The Vietnamese market has become too cheap relative to the earnings growth forecasts for this year and next. Although the earnings growth of Vietnamese banks slowed in 2022 and 2023, those earnings anyways continued to grow even during those years. Now, earnings growth is accelerating.
For emerging markets and Vietnam, a positive signal came in August from the U.S. Federal Reserve when the Fed Chairman announced that the two-year fight against inflation had ended, and the central bank’s focus would now shift to supporting employment in the USA. Rising interest rates in the USA and the corresponding strong dollar have, for the past couple of years, constrained the ability of Asian central banks to manage their own monetary policies, as capital flows and exchange rates have been in flux.
Following the Fed’s shift in August, it will be easier for the State Bank of Vietnam to manage its monetary policy in the coming years, taking into account the domestic economic conditions and financial needs.