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During a state visit by the president of Russia to Vietnam last week, Vietnam’s Prime Minister told the Russians that Vietnam would consider nuclear energy as a means of meeting the net-zero 2050 commitment it made at COP26. Indeed, Vietnam needs more low-emissions electricity, but is nuclear power really a plausible solution?
This weeks feature: Nuclear Power in Vietnam: Unpacked 2024
Banking and Finance News
State Bank US dollar reserve spending tops US$5.5 billion
The accumulated value of dollars sold by Vietnam’s State Bank is creeping up. It’s now sitting around US$5.5 billion worth since April which should mean the bank has less than US$90 billion worth left, however, the bank is notoriously cagey on what it has in reserves so this is difficult to confirm.
See also: Vietnam Dong Tracker: Daily Updates
State Bank open market operations as of COB June 27
The State Bank of Vietnam has continued to issue treasury bills to suck up excess liquidity in the economy. There are currently US$5.5 billion worth of T-bills outstanding as of the close of business on June 27. Also of note, the State Bank has outstanding loans to local banks to the tune of US$296.7 million.
Outstanding loans
| Issued | Length | Maturing | VND* | US$ | % p.a. |
| 26-Jun | 7 | 3-Jul | 552 | $21,666,331 | 4.50 |
| 27-Jun | 7 | 4-Jul | 7,000 | $274,968,007 | 4.50 |
| Total | 7,551.56 | $296,634,339 |
*billions
Outstanding T-bills
| Issued | Length | Maturing | VND* | US$ | % p.a. |
| 28-May | 35 | 2-Jul | 3,700 | $145,340,440 | 4.20 |
| 30-May | 28 | 27-Jun | 4,900 | $192,477,880 | 4.25 |
| 31-May | 28 | 28-Jun | 16,250 | $638,319,500 | 4.25 |
| 3-Jun | 28 | 1-Jul | 8,450 | $331,926,140 | 4.25 |
| 4-Jun | 28 | 2-Jul | 6,150 | $241,579,380 | 4.25 |
| 5-Jun | 28 | 3-Jul | 3,160 | $124,128,592 | 4.25 |
| 5-Jun | 28 | 3-Jul | 5,800 | $227,830,960 | 4.25 |
| 5-Jun | 28 | 3-Jul | 4,900 | $192,477,880 | 4.25 |
| 10-Jun | 28 | 8-Jul | 2,100 | $82,490,520 | 4.25 |
| 11-Jun | 28 | 9-Jul | 1,300 | $51,065,560 | 4.25 |
| 12-Jun | 28 | 10-Jul | 600 | $23,568,720 | 4.25 |
| 13-Jun | 28 | 11-Jul | 2,650 | $104,095,180 | 4.25 |
| 14-Jun | 28 | 12-Jul | 700 | $27,496,840 | 4.25 |
| 17-Jun | 28 | 15-Jul | 2,650 | $104,095,180 | 4.25 |
| 18-Jun | 28 | 16-Jul | 5,150 | $202,298,180 | 4.25 |
| 19-Jun | 28 | 17-Jul | 6,450 | $253,363,740 | 4.25 |
| 20-Jun | 28 | 18-Jul | 7,550 | $296,573,060 | 4.25 |
| 21-Jun | 14 | 5-Jul | 8,900 | $349,602,680 | 4.25 |
| 24-Jun | 14 | 8-Jul | 10,150 | $398,704,180 | 4.25 |
| 25-Jun | 14 | 9-Jul | 25,000 | $982,030,000 | 4.30 |
| 26-Jun | 14 | 10-Jul | 4,630 | $181,871,956 | 4.50 |
| 27-Jun | 14 | 11-Jul | 9,200 | $361,387,040 | 4.50 |
| Total | 140,340 | $5,512,723,608 |
*billions
Currency news
Vietnam maintains position on US currency manipulator watchlist
The US Department of Treasury has released its latest currency manipulator Monitoring List on which Vietnam still features. It is one of seven countries on the list alongside China, Japan, Taiwan, Malaysia, Singapore, and Germany.
The three criteria the US Treasury considers are:
- A material account surplus greater than 3 percent of GDP;
- A goods surplus with the US greater than US$15 billion; and
- Foreign currency purchases in eight out of 12 months worth more than 2 percent of GDP.
The most recent report found Vietnam had met the first two criteria, but not the last, over the course of 2023.
See also: The Dong’s Wild Ride: Unpacked 2024
Economy news
Vietnam thinktank finds 5.85 percent GDP growth more likely that 6.5 percent target
A report from Vietnam’s Institute for Economic and Policy Research–which goes by the acronym VEPR–has found that Vietnam is unlikely to reach its GDP growth target of 6.5 percent by the end of the year. The institute’s Vietnam Annual Economic Report 2024 has instead found that GDP growth to come in around 5.85 percent. A contraction of the public sector, weak consumer demand at home and abroad, and an increased risk of rising interest rates, are all weighing on GDP growth, according to the report.
See also: Vietnam think-tank finds 5.85 percent GDP growth more likely that 6.5 percent target
Manufacturing news
Orders up but prices down for garments and textiles in Vietnam
Vietnamese garment and textile makers have seen orders increase in the first half of 2024, however, prices remain low, according to the General Director of Vinatex, one of Vietnam’s biggest garment and textile manufacturers. Prices are around 20 percent lower than pre-COVID levels and can be up to 50 percent lower on some items, according to the exec.
Of note, the year 2023 was not a good year for garment manufacturers and clothing suppliers in Vietnam in general. This was mostly on the back of lower demand in key export markets as a result of higher inflation from higher fuel costs. The response to this has been mostly supply side stimulus. Tax and interest rate cuts have been common but the impact of these measures has been limited without the demand to support them.
See also: Vietnam Garment Manufacturing 2024: Ultimate Guide
Isotopic testing for cotton products entering US likely problem for Vietnam
Garment samples are being subjected to isotope testing in the US to determine the origin of the cotton used in their production and this could spell problems for Vietnam garment manufacturing, garment and apparel trade publication Just-Style is reporting. The publication cites a study in which 19 percent of samples tested contained traces of Chinese cotton banned as part of the Uyghur Forced Labor Prevention Act–the UFLPA.
Of note, between October of last year and May of this year, US Customs stopped 950 shipments entering the US from Vietnam under the UFLPA valued at US$520 million. Of those 528 were released, 207 are still pending an outcome, and 215 were denied entry. Those denied shipments were worth a collective US$20.9 million with 46 shipments of apparel, footwear, and textiles among them valued at US$496,485.
Stock market news
Vietnam Stock Exchange reports first fall in profit since inception
The Vietnam Stock Exchange, which is the overarching body that manages the Hanoi Stock Exchange, the Ho Chi Minh City Stock Exchange, and the Unlisted Public Companies stock exchange, reported a fall in profit of 8 percent last year. This is the first time profit has declined since it was established in 2020.
South Korean firm to exit Vietnam Vingroup, Masan holdings worth US$666 million
South Korea’s SK Group will reportedly divest from Vietnam’s food processing conglomerate Masan and real estate, manufacturing, and hospitality conglomerate Vingroup. Both investments have lost considerable value since SK Group bought into these firms.
Both investments have lost considerable value since SK Group bought into these firms in 2018. SK Group bought 205.7 million shares in Vingroup for just shy of US$1 billion dollars. These shares were worth US$337.4 million as of June 21.
It also bought 109.9 million shares in Masan Group for just over US$470 million. As of June 21, these were worth about US$328.6 million. That said, SK Group has reportedly exercised a put option on these shares that would see it recover most, if not all, of its losses. Masan, however, has denied that this option has been exercised.
Vietnam stock Index could reach 1,700 points this year: Finnish investment fund
The PYN Elite Fund, a Finnish investment fund that holds a number of stocks listed on the Ho Chi Minh City Stock Exchange, has issued an investor letter suggesting Vietnam’s VN-index could reach as high as 1,700 points by the end of the year. This would be an increase of 34.79 percent over Wednesday’s close.
This seems very optimistic–In the first six months of this year the VN-Index climbed just 10.27 percent–it would more or less need to climb three times faster in the last six months of the year than it did in the first six months.
Furthermore, PYN Elite’s assessment also seems to buck the trend among foreign investors which are pulling out of the market to the turn of billions of dollars. South Korea’s SK Group, Taiwan’s Fubon, and BlackRock from the US.
Foreign trader net-withdrawals from HoSE reach US$2 billion this year
Foreign traders have continued to sell down their positions in the Ho Chi Minh City Stock Exchange. In total, just over US$172 million was withdrawn from the market over the last five trading sessions to the close of business on June 27. This brings the total net withdrawn from the market by foreign traders to more than US$2 billion so far this year.
See also: Vietnam’s Foreign Investor Stock Sell-Off: Unpacked 2024
Foreign trader activity, last five trading days
| Buy | Sell | Change | ||||
| Date | VND* | US$ | VND* | US$ | VND* | US$ |
| 21/6 | 2,427 | $95,335,472 | 3,432 | $134,813,078 | -1,005 | -$39,477,606 |
| 24/6 | 2,458 | $96,553,190 | 3,391 | $133,202,549 | -933 | -$36,649,360 |
| 25/6 | 2,797 | $109,869,516 | 3,501 | $137,523,481 | -704 | -$27,653,965 |
| 25/6 | 2,639 | $103,663,087 | 3,236 | $127,113,963 | -597 | -$23,450,876 |
| 25/6 | 2,406 | $94,510,567 | 3,548 | $139,369,698 | -1,142 | -$44,859,130 |
| Total | 12,727 | $499,931,832 | 17,108 | $672,022,770 | -4,381 | -$172,090,937 |
| *billions | ||||||
Source: www.hsx.vn
Tax news
Vietnam floats corporate income tax cuts for small-micro businesses
The Ministry of Finance has issued a dispatch recommending a corporate income tax cut from the standard 20 percent to 15 percent for enterprises with revenue less than VND 3 billion, or about US$117,855, a year. It has also suggested a reduction to 17 percent for businesses with revenue between VND 3 billion and VND 50 billion, or US$1.96 million, a year.
Of note, the draft amendments to the Law on Corporate Income Tax do not seem to make a distinction between local and foreign firms. That being the case, foreign-owned small businesses–cafes, bars, gyms, and what not–could also benefit from these changes if passed.
See also: Corporate Income Tax in Vietnam 2024: Quick Read
Trade news
Vietnam ratifies UK ascension to CPTPP
Vietnam’s National Assembly has passed legislation officially confirming the UK’s ascension to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership–the CPTPP. Vietnam is the sixth member state to ratify the UK’s ascension.
The week ahead
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