Economy Thrives, Securities Investors Optimistic for Remainder of Year

The General Statistics Office (GSO) of Vietnam released a report showing remarkable achievements in the economy, with GDP growing by 6.93 percent in the second quarter, surpassing predictions by most international institutions. This marks the highest second-quarter growth rate in 13 years, aside from the exceptional period in 2022 (+7.99 percent).

In the first quarter of the year, Vietnam’s GDP growth rate was 6.42 percent, exceeding expectations from the World Bank and IMF, which projected 5.5 percent and 6 percent GDP growth rates, respectively, for the entire year of 2024.

Export turnover in the first six months reached $190 billion, up 14.5 percent compared to the same period last year, surpassing the previous record of $185 billion set in the first half of 2022.

Foreign direct investment (FDI) disbursement also set a new record, with $10.84 billion of capital disbursed, an increase of 8.2 percent compared to the same period last year.

For the first time, Vietnam witnessed a budget surplus in the first half of 2024, with total collections reaching VND1.02 quadrillion, an increase of 15.7 percent over the same period last year, and budget expenditures amounting to VND803 trillion.

The number of foreign travelers to Vietnam in the first six months rose by 58.4 percent to 8.8 million, an increase of 4.1 percent over a record high in 2019 before the Covid-19 pandemic.

Stock Market Fluctuations

In the first half of the year, securities investors experienced mixed emotions. In early June, there were expectations for the VN Index to surpass the 1,300-point threshold. However, in the latter half, concerns arose as the index fell sharply, breaking the short-term upward trend.

Most shares saw prices fall by 5-15 percent by the end of June, with the VN-Index closing at 1,245 points, a decrease of 1.3 percent compared to May.

Nguyen Minh Giang from KBSV Vietnam noted several factors that disrupted the short-term upward trend in the second half of June, including ETF restructuring, foreign investors’ continued net selling, a rise in the DXY Index, and unpredictable gold market movements.

The depreciation of the Vietnamese dong and the appreciation of the US dollar were major reasons behind foreign investors’ net sales. By June 2024, foreign investors’ net sales had reached VND50 trillion ($2 billion), the highest net sales since 2011.

Analysts indicated that foreign investors’ transactions now account for just 19 percent of total transactions, lower than in previous years. However, recent net sales have pressured the stock market and influenced individual investors.

Strong Growth Expected in H2

Giang believes that with the robust economic performance in the first half, investors have reasons to be optimistic about a bustling stock market in the second half.

In May, the US’s core PCE (personal consumption expenditures price index), the US Federal Reserve’s preferred measure of inflation, showed the weakest increase in the last three years. This could lead to the possibility of the US Federal Reserve cutting interest rates for the first time in the second half of 2024, possibly in September.

In Vietnam, several factors support the stock market: easing exchange rate pressure, partly due to decreased dollar demand by enterprises, and stability in the gold market following the State Bank’s sale of SJC bullion gold via four state-owned banks. Additional positive factors include the export surplus, high FDI capital, and overseas remittances.

Analysts predict that the stock market will fluctuate between 1,235 and 1,285 points for 2-3 weeks.