In today’s insight from VinaCapital’s Chief Economist, Michael Kokalari, we review drivers behind Vietnam’s resilient GDP growth in the first half of 2021 and how the Covid 4th wave will potentially impact the second half of the year. As you know, the VN Index returned 28% the first six months of the year, and has given back some of the gains over the last two weeks. Given the current Covid situation in Vietnam, we expect more market volatility in the near team, however our long term outlook for both the economy and the stock market remains positive. If you are a long term investor, the current market pullback may present an excellent opportunity to initiate or add to existing positions in Vietnam.
As you know, Vietnam is experiencing a fourth wave of Covid and cases have been increasing, especially in Ho Chi Minh City. In this piece from Michael Kokalari, VinaCapital’s Chief Economist, we update you on new restrictions that will be put in place in Ho Chi Min City and share why we remain optimistic about the near term and long term economic prospects for Vietnam, even with the new restrictions. Additionally, we continue to be positive on the stock market and view any pullback based on this fourth wave as a buying opportunity.
Foreign Ownership Limits (FOL) for Vietnamese equities continues to be a source of discussion with our existing clients and with investors who are making their first investment in Vietnam. The FOL rules in Vietnam have evolved since the stock market was launched 20 years ago, and while there have been updates to the policy in 2015 and more recently in January of 2021, questions remain. In today’s piece, we seek to explain the current FOL rules, implications and share insights on how FOL rules may evolve in the next few years.
In our bi-weekly piece from Michael Kokalari, Chief Economist of VinaCapital, we discuss the development of the transportation network and increase in power generation capabilities in Vietnam. These are two key themes of infrastructure development in Vietnam and are critical to maintaining the robust GDP growth and continued FDI into large scale projects. As you will see, plans for developing both areas are well underway with continued investment and interest from both government and private capital.
Vietnamese Banks’ Blowout Earnings and Capital Raising Plans are Lifting the VN-Index to New Record Highs
As you have likely noticed, the VN Index continues to move higher, which is perhaps surprising given that Vietnam is dealing with a new Covid Fourth Wave. One of the key drivers of the market’s performance is the strength of the banking sector, which is the largest sector in the VN Index. In our bi-weekly piece from Chief Economist Michael Kokalari, we highlight why the banks have performed well over the past 12 months and why we are confident the banks can continue to perform well in the future.