Textile and garment shares lose appeal

Textile and garment companies are facing double problem: they find it difficult to import input materials and cannot export their goods.

Analysts had predicted that the textile and garment industry would have a bright future thanks to EVFTA after one year of instability because of the US-China trade war. However, the outbreak of Covid-19 has upset everything.

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One of the reasons behind the sharp fall in garment share prices is the investors’ pessimism about the epidemic in Vietnam and the world. Covid-19 has spread in 197 countries and territories after it originated in Wuhan in December.

‘Negative’ was the assessment by SSI about the impact of Covid-19 on the textile and garment sector. The firm has excluded MSH shares out of the list of favorite shares.

Textile and garment companies have suffered from the interruption of input material supply from China, and most recently, they have been informed that partners from the EU and US have stopped importing products.

Input materials

Textile and garment companies have suffered from the interruption of input material supply from China, and most recently, they have been informed that partners from the EU and US have stopped importing products.

Soon after the Covid-19 broke out in China, the Chinese government closed many factories and restricted transport.

It re-opened factories in recent days, when the number of new infection cases began decreasing. However, it will take time to restart production and export products.

Meanwhile, Vietnamese textile and garment enterprises need input materials from China to maintain production.

Vietnam imported $11.5 billion worth of textile and garment materials from China in 2019, according to the General Department of Customs (GDC).

Exports

The Covid-19 epidemic in China has temporarily subsided, but in Europe and the US, it has become worse.

The Handicraft and Wood Industry Association of HCM City (Hawa) on March 20 said that US importers would stop importing garments from Vietnam for the next three weeks. Prior to that, the importers from EU also announced the suspension of imports for one month.

The US and EU are the two most important export markets for Vietnam which bought $14.85 billion and $4.3 billion worth of Vietnam’s products in 2019.

A lot of textile and garment companies have shifted to make face masks, which has allowed them to survive the current difficulties.

Vinatex said its face mask output is 28-30 million a month and will be 50 million face masks a month, if necessary.

TNG Investment and Trade reported revenue of VND288.6 billion in February, an increase of 65 percent over the same period last year. The figure was VND559.5 billion in the first two months of the year. The sharp increase is attributed to the big orders for face masks.