>>Organizations optimistic about Vietnamese prospects
>>Foreign investment funds optimistic about Vietnam’s growth
>>What investment strategy to follow in 2022?
|In the first six months of this year, Vietnam’s real retail sales grew 7.9% year-on-year. Photo: VNA/CVN|
“We discussed our expectation of 7.5% GDP growth in 2022 in the webinar,” said VinaCapital’s chief economist, Michael Kokalari.
“The release of Vietnam’s economic statistics in July not only reinforced this forecast, but also showed that the country’s economy is expected to grow by an astonishing 10% year-on-year in the current quarter.“, he predicted.
“Our forecast for the Vietnamese economy to grow at least 7.5% this year (and at least 10% in the third quarter) leads us to believe that the consensus forecast of 16% revenue growth this year in Vietnam is too cautious“, he explained.
VinaCapital expected revenue growth to be over 20% this year, supported by Vietnam’s strong economic performance – in stark contrast to the US stock market, where revenue growth expectations seem too high, especially given the deteriorating economic outlook for that country.
In the first six months of this year, Vietnam’s real retail sales (i.e. excluding the impact of inflation) rose 7.9% year-on-year; this figure jumped to 11.9% in the first seven months of the year, well above the 7% year-on-year growth we had previously forecast for 2022.
“This is important because we are often asked now whether the current slowdown in the US economy – which is Vietnam’s biggest export market – will weigh on Vietnam’s economic growth. In other words, if the United States sneezes, will Vietnam catch a cold?”, said Michael Kokalari.
“The short answer to this question is that while a slowdown in the US economy is likely to dampen Vietnam’s export growth and economic growth, the impact of this slowdown will be more than offset by the strength of Vietnam’s domestic economy. Vietnam“, he indicated.
“Finally, the revenues and profits of companies listed on the Vietnamese Stock Exchange are mainly driven by the domestic economy, which is why we would have expected the stock exchange to benefit from the surprisingly strong domestic growth.“, he added.
|Vietnam’s stock market rose 37% in 2021, driven by a 36% increase in profits. Photo: VNA/CVN|
Vietnam’s stock market rose 37% in 2021, driven by a 36% increase in profits. Consensus forecasts earnings growth of 16% in 2022, and VinaCapital expects earnings growth of more than 20% this year, supported by strong economic growth in Vietnam.
Aggressive rate hikes from the US Federal Reserve (FED) have showered global equity investors (the S&P500 is down 14% year-to-date), but VinaCapital expected the strength of the Vietnam’s domestic economy is more than offsetting weak stock sentiment in the United States and other markets.
“We expect another drop in the US stock market, which could in turn push down the Vietnamese stock market. However, at some point, we expect the FED to back away from its aggressive rate hike plans.”he said.
VinaCapital estimated that the Vietnamese stock market should be one of the biggest beneficiaries of a FED pivot, as Vietnam has the most attractive valuation in the region and the second highest expected earnings growth after Indonesia. . Moreover, the earnings quality/visibility of Vietnamese companies is much better than that of Indonesia and other regional peers.
“Vietnam’s economy is still stronger than expected at the start of the year, but this strength is not translating into higher stock prices due to the FED’s aggressive rate hikes and tighter regulatory measures in Vietnam. That said, we expect net earnings per share growth of over 20% in 2022, which should support a recovery in the VN-Index by the end of 2022.”he concluded.