The report about Vietnam’s economy released by the General Statistics Office (GSO) showed encouraging achievements, with GDP growing by 6.93 percent in the second quarter which was beyond the predictions by most international institutions. This was the highest second-quarter growth rate in 13 years, except for the special period in 2022 (+ 7.99 percent).

Vietnam’s GDP growth rate in the first quarter of the year was 6.42 percent, much higher than expected by the World Bank and IMF (International Monetary Fund), which projected 5.5 percent and 6 percent GDP growth rates, respectively, for the entire year of 2024.

The export turnover in the first six months reached $190 billion, up 14.5 percent over the same period last year. The figure was higher than the record $185 billion set in the first half of 2022.

Meanwhile, FDI (foreign direct investment) disbursement set a new record with $10.84 billion of capital disbursed, an increase of 8.2 percent compared with the same period last year.

Also in the first half of 2024, Vietnam for the first time witnessed a budget surplus with total collections reaching VND1.02 quadrillion, an increase of 15.7 percent over the same period last year, and budget expenditures of VND803 trillion.

The number of foreign travelers to Vietnam in the first six months rose by 58.4 percent to 8.8 million, an increase of 4.1 percent over a record high in 2019 before the Covid-19 pandemic.

Stock market fluctuations

In the first half of the year, securities investors had mixed emotions. In the first half of June, investors expected the VN Index to surpass the 1,300 point threshold. But in the second half, they worried when the index fell sharply, breaking the short-term upward trend.

Most shares saw prices fall by 5-15 percent by the end of June, while the closing VN-Index stood at 1,245 points, a decrease of 1.3 percent compared with May.

Nguyen Minh Giang from KBSV Vietnam said there were many factors that broke the short-term upward trend in the second half of June. 

June was the time for ETFs to restructure and fix monthly and quarterly NAV. Meanwhile, foreign investors continued to sell more than buy, the DXY Index increased again, and the gold market became unpredictable.

The depreciation of the Vietnam dong and the appreciation of the greenback were the major reasons behind foreign investors’ net sales. As of June 2024, foreign investors’ net sales had reached VND50 trillion, or $2 billion, the highest net sales since 2011.

According to analysts, foreign investors’ transactions now just account for 19 percent of total transactions, lower than those in previous years. However, the continued net sales recently have, to some extent, put pressure on the stock market and have influenced individual investors.

However, they believe that pressure from foreign investors will ease in the third quarter, when the exchange rate pressure lessens.

Strong rise in H2 expected

Giang believes that with the good economic performance in the first half, investors have every reason to believe the stock market will be bustling in the second half.

The US’s core PCE (personal consumption expenditures price index), which is the US FED’s preferred measure of inflation, in May witnessed the weakest increase in the last three years. 

This could lead to the possibility of the US FED cutting the interest rate for the first time in the second half of 2024, possibly in September. 

In Vietnam, current factors support the stock market: the pressure on the exchange rate will be eased in the time to come, partly because of enterprises’ decreased dollar demand; and the gold market has become stable after the State Bank sold SJC bullion gold via four state-owned banks. The other positive factors include the export surplus, high FDI capital, and overseas remittances.

Analysts predict that the stock market will see 2-3 weeks between 1,235 and 1,285 points.

Manh Ha