Henig: Việt Nam’s foreign exchange reserves to grow this year
January, 19/2023 – 05:51
Việt Nam’s foreign exchange reserves will recover to the level of three months of imports and reach $102 billion by the end of this year from the current level of $89 billion.
HÀ NỘI — VNDirect Securities Corporation expects Vietnamese foreign exchange reserves to recover to 3.3 months of imports and reach US$102 billion by the end of this year from the current level of $89 billion last year, said in its updated macro report.
Analysts of VNDirect have made forecasts and said that with the US Federal Reserve (Fed) slowing down the rate of interest rate hikes this year and improving Vietnamese foreign exchange reserves, it would stop the decline price of Vietnamese đồng.
At the same time, the rate at the end of this year is likely to decrease by 1-2 per cent.
Besides, experts also expect a trade surplus of $13.4 billion this year, from a trade surplus of $12.4 billion last year.
In addition, the current account will turn into a surplus at 1.4 per cent of GDP this year from a projected deficit of 0.8 per cent of GDP last year.
According to data published in March 2022, Việt Nam’s foreign exchange reserves are at a record high of nearly $110 billion.
However, after that, the State Bank of Vietnam (SBV) faced many difficulties in balancing the three main goals of controlling inflation, stabilising exchange rates and interest rates to support growth.
SBV had to sell a large amount of foreign exchange reserves to stabilise the exchange rate, which is estimated at approximately 20 per cent of foreign exchange reserves, in the first 10 months of last year.
This has caused Việt Nam’s foreign exchange reserves to fall below the level recommended by the International Monetary Fund (IMF) when it was less than three months of imports.
VNDirect expects a trade surplus of $12 billion next year, from an expected trade surplus of $10.4 billion last year.
At the same time, VNDirect also expects the current account to turn into a surplus in to 0.4 per cent of GDP this year from a projected deficit of 1.3 per cent of GDP last year.
Therefore, the securities company said that Việt Nam’s foreign exchange reserves will recover to the level of three months of imports and reach $102 billion by the end of this year from the current level of $89 billion.
However, VNDirect said that there were several key risks to the forecast including higher-than-expected inflation and a stronger-than-expected US dollar which could put additional pressure on the Vietnamese đồng and the stronger-than-expected recession of Việt Nam’s major trading partners.
In fact, Vietnamese đồng once depreciated by 7-8 per cent last year compared to the end of 2021, but by the last trading day of last year, Vietnamese đồng only depreciated by 3.53 per cent, equivalent to half of the two previous months.
— VNS LINK
Henig: Significant upticks in international trade in 2022: MXV
January, 19/2023 – 08:53
International trade saw significant upticks with an average daily exchange of VND5 trillion daily, with some days at over VND10 trillion, and more than 4,000 new accounts created during the year 2022, according to the Mercantile Exchange of Vietnam (MXV).
HÀ NỘI — International trade saw significant upticks with an average daily exchange of VNĐ5 trillion daily, with some days at over VNĐ10 trillion, and more than 4,000 new accounts created during 2022, according to the Mercantile Exchange of Vietnam (MXV).
In a recently released report, MXV said trade volume has increased by 36 per cent compared to 2021 with a total of over 22,000 active accounts on the platform. Monthly growth has also been reportedly stable with an upward trend.
“We have overseen deals being made 24/7 from Monday till Saturday with some of the world’s largest trade platforms for the entire year, without any issues,” said MXV’s director-general Đặng Việt Hưng.
He said the smooth operation was the result of upgrading IT infrastructure with a number of new automatic functions which has been well-received by international and industry experts. Hưng added the system has been geared toward greater trade volume in the future.
Since its foundation in 2010, the platform’s focus has been on improving collaboration with international trade platforms to push key Việt Nam’s commodities including agricultural products, energy, metals, and industrial input materials.
“Last year, we introduced new Mini and Micro transactions. Investors could place an order with as little as VNĐ10 million, a significantly lower amount compared to before, which has allowed thousands of new investors, with limited financial capacity, to enter the playground,” he said.
It has paid off, according to Hưng, as WTI Micro oil transaction was among the country’s busiest trade activities last year.
The platform has been working around the clock to expand its networks to cover all regions across the country with a growing number of partners and members. A series of new protocols and policies, implemented in 2022, have been enforced to ensure all partners and members received sufficient training to follow the country’s laws and regulations, as well as international trade norms.
MXV said it organised 12 training classes during the last year and granted certificates to over 500 brokers and investors through a collaborative effort with international trade platforms as part of an effort to improve its human resource quality and efficiency.
The growing Việt Nam market has received attention from some of the world’s largest trading platforms such as the Chicago Mercantile Exchange (CME) as many others regularly paid visits and conducted working sessions with MXV.
CME advised its Vietnamese partner to focus on the delivery of commodities, given the country’s advantage in producing a number of key commodities and input materials and its growing influence in the global supply chain.
Hưng urged the government to quickly implement additional policies to speed up the development of trade activities on the platform, stressing the importance of adapting and reacting to the global trade’s new environment.
“It will provide the platform a solid foundation for future development and further support Vietnamese products,” he said.
In 2023, the platform’s top priority, he said, is to introduce additional new services for Vietnamese key commodities including coffee, cashew, and pepper. Access to new markets around the world should provide a marked improvement in farmers’ confidence and productivity.
MXV has been working closely with its logistics partners and port authorities in an attempt to raise commodity delivery by 200-300 per cent this year compared to 2022.
— VNS LINK
Henig: Shares extend gains on the rise of real estate, securities stocks
January, 19/2023 – 06:31
Shares gained ground on Wednesday thanks to the sharp rises of large-caps and in the securities and real estate group, supporting the overall market.
HÀ NỘI — Shares gained ground on Wednesday thanks to the sharp rises of large-caps and in the securities and real estate group, supporting the overall market.
The benchmark VN-Index on the Hồ Chí Minh Stock Exchange (HoSE) gained 0.92 per cent to close at 1,098.28 points. The index had ended Tuesday at 1,088.29 points, an increase of 2.03 per cent.
The market’s breadth turned positive with 105 stocks declining, while 322 rose.
Liquidity rose to a new high with 604.2 million shares traded on the southern bourse, worth VNĐ10.2 trillion (US$435.2 million).
The 30 biggest stocks tracking VN30-Index rose 1.09 per cent to 1,115.72 points. Twenty-five in the VN30 basket increased, while two declined and three ended unchanged.
Securities stocks soared at the end of the session with many strong gainers, namely Asia – Pacific Securities Joint Stock Company (APS), Việt Nam Bank For Industry & Trade Securities JSC (CTS), VNDirect Securities Co (VND), Bank for Invesment & Development of Vietnam Securities Company (BSI) and VIX Securities Joint Stock Company (VIX).
Real estate and construction stocks witnessed a dramatic gain in prices, such as Khang Điền House (KDH), Novaland (NVL) and Phát Đạt Real Estate Group (PDR).
The bullish inertia continue to bring the market up and conquer the higher resistence zone. Liquidity improved compared to the previous period, showing that investors’ sentiment is gradually becoming positive again, said Việt Dragon Securities Co.
“With this development, the market may continue to gain in the next session thanks to the inertia, yet a dispute situation may take place. The next resistance area to watch out for is the old peak of 1,100 points of VN-Index, equivalent to 1,120 points of VN-30 index. Therefore, investors expect the market’s ability to rise, but still need to pay attention to selling pressure at the upcoming peak,” said the company.
Meanwhile, the HNX-Index on the Hà Nội Stock Exchange (HNX) gained 1.2 per cent, to close Weddnesday at 217.73 points.
The index had closed Tuesday at 215.15 points, a decline of 2.02 per cent.
During the trading session, investors poured VNĐ1.2 trillion into the northern market, equivalent to a trading volume of 75.3 million shares.
— VNS LINK
Henig: Association asks for support to build cold storage system in HCM City
January, 19/2023 – 07:51
HCM City needs to develop a cold storage system and raw material storage areas for the food processing industry, the Food and Foodstuff Association of HCM City said.
HCM CITY — HCM City needs to develop a cold storage system and raw material storage areas for the food processing industry, the Food and Foodstuff Association of HCM City said.
The two projects play an important role in the development of the city’s food processing industry in the 2021-2030 period. The industry is among the four key industries that the city prioritises, it said.
Lý Kim Chi, chairwoman of the association, said the city currently has many cold storages units but they are at small scale and not that modern, so they do not meet all the requirements for cold storage.
The municipal government, therefore, has approved a cold storage system development project and assigned the city Department of Industry and Trade in collaboration with the association to deploy it, she said.
The cold storage units will have an average area of 5-10ha and be located at areas with convenient traffic and not too far the city centre. They must be at international quality to store and preserve many groups of goods, including imported ones and locally produced products, she said.
“But we have not found an appropriate site for building the cold storage despite making intensive searches,” she said.
Funds for building the cold storage system are contributed by businesses in the industry. The association did not ask the city government to fund for the project, but wanted the city to have policies to support the industry to implement the project, she said.
Chi said a material storage area is very important to the food processing industry, adding that currently, material inputs for food processing firms in the city are mainly supplied by farmers in the southwest provinces.
Therefore, the industry needs to link with provinces to build stable material storage areas for each commodity, and instruct farmers to adopt certain requirements in their crop production to yield clean raw materials so firms can process products for export to fastidious markets such as the US and EU, she said.
Building raw material storage areas should go in tandem with logistics development. The current transport infrastructure is not that good, pushing up costs to firms. If ring roads that connect the city with neighbouring provinces are soon completed, they would help HCM City food processing enterprises reduce costs, she said.
While other sectors witnessed a drop in revenue last year, the food and foodstuff sector recorded over 10 per cent growth in revenue in 2002, and enterprises have had many export orders from several markets for this year, Chi said.
— VNS LINK
Henig: Việt Nam will face opportunities and challenges from the world economy in 2023
January, 19/2023 – 08:00
The factors affecting the world economy in 2023 will bring significant challenges to Việt Nam but also open great opportunities for this country if it has suitable solutions to develop the economy
The factors affecting the world economy in 2023 will bring significant challenges to Việt Nam but also open great opportunities for this country if it has suitable solutions to develop the economy.
Phạm Sỹ Thành, Director of the China Economic Research Programme at the Việt Nam Centre for Economics and Policy Research (VEPR), spoke to Vietnam News Agency about this issue.
Many financial institutions believe that monetary policy tightening for curbing high inflation and the unending energy crisis will be important factors affecting the world economy in 2023. What do you think about this issue?
The monetary policy tightening of the major central banks is one of the important factors that create a reduction of external demand of the economies as well as the decline in production of countries at present. However, this is only part of the difficulties to anticipate for 2023. The fact is that world inflation has already peaked while the roadmap of central banks’ interest rate hikes will follow a much lower margin compared to that in 2022.
Besides that, I think there are three other factors that have a negative impact on the global economy. First of all, there is not ever a situation that all three major economic regions of the global economy face many difficulties like now.
In 2008, the US economy had problems, while the European and China economies were fine.
In 2010, the European economy was unstable, but the US economy recovered and China was on a good growth track.
In the two years of 2015-2016, China’s economy had problems, while the US and Europe recovered strongly from the crisis.
However, now, it is the first time all three major economies have problems. Specifically, the US still faces high inflation. In Europe, inflation and energy prices are problematic. China, on the other hand, is experiencing problems in asset market and the unexpected effects of the zero-COVID policy.
In the world economic model, the US and Europe are like the demand side, and China is like the supply side. So, if only one of the two sides has problems, the global economy will face great difficulties. If these two sides face difficulties at the same time, the risk of a global economic slowdown is even more obvious.
The second factor that will negatively affect the global economy is the consequence of the monetary policy tightening that central banks have applied in recent years to control high inflation. Accordingly, it is not only the problem in the exchange rate, but also the consequence will create great pressure on the economies that pursue an export model or rely on exports to promote economic growth.
In addition, the instability of the asset market in China is also a new hot spot to watch. For the world economy, China is a very important growth country. According to the latest forecast, China’s economic growth in 2022 reached only 50 per cent of the target. The reasons are the effect of the zero-COVID policy, the volatility of the asset market affecting consumer sentiment and reducing exports. These are the factors that can adversely affect China’s economic growth prospects in 2023.
Many analysts believe that China can fully open up in 2023 after a long period of isolation against the COVID-19 pandemic. It will be a big impact on the world’s inflation control in 2023. What do you think about this?
China’s opening has a huge impact on the prices of global basic commodities such as copper, aluminum, steel, oil and agricultural products. In fact, China’s imports of those commodities for domestic consumption are very small. With the characteristic of being an export economy, if the exports from China to the US and Europe cannot recover, China will boost exports to other markets.
However, the statistics at the end of 2022 showed that China’s export growth was at a low level. In November 2022, China’s exports fell 8.7 per cent year-on-year, and it was the second consecutive month of decline.
This was also the deepest drop in China’s exports since February 2020 – the peak of the outbreak of COVID-19 in China.
These numbers showed that the real difficulty comes from the monetary policy tightening of the US and EU that have had an immediate impact on large export-based economies like China.
Besides, the world’s inflation problem also comes from the conflict between Russia and Ukraine because this has caused the world to face an energy price crisis. Therefore, the world’s inflation in 2023 depends not only on China’s opening up, but also on solving the world’s energy crisis.
How will Việt Nam’s economy face these big challenges to maintain economic growth?
I think that Việt Nam is facing a big challenge from the outside, which is a huge decrease in demand for Vietnamese exports.
In fact, the growth rate of Việt Nam’s many export commodities gaining turnover of over US$1 billion, such as wood and garment products, in October and November 2022 decreased by 30-40 per cent compared to the same period last year and to the previous month.
This showed that the foreign market is no longer attractive enough for exports in 2023. Meanwhile, the decline in exports will bring many problems, especially poverty, lack of work, and an increase in unemployment in industrial zones.
In addition, Việt Nam also faces two internal challenges. Firstly, the handling of violations in both the bond market and the banking system is creating bottlenecks in capital flows.
Meanwhile, the cost of capital is one of the barriers for businesses in approaching capital. This difficulty requires the Government to take measures on removing it, helping businesses access capital as quickly as possible with an appropriate interest rate.
Besides, Vietnamese exporters also have great opportunities to get orders from partners that did business with Chinese businesses before in the context of China applying the zero COVID policy.
That partly also made the supply chain’s move out of China to Việt Nam faster, like the move of Foxconn, Apple, Adidas or Samsung. In fact, in Southeast Asia, Việt Nam is emerging as one of the locations where large corporations choose to build research and development (R&D) centres.
To take advantage of the external advantages, Việt Nam needs to have synchronous solutions, including the building of a better industrial infrastructure and office systems.
Another important solution is to deal with the problems of the bond markets and banking system. In particular, fiscal policy needs to play a bigger role in opening up more opportunities for economic development as well as take advantage of the situation that other affected economies do not recover.