Banking & Finance

As of the end of July, the USD/VND exchange rate had increased 2.4 per cent since the beginning of the year. Analysts believe the exchange rate has returned to stability after the State Bank of Vietnam’s strong intervention in selling about $13 billion, or 11 per cent of the country’s foreign exchange reserves. There are four factors that will help the VND resist the strong pressure from the USD.

According to the Hanoi Stock Exchange (HNX), in the five years since its introduction in 2017, Vietnam’s derivatives market has grown beyond expectations and become an effective investment channel in risk avoidance.

Mr. Tran Ngoc Bau, Founder and CEO of WiGroup, told the “WeTalk - Financial Market Prospects and Opportunities” seminar that inflation is not the most serious problem for the State Bank of Vietnam (SBV) to address, it is the USD/VND exchange rate. The actions of the SBV in recent times have, in fact, always been aimed at stabilizing the exchange rate. External factors mainly relate to US monetary policy, especially the significant strengthening of the USD.

Many analysts believe that, in the short term, the electricity industry will benefit as public investment accelerates. Banks, securities, and real estate also have potential, because these groups are present in every up and down.

After three consecutive months of net entry into Vietnam’s stock market, capital flows from exchange-traded funds (ETFs) and active funds reversed to net withdrawal in July. According to SSI Research, a positive long-term outlook for Vietnamese securities could trigger cash flows from actively disbursing funds. ETF capital flows can also still maintain their attractiveness.

VinaCapital has forecast that the US stock market will see another decline and may affect Vietnam’s stock market. However, the fund also expects Vietnam’s stock market to be one of the biggest beneficiaries of the US Fed’s turnaround, as Vietnam has the most attractive valuations in the region and a higher growth rate, including the second-highest growth in corporate profits, only after Indonesia.