnam in the next few years”.

Source: https://baodautu.vn/hieu-suat-giam-quy-ngoai-van-ky-vong-tich-cuc-vao-kinh-te-viet-nam-d229224.html