Vietnam’s economy is about to achieve a brisk GDP growth of more than 6.5% in 2024. Just this week, the National Assembly, which is responsible for the country’s budget, key appointments and legislative changes, made significant additions to next year’s budget, especially to public investments. Additional investments can be up to 30% compared to previous planning. Despite the new investments, public debt is estimated to remain at a very moderate level of 36–37% of GDP. The large government investment spending also bode well for the investments of the private sector and the growth in the domestic demand, especially as the same time global economic growth still looks vulnerable.
Only about a fifth of Vietnam’s listed companies have yet reported their third-quarter results, with earnings growth of +22%. Based on these figures, one could assume that the Vietnam’s earnings growth will settle around 20-30% in the third quarter. We expect strong results from several of our banks, above the stock market’s average earnings growth. The banks’ earnings outlook for the next 12 months is also relatively positive. Banks are still trading at very low valuations relative to their earnings growth and historical valuation multiples. Recently, however, investors’ interest has started to rise, and several brokers have given new buy recommendations for the banking sector.
The USD/VND exchange rate has fluctuated during 2024, down in the spring, up in the summer, and now down again in October. When the value of the dong against the dollar has weakened, stock market sentiment has almost always weakened. This has also been the case now, as dong has weakened by -3.5% against the dollar in three weeks.