Listed companies may find EVFTA rules tough, say securities firms

Vietnam’s benchmark VN-Index has risen since the ratification of the EU-Vietnam trade agreement on the back of listed firms whose exports would be boosted by the deal.

A view of a terminal of the Saigon Newport Corporation.Logistics firms are expected to benefit from the inflow of foreign capital, asthe amount of shipments handled at ports is expected to increase thanks tothe EVFTA 



However, securities firms have warned their increased share prices may not besustained as those companies face some internal challenges in meeting the EU’srequirements.

Logistics and industrial property are two economic sectors that would benefitfrom the transfer of capital from the EU to Vietnam as the free trade agreementhas opened the door for more foreign investors.

Viet Dragon Securities Co (VDSC) says Vietnam may become a new manufacturinghub as US-China trade tensions could shift global manufacturers to Vietnam fromChina.

With the signing of the EVFTA, shipments to Vietnam will increase as foreigncompanies will have to import machines and equipment to establish their plantsin the country.

However, VDSC warns Vietnam is becoming highly dependent on foreign directinvestment (FDI). Therefore, if FDI firms underperform, the logistics sectorwill also dive.

In addition, a large number of logistics companies haven’t maximised theirpotential and improved their competitiveness, so they won’t be able to make thebest use of the advantages brought by the EVFTA.

Analysts have said textile and garment companies are going to take advantage ofthe trade deals between Vietnam and the European Union as EU tariffs on theseproducts will be curbed to zero per cent by 2026.

But if Vietnamese producers want tax cuts for their exports, they have to meetthe EU’s strict requirements on the origin of input materials, according to areport by Bao Viet Securities Co (BVSC) released in June, 2019.

For textile and garment products, input materials must be locally made in Vietnam,the EU and markets with free-trade agreements with the two sides – like theRepublic of Korea – and the production must be done in Vietnam or the EU.

Few Vietnamese textile and garment firms meet those requirements as localcompanies are only capable of production, while input materials must beimported from China and Taiwan – which are not bound by any trade deals withthe EU, BVSC reports.

Concerns about the lack of producing raw materials among textile and garmentcompanies caused their shares to underperform or record modest gains on July 8.

Of the 20 textile and garment companies listed on both the Ho Chi Minh and Hanoi stock exchanges, only Duc Quan Investment and Development JSC (HoSE: FTM) gained 0.8 percent on July 8.

The rest of the companies’ stocks either slid or closed flat at the end of thefirst day of the week. Shares of Everpia JSC (HoSE: EVE) fell 0.7 percent and ThanhCong Textile Garment Investment Trading JSC (HoSE: TCM) lost 2 percent.

Since June 30, Everpia shares have slid 1.1 percent while Thanh Cong shares have gained only 2.2 percent. - VNS

 
 
 

Other News

.
Trinh Van Quyet’s transaction canceled, securities accounts blocked
Trinh Van Quyet’s transaction canceled, securities accounts blocked
BUSINESSicon  12/01/2022 

An unreported transaction made by Trinh Van Quyet, Chair of FLC Group, worth VND1.6-1.8 trillion on January 10 has been canceled as he did not report the deal.

Vietnam first Southeast Asian country to earn over US$1 billion from exports to Hungary
Vietnam first Southeast Asian country to earn over US$1 billion from exports to Hungary
BUSINESSicon  12/01/2022 

Vietnam has become the first Southeast Asian nation to earn over 1 billion USD from exporting goods to Hungary and the European country’s leading exporter from this region since 2000, according to the Ministry of Industry and Trade.

Vietnam has 683,600 operational firms: economic census
Vietnam has 683,600 operational firms: economic census
BUSINESSicon  12/01/2022 

As of December 31, 2020, Vietnam counted 683,600 operational enterprises, up 35.3 percent from 2016, the 2021 economic census revealed.

Hanoi to welcome launch of 26,000 apartment units in 2022: C&W Vietnam
Hanoi to welcome launch of 26,000 apartment units in 2022: C&W Vietnam
BUSINESSicon  12/01/2022 

Around 26,000 apartment units are expected to be launched in Hanoi in 2022, signaling a vibrant outlook for the segment, according to real estate service provider Cushman & Wakefield (C&W) Vietnam.

Laos top recipient of Vietnam’s overseas investment
Laos top recipient of Vietnam’s overseas investment
BUSINESSicon  12/01/2022 

Laos has been the largest recipient of Vietnam's overseas investment so far, with 209 projects totalling 5.1 billion USD in registered capital, Minister of Planning and Investment Nguyen Chi Dung has said.

Top 5 commodity brokers in Vietnam revealed
Top 5 commodity brokers in Vietnam revealed
BUSINESSicon  12/01/2022 

The five companies holding the largest commodity brokerage market shares in Vietnam sustained their positions in 2021, according to the Mercantile Exchange of Vietnam (MXV).

VN auto market grows slightly in 2021
VN auto market grows slightly in 2021
BUSINESSicon  12/01/2022 

Vietnam’s automobile market recorded slight growth in 2021, data from manufacturers showed.

Vietnamese billionaire sells shares without necessary report
Vietnamese billionaire sells shares without necessary report
BUSINESSicon  11/01/2022 

The State Securities Commission (SSC) has released a notice about a stock transaction without a report from Trinh Van Quyet, President of FLC Group.

Vietnam's tourism revives, starts again from scratch
Vietnam's tourism revives, starts again from scratch
FEATUREicon  12/01/2022 

The market is completely new after Covid-19. All players, small and large, will be at the starting point. Those who have a good start will obtain more market share.

Distressed by Covid-19, wind power developers want FIT to be extended
Distressed by Covid-19, wind power developers want FIT to be extended
FEATUREicon  12/01/2022 

Unable to have commercial operation date (COD) prior to November 1, 2021, many wind power investors have fallen into dilemma.

Telecom providers launch Mobile Money service
Telecom providers launch Mobile Money service
BUSINESSicon  11/01/2022 

Telecommunications isn't the booming industry it once was, thanks to the mobile market becoming saturated in recent years. This shift is forcing telecom providers to look for "new spaces" - one of which is Mobile Money.

Vietnam aims for 8% export growth this year
Vietnam aims for 8% export growth this year
BUSINESSicon  11/01/2022 

Although much of the economy was impacted by the fourth wave of COVID-19 in 2021, Viet Nam’s imports and exports reached a record of nearly US$670 billion, an increase of almost 23 per cent from 2020.

Vietnam coffee industry targets US$6 billion export value in 2030
Vietnam coffee industry targets US$6 billion export value in 2030
BUSINESSicon  11/01/2022 

The Viet Nam Coffee and Cocoa Association has targeted a coffee export turnover of US$5-6 billion in 2030, doubling the export value at present.

Three border crossings to reopen in Quang Ninh
Three border crossings to reopen in Quang Ninh
BUSINESSicon  11/01/2022 

China will resume customs clearance at three border crossings in Quang Ninh Province from January 11, according to the Ministry of Industry and Trade.

Largest-ever support package to strengthen farmers
Largest-ever support package to strengthen farmers
BUSINESSicon  11/01/2022 

The Government has just submitted a support package of VND350 trillion (US$15.43 billion) for socio-economic recovery and development to the National Assembly.

Treasures hidden in forests, bring high profit to farmers
Treasures hidden in forests, bring high profit to farmers
BUSINESSicon  11/01/2022 

Ngoc Linh ginseng lives under the canopy of old forests, with a forest coverage level of 70-80 percent and temperature of below 25oC. Businesses are now joining forces with locals to grow Ngoc Linh ginseng there.

Home-appliance distributors bargain products away, shut down after incurring big losses
Home-appliance distributors bargain products away, shut down after incurring big losses
FEATUREicon  11/01/2022 

Home appliance distributors have had a tough year 2021 because of Covid-19.

Real estate market anxiously awaits new regulations
Real estate market anxiously awaits new regulations
FEATUREicon  10/01/2022 

The National Assembly this morning began discussing the amending of eight laws.

Some hotels manage to survive the pandemic
Some hotels manage to survive the pandemic
FEATUREicon  11/01/2022 

Going digital, using staff for multiple tasks, and opening new businesses, hotels have been struggling to survive the second year of the pandemic.

Tet online sales kick off one month before Tet
Tet online sales kick off one month before Tet
FEATUREicon  10/01/2022 

Everything now can be purchased online, from food for Tet parties to smartphones.

 
 
 
Leave your comment on an article

OR QUICK LOGIN