General news
President of Vietnam Vo Van Thuong resigns
Vietnam’s president, Vo Van Thuong, officially resigned this week. This was reportedly a part of the ‘blazing furnace’ anti-corruption campaign that has been running for the last two years or so. Unofficial news sources, late last week, had suggested the announcement was likely after a visit from the Dutch royals was postponed at the request of the Vietnamese government. An interim president has been named as Vo Thi Anh Xuan.
Currency news
Importers, exporters disagree over Vietnam’s currency strategy
A 1 percent increase in the value of the US dollar could equate to a US$12.1 million annual loss for Vietnam‘s national carrier, according to Dang Ngoc Hoa, chairman of Vietnam Airlines, and reported by VN Express. The chairman of PetroVietnam, Le Manh Hung, is also advocating for keeping a stable exchange rate.
On the flip side, the head of Vinatext, a major garment and textile producer, Le Tien Truong, has said that local garment makers have lost business to competitor countries that have allowed their currency to depreciate. He says, Vietnam-made goods are about 15 percent more expensive in some instances.
T-Bills issued by State Bank top US$5.4 billion
The State Bank of Vietnam has continued to issue treasury bills to prop up the local currency. There are currently US$5.24 billion worth of T-bills as of close of business March 21.
Outstanding T-bills
| Vietnam T-Bills March 11 to March 21 | |||||
| Issued | Length | Winners | VND (billions) | US$ | % p.a. |
| 11-Mar | 28 | 6 | 14,999.70 | $604,704,686 | 1.4 |
| 12-Mar | 28 | 7 | 14,999.70 | $604,704,686 | 1.4 |
| 13-Mar | 28 | 12 | 14,999.70 | $604,704,686 | 1.4 |
| 14-Mar | 28 | 10 | 14,999.70 | $604,704,686 | 1.4 |
| 15-Mar | 28 | 11 | 15,000 | $604,716,780 | 1.38 |
| 18-Mar | 28 | 12 | 14,999.90 | $604,712,749 | 1.4 |
| 19-Mar | 28 | 10 | 10,000.00 | $403,144,520 | 1.35 |
| 20-Mar | 28 | 11 | 15,000.00 | $604,716,780 | 1.34 |
| 21-Mar | 28 | 11 | 15,000.00 | $604,716,780 | 1.32 |
| Total | 129,998.70 | 5,240,826,351.21 | |||
Source: www.sbv.gov.vn
Gold news
Intervention in gold markets still under discussion
The Deputy Prime Minister, Le Minh Khai, met with key decision makers in the State Bank of Vietnam and several other government departments to discuss recent activity in the gold market. Specifically, the local gold price has at times been more than 25 percent higher than the world gold price. There were no clear outcomes from the meeting, according to this article from VN Express, however, there was some acknowledgement that any efforts to intervene in the gold market will have a knock-on effect on other parts of the economy.
For some background as to how these prices have grown so far apart see: The Gold Price in Vietnam: Explained 2024.
Stock market news
Foreign traders continue to withdraw from the HoSE
Foreign traders have continued to sell down their positions in the Ho Chi Minh City Stock Exchange. Of note, there was intense activity early in the week possibly in response to speculation that the president would be resigning.
Foreign trader activity, last five trading days
| Buy | Sell | Change | ||||
| Date | VND* | US$ | VND* | US$ | VND* | US$ |
| 15/3 | 2,628 | $106,010,487 | 3,933 | $158,652,681 | -1,305 | -$52,642,194 |
| 18/3 | 3,253 | $131,222,266 | 4,180 | $168,616,376 | -927 | -$37,394,110 |
| 19/3 | 2,217 | $89,431,222 | 3,083 | $124,364,662 | -866 | -$34,933,441 |
| 20/3 | 1,630 | $65,752,319 | 2,193 | $88,463,089 | -563 | -$22,710,770 |
| 21/3 | 2,043 | $82,412,262 | 2,400 | $96,813,230 | -357 | -$14,400,968 |
| Total | 11,771 | $474,828,556 | 15,789 | $636,910,039 | -4,018 | -$162,081,483 |
| *billions | ||||||
Source: www.hsx.vn
Vietnam inches closer to removing local bourse pre-funding requirements
Vietnam’s Ministry of Finance is circulating amendments to the circular that codifies pre-funding requirements on the Ho Chi Minh City Stock Exchange (Circular 120/2020/TT-BTC). According to this article from VN Express the amendments would require no deposit before a trade can be made with the local brokerage accountable for the funds should a foreign investor fail to pay-up. If approved this would be a big step forward for Vietnam’s pursuit of a stock market upgrade.
For background see: Vietnam’s Stock Market Upgrade Opportunity: Unpacked.
Trade news
Vietnam meat producers request support tackling cheaper meat imports
The Vietnam Livestock Association and the Animal Feed, Large Livestock and Poultry Breeding associations have made a submission to the Government of Vietnam requesting additional technical barriers on imported meats, Tuoi Tre has reported.
The associations are essentially arguing that Vietnam’s technical requirements for meat imports are lax relative to their export markets.
They also note that as tariffs come down–a result of Vietnam’s myriad of free trade deals–Vietnam will become heavily dependent on meat imports at the expense of the local industry.
Whereas the returns on free trade agreements are a key talking point in mainstream media in Vietnam, it is unusual, or at least not common to discuss the cost to local businesses. In this light, it can be difficult to gauge public sentiment toward the free trade movement in Vietnam.
Aviation news
Vietnam’s Pacific Airlines has no aircraft left in its fleet
The airline formerly known as Jetstar Pacific, owned by Vietnam’s national carrier Vietnam Airlines, looks to have returned all of its aircraft though this may have been a repossession. This article in Tuoi Tre is not exactly clear but it does make specific mention of the struggles Pacific Airlines has had paying its debts and that the airline was running at a loss.
Of note, Vietnam Airlines itself has also been struggling. It is currently negative equity and has recorded three consecutive years of losses. It should technically have been delisted from the Ho Chi Minh City Stock Exchange, however, this has not happened.
The week ahead
In lieu of a clear direction forward following the resignation of Vietnam’s president this week, foreign investors will likely take a cautious approach next week. That said, leadership changes in Vietnam are generally carried out very quickly with very little fanfare and subsequently minimal coverage in the local press–any short term impacts will likely be short lived.
That said, it will be interesting to see how this impacts Vietnam as an investment destination over the long term, if at all.
Vietnam is a dynamic market that is changing rapidly. To keep updated to date with the business environment and how it is evolving make sure to subscribe to the-shiv.
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