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Credit growth in Vietnam jumps 1.08 percent in just four days
Vietnam’s credit growth hit 1.34 percent by March 29 up from .26 percent on March 25, just four days earlier, The Investors has reported. It is not clear where this money went but this is a big jump in a very short amount of time. Notably, January and February both recorded contractions in credit growth and for the year it was sitting at -0.72 percent at the end of February.
Vietnam has started dipping into its US dollar reserves
The State Bank of Vietnam–the SBV–has begun spending US dollars from its foreign reserves to prevent the dong from sliding further, Bloomberg reported. This follows on from a series of treasury bill issuances over the last month or so that have done very little to reduce pressure on the local currency.
The SBV claims to have around US$100 million in reserves, however, the ASEAN Macroeconomic Research Office estimated Vietnam’s reserves to be around US$89.7 billion at the end of 2023. The SBV doesn’t publish official data on the size of its reserves.
According to this article from Tuoi Tre teh SBV is selling its dollars to banks that hold negative foreign currency positions. They are allowed to buy enough US dollars to bring their foreign currency balances back to zero.
SBV open market operations, outstanding loans
Date | Length | Maturing | VND* | US$ | % |
19/04 | 7 | 26-Apr | 3,191 | $125,839,661 | 4.00 |
22/04 | 14 | 6-May | 8,563 | $337,637,356 | 4.00 |
23/04 | 14 | 7-May | 36,000 | $1,419,555,206 | 4.25 |
24/04 | 14 | 8-May | 25,051 | $987,800,525 | 4.25 |
25/04 | 14 | 9-May | 25,000 | $985,802,106 | 4.25 |
Total | 97,804 | 3,856,634,853 |
*billions
SBV open market operations, outstanding treasury bills
Date | Length | Maturing | VND* | US$ | % |
29/03 | 28 | 26-Apr | 2,300 | $90,693,830 | 2.49 |
01/04 | 28 | 29-Apr | 500 | $19,716,050 | 2.40 |
03/04 | 28 | 1-May | 300 | $11,829,630 | 1.90 |
04/04 | 28 | 2-May | 200 | $7,886,420 | 2.40 |
05/04 | 28 | 3-May | 600 | $23,659,260 | 2.70 |
06/04 | 28 | 4-May | 3,200 | $126,182,720 | 2.90 |
09/04 | 28 | 7-May | 3,850 | $151,813,585 | 2.90 |
10/04 | 28 | 8-May | 4,000 | $157,728,400 | 2.90 |
11/04 | 28 | 9-May | 5,600 | $220,819,760 | 3.50 |
12/04 | 28 | 10-May | 8,600 | $339,116,060 | 3.50 |
15/04 | 28 | 13-May | 2,800 | $110,409,880 | 3.59 |
16/04 | 28 | 14-May | 550 | $21,687,655 | 3.59 |
17/04 | 28 | 15-May | 5,500 | $216,876,550 | 3.59 |
19/04 | 28 | 17-May | 4,250 | $167,586,425 | 3.73 |
22/04 | 28 | 20-May | 3,550 | $139,983,955 | 3.73 |
23/04 | 28 | 21-May | 2,150 | $84,779,015 | 3.73 |
24/04 | 28 | 22-May | 1,400 | $55,204,940 | 3.75 |
25/04 | 28 | 23-May | 400 | $15,772,840 | 3.50 |
Total | 49,750 | 1,961,746,975 |
*billions
Economy news
Vietnam’s GDP projected to reach 5.8 percent this year: IMF
The International Monetary Fund has released its World Economic Outlook April 2024 which estimates Vietnam’s GDP growth for this year to be 5.8 percent. The IMF also bumped Vietnam up from its Low-Income Developing Countries group and added it to its Emerging Market and Middle-Income Economies group but didn’t really explain why it had made the change.
World Bank forecasts 5.5 percent growth for Vietnam: Report
The World Bank’s April Taking Stock Report is forecasting GDP growth for Vietnam of 5.5 percent. Whereas the publication mostly rehashes the standard reasons why it expects GDP growth to improve–more demand overseas and stronger FDI–it also offers a chapter on entrepreneurship and startups.
Standard Chartered cuts .7 percent from Vietnam growth outlook
Standard Chartered has said it expects Vietnam’s GDP growth to be around 6 percent in 2024 down from an earlier forecast of 6.7 percent, VN Express has reported. Notably, the target of 6.7 percent was quite high, relatively speaking–Vietnam’s National Assembly, which has a tendency to be overly optimistic, had only set a target of 6 to 6.5 percent for 2024.
Standard Chartered lowered its forecast on the back of lower than expected first quarter growth and ‘global trade headwinds’.
Energy news
Offshore wind in Vietnam unlikely before 2028
The Global Wind Energy Council’s Global Wind Report 2024, says Vietnam will not have offshore wind power before 2028, according to The Investor. The report cites the underdevelopment of Vietnam’s grid and regulatory gaps as key challenges facing offshore wind development in Vietnam.
Of note, Vietnam’s Power Development Plan 8 has a target of six gigawatts of offshore wind by 2030.
MoIT thinking on zero-dong feed-in tariffs for rooftop solar
There has been some debate as to whether or not rooftop solar projects should receive feed-in tariffs for excess power they feed to the grid. The Ministry of Industry and Trade is against it essentially arguing that if there are feed-in tariffs people will install rooftop solar in order to make money selling electricity to the grid, VN Express reported.
With no cash incentive to sell power to the grid, there isn’t really any reason why a home or business might give its excess power to the grid. Power shortages were a problem last year and more than likely will be this year too. In this light, this seems counterproductive.
Gold news
Why the State Banks gold auction failed Monday
A gold auction of the State Bank of Vietnam–SBV–gold reserves slated for Monday was cancelled and a gold auction that went ahead Tuesday had only two bidders, because floor prices were too high, VN Express is reporting. It also says that the minimum volume of 1,400 taels or about 53 kilos of gold was too much.
That said, the SBV’s gold auctions don’t really make a lot of sense. Essentially, the aim is to bring down the price of gold by selling more gold into the market at below its current market price in Vietnam which is about 15 percent higher than the world gold price. Generally, however, when a buyer thinks a price will drop–in this case it is more or less guaranteed by the State Bank that it will–they wait. As a result, demand falls, so the price falls, so they wait longer it the hopes that it might fall further–in this case we know where the bottom is, too, it’s the world gold price.
Media news
More fines in Vietnam over ads on videos featuring the nine-dash line
Vietnam’s Ministry of Information and Communication–the MIC–has fined an advertising firm just over US$2,000 for showing advertisements on videos on YouTube that contained the nine-dash line, VN Express has reported. This was the fourth fine since the start of last year for WPP Communications Company Limited–also known as GroupM.
According to the article, the firm lamented that it was the fault of YouTube’s algorithm presumably because it automatically places advertisements. In this context, the regulations on advertising on videos depicting the nine-dash line become very difficult to adhere to. The MIC has released both a black list and a white list for advertisers so that they know where they can and cannot advertise, however, relative to the volume of content consumed each day via the internet these lists are very short and not particularly practical.
Stock market news
New KRX trading system launch slated for May 1
The Ho Chi Minh City Stock Exchange has said that the KRX trading system, imported from South Korea, will go live after the long weekend on May 2, Tuoi Tre is reporting. It was, however, slated to launch in 2015 but has been repeatedly delayed. Most recently, it was supposed to go live on December 25, 2023, however, this date came and went with the KRX going live nor any word from the HoSE as to why it was delayed and when it would actually go live.
The KRX has been touted as a key part of Vietnam’s quest to have its stock market upgraded. For more information, see: Vietnam’s Stock Market Upgrade Opportunity: Unpacked
Foreign investors net withdraw US$26.2 million
Foreign traders on the Ho Chi Minh City Stock Exchange have net withdrawn US$26.2 million over the last five trading sessions. This brings the total net withdrawn from the local bourse this year to just over US$792 million.
Foreign investor trading activity, last five trading sessions to April 25
Buy | Sell | Change | ||||
Date | VND* | US$ | VND* | US$ | VND* | US$ |
19/4 | 3,017 | $118,966,646 | 2,337 | $92,152,818 | 680 | $26,813,828 |
22/4 | 1,992 | $78,548,743 | 2,337 | $92,152,818 | -345 | -$13,604,075 |
23/4 | 1,745 | $68,809,015 | 2,041 | $80,480,916 | -296 | -$11,671,902 |
24/4 | 2,500 | $98,580,250 | 2,743 | $108,162,250 | -243 | -$9,582,000 |
25/4 | 2,214 | $87,302,669 | 2,674 | $105,441,435 | -460 | -$18,138,766 |
Total | 11,468 | $452,207,323 | 12,132 | $478,390,237 | -664 | -$26,182,914 |
*billions |
Real estate news
Vinhomes CEO says firm will not financially support Vinfast
At a shareholders meeting for Vinhomes, the real estate arm of Vietnam’s Vingroup, the CEO of the company said that it would not be supporting electric vehicle maker Vinfast, also a subsidiary of Vingroup, The Investor has reported. This speaks to growing concerns among investors as to the state of Vingroup broadly on the back of huge losses for Vinfast.
Of note, Vinhomes is the most profitable company in the Vingroup ecosystem accounting for nearly 70 percent of the group’s revenue in 2023. It also accounted for almost 87 percent of the gross profit of the group. It’s not clear how Vinfast, which is running at a loss of over US$200 million a month, can survive without the support of Vinhomes.
The week ahead
The Ministry of Planning and Investment should release its foreign direct investment data for April. This is usually available around the 20th of each month but has not as yet been forthcoming for this month.
Monday, Tuesday, and Wednesday are public holidays which means limited economic and business news–no gold auctions and no offloading of US dollar reserves by the State Bank of Vietnam, at least that is normally the case.
S&P Global’s Purchasing Managers Index for April should also be available from Wednesday alongside the General Office of Statistics monthly economic report, however, with the public holidays may be delayed.
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