1H 2024 Vietnam Review & Outlook

1H 2024 Vietnam Review & Outlook: Summary

Short Summary:

This webinar provides a comprehensive review and outlook for Vietnam's economy and stock market in the first half of 2024. The speakers discuss the strong performance of manufacturing and exports, driven by the robust US economy. They also highlight the impact of the strong US dollar and gold bull market on the Vietnamese dong, leading to concerns about currency depreciation. The webinar further explores the continued strength of foreign direct investment (FDI) in Vietnam, despite some concerns about its sustainability. Finally, the speakers analyze the stock market performance, highlighting the impact of foreign net selling and providing an outlook for the second half of the year. They emphasize the potential for strong earnings growth in the coming quarters, driven by sectors like aviation, materials, and banking. The webinar concludes with a discussion about Vietnam's potential to become a semiconductor hub, highlighting the country's strong engineering talent and government support.

Detailed Summary:

1. Introduction and Performance Review:

The webinar begins with a tribute to Andy Hoe, a key figure in VinaCapital, who passed away suddenly.
The speakers review their forecasts for the first half of 2024, highlighting their accurate predictions about modest inflation, export recovery, and rising interest rates.
They acknowledge their underestimation of currency depreciation and the real estate market's slow recovery.
The speakers emphasize the strong performance of VinaCapital's investment products, showcasing consistent alpha generation across various funds.

2. Macroeconomic Outlook:

Michael expects 6.5% GDP growth for the year, driven by strong manufacturing and exports.
He discusses the impact of the surprisingly strong US economy on Vietnam, highlighting both the benefits of increased exports and tourism and the challenges of a strong US dollar.
He emphasizes the continued strength of FDI in Vietnam, despite concerns about political developments and competition from other countries.
He expresses concern about the depreciation of the Vietnamese dong, citing the strong US dollar, gold bull market, and potential trade deficit in the second half of the year.
He highlights government measures to manage the currency situation, including selling FX reserves and increasing interest rates.

3. Stock Market Performance and Outlook:

Lynn discusses the stock market performance in the first half of 2024, highlighting the strong performance of Information Technology, Consumer Discretionary, and Materials sectors.
She analyzes the impact of foreign net selling on the market, noting that it has intensified and put pressure on local investors.
She expects the market to be bumpy in the coming months but anticipates a stronger second half, driven by recovering earnings growth.
She highlights the potential for strong earnings growth in the second half of the year and the next one to two years, fueled by sectors like aviation, materials, and banking.
She emphasizes the attractive valuation of the market and highlights themes like banking, retailers, and construction materials as potential growth drivers.
She provides a detailed analysis of the real estate sector, highlighting the signs of recovery and the potential for strong pre-sales growth in the coming years.
She discusses the banking sector's performance and outlook, emphasizing the potential for improved asset quality and earnings growth.

4. Vietnam as a Semiconductor Hub:

The speakers discuss Vietnam's potential to become a semiconductor hub, highlighting the country's strong engineering talent and government support.
They acknowledge that Vietnam currently focuses on the lower end of the semiconductor value chain but believe that significant investment and talent development will enable the country to play a larger role in the future.
They cite examples of existing investments by companies like Nvidia and FPT, indicating that the transition is already underway.
They identify key factors that will contribute to Vietnam's success, including infrastructure, talent, government policies, and access to raw materials.

Notable Quotes:

"Andy was a mentor to many, a friend to all, and his legacy is something that we're all very proud of." - Eric Levenson
"The main story this year is manufacturing, but consumption is also helping." - Michael
"The strong US dollar and the gold bull market are two factors that are putting pressure on the Vietnam dong." - Michael
"The FDI story is still very, very strong in Vietnam." - Michael
"We think the market is going to be bumpy a little bit in the next couple of months." - Lynn
"We expect earnings growth for the markets to recover very strong in Q3 and Q4." - Lynn
"We stay positive for the banking sector overall, but we also see there is a mixed picture. We have to be selective as well." - Lynn
"Vietnam has the potential to be a hub for semiconductors." - Eric Levenson
"The capability of the engineers here is like unbelievable. It really is superb." - Michael
"It will take education investment both by the government and also probably by the private sector." - Michael