When Chinese e-commerce giant Temu officially launched in Vietnam last month the hype was palpable. Not only had the firm dropped a small fortune on advertising but it had also ruffled feathers in Vietnam’s business community: Temu’s goods were too cheap and Vietnamese producers could not compete. With a narrative containing two things Vietnamese love–huge discounts and hating on China–the local media piled on… Read More »

Banking and Finance News

State Bank continues aggressive open market operations

The State Bank of Vietnam has continued to intervene in the currency market with US$3 billion in treasury bills outstanding as of the close of business Thursday. There were also reverse repurchase agreements outstanding to the tune of US$3.4 billion. This will likely be exacerbated in the near term on the back of the election of Donald Trump in the US.

Electricity news

Vietnam state power provider moves two-tier electricity pricing strategy forward

Vietnam’s state-owned power provider Electricity Vietnam or EVN has submitted a proposal to the Ministry of Industry and Trade that would see a two-tier electricity pricing strategy trialled with a select group of power consumers next year, Dan Tri has reported. Essentially, this would see firms pay a set fee for a certain amount of power each month whether they use that power or not and then a metered price based on their actual power consumption.

This policy looks to be a response by the state power provider to try and increase revenue without increasing electricity prices. This comes after the state power provider ran up huge losses over the past two years by selling electricity below cost price.

For more information see: Electricity in Vietnam for Foreign Investors 2024

Manufacturing news

Vietnam Purchasing Managers’ Index jumps in October

The S&P Global Vietnam Manufacturing Purchasing Managers’ Index reached 51.2 in October up from 47.3 in September, according to a press release from S&P. Above the 50-point break-even mark, this would indicate the manufacturing industry is expanding once more after a sharp fall in September.

Key takeaways:

Some firms continued to face disruptions left over from Typhoon Yagi and the flooding that came with it.
Exports orders were up but only slightly with reports that international demand was subdued.
Backlogs of orders continued to rise.
Inventories of completed goods continued to decrease.
Employment fell.
Input costs were reportedly up on a weaker dong and rising prices for oil, metal, and transport. This led to an increase in selling prices but this was limited by competitive pressure.
Optimism was at a nine-month low with some firms suggesting confidence had been hit by uncertainty around the US election.

Furniture production records 3.3 percent month-on-month growth in September

Vietnam’s output of products such as beds, cabinets, tables, and chairs increased by 3.3 percent in September compared to August, reflecting modest month-to-month growth, according to Vietnam’s Industrial Production Index.

In a year-on-year comparison, production for September 2024 was up by 38.3 percent over the same month in 2023, indicating higher demand in the furniture sector. Furthermore, the cumulative data for the first nine months of 2024 shows a 24.7 percent rise in production compared to the same period last year.

Vietnam electronics production increases 6.8 percent September over August

Electronic products, computers, and optical products saw an 8.6 percent increase from August, and a year-over-year rise of 6.8 percent compared to September 2023, according to Vietnam’s Industrial Production Index. Year-to-date, the sector has grown by 9.1 percent over the first nine months of 2024, underscoring a consistent expansion of this crucial industry.

Real estate news

Struggling Vietnam construction firm gets lifeline with HCMC development project

Hoa Binh Construction, which was recently removed from the Ho Chi Minh City Stock Exchange due to poor financial performance, has been thrown a lifeline securing a VND 1.9 trillion or US$75.1 contract for a housing development in Ho Chi Minh City, Vietnam News has reported. Notably, Hoa Binh had accumulated losses at the end of 2023 of VND 3.24 trillion or US$128 million.

Of note, the chairman of Hoa Binh, Nguyen Huu Duong, put a gold-plated hotel he owned in Hanoi’s Ba Dinh district up for sale in March of last year after the construction firm failed to pay its staff for nearly four months. This is in line with a broader sale of assets from the firm in order to try and keep its head above water.

Resources news

Thai petrochemical complex in Vietnam to halt operations on market downturn

Thailand’s SCG Group has said it intends to halt commercial operations at the Long Son petrochemical complex it owns in Ba Ria-Vung Tau pending an improvement in market conditions, Tuoi Tre has reported. This is after just one month in operation with a test phase only beginning at the end of September.

This development is made all the more pertinent in that it has cost a reported US$5 billion to build. Notably, it was reported it was “ready to roll” back in August of 2022, however, this never materialised.

Stock market news

Pre-funding gone for some foreign stock traders in Vietnam, as new circular kicks-in

A new circular that has removed pre-funding requirements for foreign institutional investors buying and selling stocks on Vietnam stock exchanges kicked in at the start of the month.

Tuoi Tre has covered the expectations of market watchers that this will give the market a welcome boost, however, these hopes are largely pinned on an upgrade from a frontier to an emerging market on the back of said reform. An upgrade, however, is far from guaranteed.

There is more on that here: Vietnam’s Stock Market Upgrade Opportunity: Unpacked

Dau Tu Online on the other hand is suggesting that local securities firms with large cash buffers stand to benefit most. This stems from requirements that securities firms essentially act as guarantors for foreign investors, covering trades in the event a foreign institution doesn’t front up the cash. Ergo, more money means they can offer bigger advances.

VN Economy, conversely, has pointed out that after coming into effect there have still been large net cash outflows from the market from foreign investors. The publication then rehashes past speculation on why foreign investors might be selling out of the local exchange including Thai tax reforms on investments made outside of the country and interest rate differentials, for example.

There is more on that here: Vietnam’s Foreign Investor Stock Sell-Off: Unpacked

South Korea’s SK Group no longer major stakeholder in Vietnam’s Masan Group

South Korea’s SK Group has seen its position in Vietnam’s Masan Group reduced to just 3.67 percent of the firm’s charter capital after offloading 76.28 million shares, according to a press release from Masan issued Friday. This is in line with a planned divestment announced back in June, with its holding in the company significantly diminished in value.

Specifically, in 2018. SK Group bought 109.9 million shares in Masan Group for VND 100,000 or US$4.29 per share for a total of just over US$470 million. When it announced that it would be divesting, shares in Masan, which trades under the ticker MSN, were trading at about VND 76,200 or US$2.99 valuing the company’s holding at about US$328.6 million.

Foreign trader 2024 net-sales grow by another US$102.8 million

Over the last five trading sessions, to the close of business on November 7, in total, foreign investors had net-sold US$102 million worth of HCMC Stock Exchange stocks. This raises the total net-sold from the market by foreign traders this year to US$3.1 billion or US$3.65 billion over the last 12 months.

Foreign trader activity, last five trading days

	Buy		Sell		Change
Date	VND	US$	VND	US$	VND	US$
1/11	1,629	$64,222,348	1,936	$76,325,638	-307	-$12,103,291
4/11	1,369	$53,972,004	2,040	$80,425,776	-671	-$26,453,772
5/11	940	$37,058,936	1,796	$70,806,222	-856	-$33,747,286
6/11	1,045	$41,198,498	1,428	$56,298,043	-383	-$15,099,545
7/11	1,504	$59,294,298	1,894	$74,669,814	-390	-$15,375,516
Total	6,487	$255,746,083	9,094	$358,525,494	-2,607	-$102,779,411

*billions

Source: Vietnam Stock Market Tracker

Tax news

Vietnam finance ministry proposes extending cut to green tax on fuel

Vietnam’s Ministry of Finance has proposed extending a cut to Vietnam’s Environmental Protection Tax that has been in place since April of 2022, VN Express has reported. The move would see cuts to the tax of 50 percent for petrol, 70 percent for jet fuel, and 40 percent on kerosene extended to the end of December 2025.

The Ministry has suggested that the cut that is currently in place has assisted in managing inflation and would continue to do so.

There is no mention of how this might impact consumption and subsequently the environment the tax was originally implemented to protect.

Of note, Vietnam was ranked 180 out of 180 countries in Yale University’s Environmental Performance Index 2024 back in August. Vietnam scored 24.5 points out of 100 with Estonia taking out first place with a score of 75.3.

The week ahead

There are a handful of events coming up this week. For more information see the: Doing Business in Vietnam: Events Directory 2024

Also, 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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