In an article published on December 3, the US’s seekingalpha.com said as other major world economies are curtailing fiscal and monetary policy support in an effort to contain inflation, Vietnam is in a position to support its growth.
In January 2022, Vietnam rolled out a fiscal stimulus package of 15.4 billion USD, equivalent to almost 4% of its GDP, to support its 8-percent growth target in the year.
The stimulus is generally viewed as positive for the country's GDP growth trajectory in 2022, the article said.
According to the article, Vietnam's currency and interest rates also appear relatively stable compared to other countries. The State Bank of Vietnam recently started tightening monetary policies to contain inflation and plans to keep it at a target rate of under 4% this year.
Vietnam's contained inflation at around 4% and low borrowing costs with the central bank discount rate at 4.5% are supporting a domestic consumption rebound as COVID restrictions are easing, it said.
A sharp recovery in personal consumption along with strong export growth contributed to the country's impressive Q3 GDP growth of 13.67%.
The Southeast Asian nation’s strong macroeconomic position is expected to lift its population out of poverty as over 50% of the Vietnamese population is projected to join the global middle class by 2035.
Vietnam has been able to remain attractive to foreign investors and received foreign direct investment (FDI) net inflows totaling 15.3 billion USD in 2021, or 4.2% of its GDP, up from 3.2% of GDP in 2013, the article affirmed, noting that the strong FDI further solidifies the country's macro outlook.
The country's capital markets appear to be trading at attractive valuations, given its strong macroeconomic outlook. Some asset managers expect growth in earnings per share (ESP) of around 20% in 2022 year-on-year.
The Ho Chi Minh stock index is down about 40% YTD. Valuations may be attractive at this level, trading at only about 10 times of earnings forecasts in 2022, the article said.
Vietnam's market liquidity has also been improving over the last few years, with average daily trading volume rising from 97 million USD in 2015 to 1 billion USD in 2021, it noted, adding there are now at least 50 listed stocks with a market capitalisation of more than 1 billion USD, indicating the growth of the market.
Vietnam's Ministry of Finance issued a statement about its focus on strengthening the infrastructure of the stock market and developing, diversifying and increasing the quality of products in the market.
According to the article, Vietnam is currently on the secondary emerging markets watch list by the Financial Times Stock Exchange (FTSE) Indices and could be added to Morgan Stanley Capital International (MSCI) emerging markets watch list in 2023. Vietnam's regulators are vying for an upgrade to emerging markets status by global index providers.
The ministry has included this goal in the project “restructuring the stock market and insurance market” and the draft strategy to help upgrade the stock market from a frontier market status to an emerging market status by 2025.
The State Securities Commission of Vietnam is working with global agencies such as the World Bank and FTSE Group as well as Vietnam's ministries, associations and market members to address concerns on foreign ownership limits.
The article said Vietnam’s management agencies are willing to make markets more accessible to foreign investors and boost the infrastructure support needed to run a healthy and functioning market, adding that an upgrade to emerging markets status could potentially attract foreign active and passive asset inflows into the local Vietnamese market.
