NATIONAL ECONOMICS UNIVERSITY

-------***-------

INDIVIDUAL ASSIGNMENT
Topic: "If you are required to invest in the securities market in
Vietnam now and hold your portfolio up to the end of the
year 2024, which investment strategies and specific
investment actions you will execute now?"

Student name: CHU THỊ HÀ THANH

Class: BFI63
Student code: 11215284

Lecture: Assoc. Prof. Dr Nguyen Thi Minh Hue

Hanoi, April 2024

Contents
I. MACROECONOMICS ANALYSIS..........................................................................................................3
1. Executive summary:...............................................................................................................................3
1.1. 1Q24 GDP Growth..........................................................................................................................3
1.2. 2024 GDP Growth forcast:.............................................................................................................5
2. Inflation:...............................................................................................................................................14
2.1. 1Q24 inflation...............................................................................................................................14
2.2. 2024 forecast inflation:.................................................................................................................15
3. Interest rates.........................................................................................................................................15
3.1. 1Q24 interest rates........................................................................................................................15
2.2. 2024 Forecast interest rates...........................................................................................................17
4. USD/VND exchange rate:....................................................................................................................19
4.1. 1Q24 USD/VND exchange rate....................................................................................................19
4.2. 2024 forecast USD/VND exchange rate.......................................................................................20
II. STOCK MARKET ANALYSIS..............................................................................................................22
III. PERSONAL BACKGROUND & GOAL..............................................................................................24
I. MACROECONOMICS ANALYSIS
1. Executive summary:
1.1. 1Q24 GDP Growth
According to data from the General Statistics Office (GSO), GDP in the first
quarter of 2024 is estimated to have expanded by 5.66% YoY, still lower than
the same period before the pandemic but the highest in the 2020-2023 period,
indicating Vietnam's economy is progressively recovering. In the context of
global challenges, Vietnam's macroeconomic indicators followed a positive
trend over the months, driven by the recovery of export activities combined
with industrial production.

* Consumption demand improved:

Consumption increased, but social investment capital remained steady.
In Q1 2024, final consumption increased by 4.69% year on year, indicating a resurgence
in domestic demand. Total retail sales of products and services increased 8.2% year on
year to VND1,537.6 trillion, indicating consistent growth in trade and service operations.
Retail sales of goods and services grew by 7.0% YoY, while tourism saw a 46.3% YoY
increase from a low base.
* Realized social investment capital continued to see steady growth:
In the first quarter of 2024, the total realized investment capital was VND613.9 trillion, a
5.2% increase over the previous year. The private sector provided VND340.7 trillion (up
4.2% YoY), while FDI contributed VND110.5 trillion (up 8.9% YoY). The public sector
contributed VND97.7 trillion (up 3.7% YoY).
*Industry and construction prospered:
In terms of supply, manufacturing and construction thrived, while agriculture, forestry,
fisheries, and services grew steadily (Fig 2).
In 1Q2024, industry and construction had a substantial YoY growth of 6.28% from the
previous year's low. We believe that this industry is returning to its growth trajectory.
Industrial production's added value is expected to increase by 6.18% YoY, with major
processing and manufacturing components expanding by 6.98% YoY, outpacing total
growth. The construction industry grew by 6.83% YoY, surpassing the 1.87% reported in
Q1 2023.
In the first three months of 2024, the index of industrial production (IIP) increased by
5.7% YoY, with positive development in 54 provinces and cities worldwide. Key
industries include electronics, furniture, and clothing were all moving higher (Fig 6).
* The service sector enjoyed stable expansion:
The government's stimulus initiatives to boost domestic consumption and tourists
contributed to a 6.12% YoY growth in the service sector.
Wholesale and retail trade grew by 6.94%, while transportation and warehousing grew by
10.58%, with finance, banking, and insurance up 5.2% and lodging and food services up
8.34% due to increased foreign tourism.
*Agriculute, forestry and fishery kep growing steadily:
The agricultural, forestry, and fisheries industry grew at 2.98% year on year, meeting
local demand, guaranteeing food security, and contributing significantly to exports.
Winter-spring rice cultivation progressed quicker than the previous year, with improved
yields in perennial crops, livestock, forestry, and fisheries goods. Furthermore,
agricultural, forestry, and aquaculture export commodities expanded well in the January-
to-March period, showing rising demand in major economies (Fig 5).

1.2. 2024 GDP Growth forcast:

*GDP growth is forecast to reach 6% for the entire year 2024:
We retain our GDP growth prediction for 2024 at 6%, citing stronger macroeconomic
indicators in 1Q2024. Growth is supported by optimistic signals in production and
exports, strong FDI inflows and public investment, domestic demand recovery from
government stimulus measures, and a booming real estate market.
Our GDP growth prediction is at danger from rising inflation and exchange rate
pressures. Commodity prices, oil prices, and transportation expenses increased due to
geopolitical tensions in the Red Sea and Russia's war in Ukraine. This pressured inflation
and limited central banks' dovish monetary policy.
The Brent crude oil price should be closely monitored as exceeding USD93 a barrel
might negatively impact other elements and derail our base-case projections.
* Exports should maintain good growth in 2Q2024 before making a stronger
breakthrough in 2H2024:
In Q1 2024, exports contributed significantly to economic growth as consumer demand in
key regions including the US, EU, and China recovered. For example, Vietnam's overall
import-export turnover in the

The first three months generated USD178.04 billion (+15.5% YoY), with an export
turnover of USD93.06 billion (+17%). The trade surplus rose to USD8.08 billion from
USD4 billion in the first two months of 2024. Electronic products, computers, and
components accounted for USD15.7 billion, a 30.3% YoY increase. Other main export
commodities, such as phones and components (+9.7%), machinery (+10.2%), and textiles
(+7.9%), also had high YoY growth.
In terms of export turnover, the US led with 28%, followed by the EU (16%) and China
(14%).
Exports are expected to expand steadily in the second quarter and reach new heights by
the end of the year due to the following factors:
(i) Consumer demand in Vietnam's key trading partners is expected to increase. The
Consumer Confidence Index (CCI) and Consumer Sentiment Index (CSI) in the US have
been going upward after reaching a low last year (Fig 13), reflecting a positive
perspective on the economy and financial condition. The Fed's potential interest rate cuts
in 2H2024 will likely boost purchasing power.
CCI in the EU and China showed positive improvement (Fig 12).
(ii) Inventories in the US and EU bottomed out, and it is expected that the demand
Replenishing stocks in these economies would boost Vietnam's export orders, particularly
for key consumer items like textiles, aquaculture, and furniture.
(iii) Exports will benefit from the overall growth of the semiconductor and electronic
components manufacturing industry.
The semiconductor industry is predicted to rise by 13.1% year on year in 2024, hitting a
record figure of USD588.36 billion, driven by rising demand for AI processors.
However, some hazards may have a detrimental influence on export activity. Factors
affecting the economy include geopolitical concerns, rising oil prices, transportation and
input costs, shifting purchasing preferences, and high interest rates among trade partners.

Electricity price increases on production expenses and unpredictable power supply.

*Industrial production flourished following the recovery of exports:
IIP climbed by 5.7% year on year, with a 5.9% gain in the important processing and
manufacturing industry, outpacing total growth. PMI reached 50 points in the first two
months of 2024, but dropped to 49.9 by the end.

March saw a decrease in output and orders owing to declining demand.

Manufacturers' confidence in the manufacturing outlook has reached its highest level in
18 months, despite a modest decline.
Expanding monetary and fiscal policies are likely to boost industrial production and
exports.
*FDI capital flows continue to grow steadily:
Vietnam's total registered FDI in the first quarter of 2024 was USD6.17 billion, an
increase of 13.4% year on year.
Disbursed FDI increased by 7.1% YoY to USD4.63 billion, the highest amount since
2017 to 2023. We predict FDI flows into Vietnam

The following variables will contribute to strong growth in 2024:

(i) Vietnam benefits from relocating output away from China, diversifying supply chains.
Vietnam's trade surplus with the US expanded by 2.7 times between 2018 and 2023,
placing it fourth among nations with major trade surpluses, after only Mexico, China, and
Canada.
(ii) Vietnam has a competitive edge over other nations in the area due to its stable
economic and political climate, ideal geographical location for global commerce, and
multiple free trade agreements.

The country benefits from trade agreements, a skilled workforce, and affordable
manufacturing prices. The Vietnamese government has upgraded institutions and
incentives to attract and manage local and international investment, foster a favorable
economic climate, and prioritize infrastructure building and improvements. EuroCham
said that the business confidence index (BCI) for European firms in Vietnam increased to
46.3 in 4Q2023 from 45.1 in the previous quarter.
(iii) The administration improved cooperation and strategic connections with the US,
Japan, and Australia, as well as promoted engagement with important international
partners including China and South Korea, which benefited trade and FDI.
(iv) Vietnam's investment attractiveness will not be reduced by the global minimum tax,
given other FDI-friendly nations such as Malaysia, Indonesia, and Thailand have
comparable tax policies. To maintain competitive advantages, the government is
contemplating providing alternative incentives for FDI firms based on global minimum
tax income.

*Retail sales of goods and services grew well due to expectations of rising domestic
demand:
We anticipate the hotel and tourist industries to continue to thrive. In 1Q2024, Vietnam
saw 4.6 million overseas arrivals, up 72% YoY from 1Q2023's low base and 3.2% from
1Q2029, approaching pre-pandemic levels for the country.

First time. Domestic visitors totaled 30 million. The total tourism earnings was at
VND195 trillion. In 2024, the tourism industry plans to receive 17-18 million
international tourists, similar to pre-pandemic levels, with an estimated income of
VND840 trillion (~8% GDP). The resurgence of tourism and travel will boost earnings
from lodging and food services.
Retail sales of goods and services increased 8.2% year on year in the first quarter.
While somewhat lower than the pre-Covid average of about 14%, we anticipate a
rebound in domestic consumption due to loose monetary policy and fiscal measures,
including

Extensions of VAT cuts and basic wage increases will have a greater impact; (ii) A
positive economic outlook, driven by exports, will create more jobs and increase income,
positively impacting consumer demand; and (iii) While inflation is expected to rise, it
will remain well below the government's target of 4.5%.

* Public investment will be further promoted:

Public investment drives economic growth and has a long-term impact on several
industries. The GSO estimates VND36.7 trillion in public investment capital disbursed
from the state budget in the first quarter of 2024, representing 13.9% of the government's
plan. This is lower than the 14.4% ratio from the same period last year, but shows an
absolute growth of 5.3% YoY, indicating stable disbursements. Legal and site clearance
challenges slowed the implementation of public investment projects in the first half of the
year.
*The real estate market proposed:
Real estate is a significant contributor to GDP and has a wide-ranging influence on other
businesses. Recent challenges in the property market include high interest rates and legal
impediments.

Events involving real estate enterprises that harmed investor trust. In late 2023, some
indicators of recovery emerged, which is an encouraging omen. CBRE reports that the
Hanoi market sold 3,316 apartments in Q4 2023, with 7,001 units sold in the previous six
months (+63% compared to the first half of 2023; +21% YoY) due to favorable sales
policies offered by developers.
The real estate market is expected to improve further due to low interest rates, which
allow developers to obtain financing and hasten project execution, leading to increased
supply. Low interest rates and preferential sales policies from developers increase
housing demand. Legal obstacles have been gradually removed through amendments to
Land Law, Housing Law, and Real Estate Business Law. Progress in implementing
affordable housing projects is expected to improve, balancing supply and demand. Public
investment projects are also being accelerated.
Investor confidence has not entirely recovered after the 2022 crisis, housing prices
remain high, corporate bond maturities pose dangers, and investors are wary.

Banks are limiting the use of short-term financing for medium and long-term loans due to
concerns about escalating non-performing loans.
*Inflation and USD/VND exchange rate showed signs of accelerating:
Rising domestic inflation and the USD/VND exchange rate pose a danger to GDP
growth. In the first quarter of 2024, average inflation remained below the government's
target at 3.77% YoY.

Rising geopolitical tensions have resulted in rising energy costs. Brent crude oil prices
rose from USD76 to USD85 per barrel in March and are expected to continue high. This
uncertainty factor will make inflation unpredictable for the rest of 2024.
The State Bank of Vietnam (SBV) has been withdrawing treasury notes since mid-March
to balance the USD/VND exchange rate and prevent speculation and stockpiling. If the
VND continued to

If the currency depreciates, the SBV may take extreme actions, such as selling forward
contracts or foreign exchange reserves. This should be continuously monitored as it may
lead to higher interest rates, reducing the supporting aspect of monetary policy for
economic development.
2. Inflation:
2.1. 1Q24 inflation
*Inflation showed signs of accelarating again:
In the first three months of 2024, headline CPI increased by 3.77% YoY. The CPI peaked
in February owing to the Lunar New Year break, but subsequently decreased toward the
conclusion of the quarter. However,

Inflationary pressures are increasing due to global tensions and rising crude oil costs,
which affect local gasoline prices.
The core CPI, which excludes volatile prices such as food and energy, increased by
2.81% YoY in the first quarter of 2024. However, this was lower than the overall CPI due
to food prices, fuel prices, medical service fees, and educational costs, which contributed
to the increase in the headline CPI.
*Construction material prices, house rent, educational costs, and rise prices impacted CPI
the most:
The primary elements influencing the average CPI in the first quarter of 2024:
(i) Rising cement, sand, and rental costs caused a 5.4% YoY increase in housing and
building materials prices, resulting in a 1.02 percentage point increase in the total CPI.
(ii) Tuition fees for the 2023-2024 academic year increased by 9.02% YoY, leading to a
0.56 percentage point rise in the total CPI.
(iii) Domestic rice prices rose to match export prices and meet demand for glutinous and
fragrant rice on Kitchen Gods Day and Lunar New Year, resulting in a 0.55 percentage
point increase in total CPI.
2.2. 2024 forecast inflation:
In 2024, Vietnam's CPI is predicted to remain below the government's limit of 4-4.5%
due to steady global commodity prices and low local consumer demand.

pressure. We increase our 2024 CPI forecast to 3.8% YoY, with an average monthly
increase of ~0.2% MoM in the remaining three quarters. This is due to concerns about
rising gasoline prices, exchange rate risks, and increased input material prices due to
increased imports for production. Other variables affecting inflation include (i) price
increases in State-managed products such as energy, education, and medical care.
(ii) higher pork prices in line with rebounding in consumption demand; and (iii) rising
domestic rice prices to keep up with export rice prices.

3. Interest rates
3.1. 1Q24 interest rates
*Market liquidity decreased, while interbank interest rates increased:
In response to rising exchange rates, the SBV raised interbank interest rates and limited
interest rate difference transactions.
In the first quarter, market cash was less available than previously, but credit growth
remained slow. The SBV has been issuing bills since March 11 with an average interest
rate of 1.58%. On April 9, the bank withdrew about VND141 trillion from the system via
OMOs. In early April, the SBV opened forward purchases to provide local liquidity to
banks as needed. Interbank trade was more active in 1Q24, hitting VND15.8 million
billion (+142% YoY), indicating increased liquidity demand compared to the same period
previous year.
As of April 9, interbank interest rates for ON, 2W, 1M, and 3M periods were 3.66%,
3.72%, 3.71%, and 3.83%, respectively (+271 bps, +153 bps, +191 bps, and +57 bps
YTD).

* Deposit interest rates continue to decrease but have shown signs of bottoming out:
In the first quarter of 2024, interest rates continued to decline, reaching record lows due
to slow credit growth. State-owned and large joint stock commercial banks experienced a
decrease in deposit interest rates by 0.2% - 0.3% year-to-date. However, some smaller
banks saw a slight increase in interest rates due to a shortage of cash. Despite this,
lending interest rates also decreased, with new loan rates averaging 6.4% annually, a
0.7% drop from the previous year-end. This decline in lending rates outpaced
expectations, bringing the gap between deposit and lending rates to 2.5% - 3%, which is
seen as relatively reasonable.With deposit interest rates reaching historic lows, liquidity
weakening, and exchange rate and inflationary pressure, we think deposit interest rates
have bottomed out and will likely inch up for the rest of the year to be around 4.75% -
5.35% (+0.15% - 0.75% from the current bottom). The average lending interest rate may
hardly decrease further as deposit interest rates increase slightly, credit demand recovers,
and the real estate market recovers in the second half of the year. Therefore, we forecast
that lending interest rates will remain flat with a margin of ± 0.25% until the end of the
year.

2.2. 2024 Forecast interest rates

*Deposit interest rates might have bottomed out and increase slightly to 4.75%-5.35%
while lending interest rates should move sideways.
Deposit interest rates are expected to rise due to increased credit demand in the second
half of 2024, driven by economic recovery factors such as rebounding exports, monetary
and fiscal policies, warming real estate market, and improved FDI and domestic
consumption. Inflationary pressures are noticeable, with CPI increases mainly in food,
housing, education, and medical services, exacerbated by rising Brent oil prices.
Geopolitical risks and US inflation concerns contribute to caution. The Fed's delayed
interest rate cut and internal factors will pressure the USD/VND exchange rate. Lending
interest rates have decreased faster than anticipated, with limited room for further
reduction due to high-cost deposits maturing and NPLs remaining a concern, exacerbated
by the expiration of Circular 02 and shrinking reserve buffers. The bond market's slow
recovery and high corporate bond maturity pressure further limit potential lending rate
decreases.
4. USD/VND exchange rate:
4.1. 1Q24 USD/VND exchange rate
*Interbank exchange rate developments in 1Q24
The sharp rise in the interbank exchange rate in Q1 2024, hitting VND24,948/USD by
April 9 (+2.8% YTD), was fueled by factors such as the DXY increase, heightened
import demand, and USD hoarding. Despite SBV's efforts, including issuing T-bills, the
impact was limited, with carry trade being affected more than import/export activities.
*The unofficial exchange rate negatively fluctuated in 1Q24 due to the pressure from
gold prices:
Since May 2023, the unofficial exchange rate has been steadily rising, surpassing the
peak of VND25,380 in November 2023 and continuing to rise. By April 9, it reached
VND25,420/USD (+2.6% YTD). The surge is primarily driven by the significant increase
in world gold prices, leading to a substantial gap between domestic and global gold prices
(sometimes up to VND20 million/tael), which stimulates arbitrage demand.
*NEER and REER move in the same direction:
In 1Q24, both the NEER and REER moved in tandem. By March 29, 2024, NEER had
gained 0.7% YTD, while REER had risen by 2.2% YTD. This suggests that the VND
appreciated against trading partners, particularly when accounting for inflation. NEER
saw a decrease primarily due to VND's depreciation against major currencies like USD
and EUR, but significant appreciation against JPY, KRW, and THB limited the decline.
The stronger increase in REER indicates that Vietnam's CPI in the period exceeded the
average CPI of its main trading partners. Despite the challenges, the VND is still
maintaining a devaluation trend similar to CNY, KRW, and THB, compared to currencies
of other regional countries.
4.2. 2024 forecast USD/VND exchange rate
*The USD/VND exchange rate is expected to continue to be under great pressure:
In 1Q24, both NEER and REER moved together. By March 29, 2024, NEER had gained
0.7% YTD, while REER rose 2.2% YTD. This suggests VND appreciated against trading
partners, especially when factoring in inflation. NEER's decrease was due to VND's
depreciation against USD and EUR, offset by significant appreciation against JPY, KRW,
and THB. The stronger REER increase indicates Vietnam's CPI exceeded its main trading
partners'. Despite challenges, VND maintained a devaluation trend similar to CNY, KRW,
and THB.

*Imports and exports are forecast to recover, but the surplus may decrease:
We project a USD10 - 12 billion surplus for the overall trade balance in 2024, attributing
this to more positive import and export activities in 1Q24 and reduced pressure from
carry trade as interbank interest rates stabilize. Specifically:
- Exports are expected to rebound by 10% - 14% due to increased demand in major
partner countries, inventory growth in the US and EU stabilizing, and positive prospects
in the global semiconductor and electronic components industry.
- Imports are poised for growth, reflecting the recovery of the domestic economy. In
1Q24, goods import turnover reached USD84.98 billion, rising by 13.9% YoY,
particularly in capital goods, indicating businesses' need to restore production.
- Import and export services helped reduce the deficit, buoyed by the potential recovery
of the tourism industry, especially for Chinese tourists.
*FDI capital flows and remittances continue to stabilize and grow:
Continued expansion of FDI funds and remittances, as outlined in the details provided on
page 9, will continue to stimulate FDI inflows and serve as a reliable source of foreign
currency influx for 2024.
* The decrease in the USD/VND interest rate difference helps reduce exchange rate
pressure:
The narrowing interest rate difference in the market is expected to decrease speculative
holdings by businesses and ease carry trade pressure on banks. Overnight interbank
interest rates are forecasted to remain between 2% and 3% for the rest of the year, aiding
in alleviating exchange rate pressure. Despite external pressures from the rise of DXY,
US bond yields, and gold prices, the SBV is likely to focus on issuing treasury bills.
However, if these pressures persist, especially if Brent prices exceed USD93 and the 10-
year US government bond yield surpasses 4.7%, the SBV may need to intervene by
selling futures or FX reserves to stabilize exchange rates.

II. STOCK MARKET ANALYSIS

After a small correction in the previous quarter, the Vietnam stock market has resumed its
upward trajectory. This is due to low interest rates and prospects of domestic economic
growth. Additionally, the 4Q23 earnings season with the

The market is driven by the comeback of listed businesses following negative growth in
previous quarters. In 1Q24, VNIndex grew by 13.64% YoY, while trade value jumped by
132%.
* The VNINDEX is expected to reach 1,360 points by the end of the year:
In 2024, no new variables are expected to significantly impact the fair valuation range for
the VNIndex P/E ratio (at 15.3x, lower than the present level of 16.5x).
We increased our profit growth prediction for listed firms from 16.4% to 19% based on
recent 4Q23 results reports and projected rebound in 2024 (refer to Part II of the study).
We increased the goal point range of the VNIndex from 1,330 points in the study Stock
market forecast 2024 to 1,360 points.
The market is supported by a recovery in production and business activities of listed
enterprises, low and stable interest rates, the KRX trading system and market upgrade
prospects in September, and a positive impact from the US stock market due to
expectations of Fed interest rate cuts and a "soft landing" in the US economy. (Refer to
Part III of the report.)
* It is forecasted that the market will have an adjustment period in 2Q as the increase in
1Q has fully reflected the expected factors
The market's P/E value has increased significantly since October 2023, reaching 16.5x
(according to Bloomberg, similar to the two-year average +1SD). The market has
accurately reflected the considerations outlined above. We believe VNIndex's price range
is reasonable given the favorable variables ahead.
A market adjustment is necessary to alleviate profit-taking pressure and address exchange
rate risks before receiving support from fundamental factors such as earnings season
growth, positive macro data, KRX system implementation, market rating upgrade, and
Fed interest rate reduction.
Investors might take advantage of the correction period to purchase low-priced equities
while maintaining a bullish perspective for the market in 2024.

III. PERSONAL BACKGROUND & GOAL

*Background:
- Occupation:
* Full-time as a student.
*Part-time as a teaching assistant.
- Financial Capability:
Montly salary: ~ 2.5 million VND.
Savings: 10 million VND
- Risk appetite: Moderate
- Strategy: Growth investing
- Stock selected: Affordable + top of industry that is supported by macroecnomics view.

My portfolio:
Orde Stock Industry 1YReturn Why to choose? Last price Weight
r
1 GAS Oil and -3.3% • Crude oil prices 75,000 20%
gas bounced back VND
better than
expected in
1Q2024.
• Oil prices should
remain high
throughout 2024,
 at least equivalent
to 2023’s level.
• The rig rental
market is expected
to remain tight in
the 2024-2025
period.
• The domestic oil
and gas sector will
enter a long-term
growth cycle
starting from
2024.
2 GMD Logistics 52.3% • The total sea 79,800VND 20%
cargo throughput
nationwide
continued to enjoy
positive growth.
• The recovery of
container ports in
the South tends to
be more positive
than those in the
North.
• The prospects
for the container
port industry in
2024 are quite
positive.
3 KBC Industrial 20% • Vietnam's newly 29,150VND 30%
real registered FDI in
estate 2024 continued to
surge, indicating
the long-term
potential of
industrial parks.
• Industrial land
rental rates are
still on the rise,
with high
absorption rates.
• In addition,
industrial park
 enterprises also
confront
obstacles.

4 CTG Banking 37.1% • Loan growth in 31,500VND 30%

the first two
months of 2024
fell short of
expectations
• NIM is expected
to improve by 15-
30bps.
• The pressure on
asset quality has
been temporarily
alleviated by
supportive
measures