VinaCapital has become a founding partner of Zone Startups Vietnam, an extension of Ryerson Futures’ successful startup accelerator programs in Canada and India.
The escalation of US-China trade tensions is weighing on Vietnam’s stock market, despite the country’s solid macroeconomic fundamentals and despite the fact that a protracted US-China trade war would benefit Vietnam by accelerating the move of manufacturing from China to Vietnam.
Vietnam’s stock market has been swept up in the Emerging Market sell-off, but this is the result of exogenous factors; the country continues to have strong economic conditions and its currency is relatively stable. In fact, Vietnam is not highly vulnerable to the risk factors causing alarm in other EMs.
Investors in Vietnam’s stock market are currently focused on China’s FX rate. There are misplaced concerns that CNY devaluation impacts Vietnam’s economy, and negative sentiment from local and foreign investors alike, triggered by CNY devaluation.
The VN Dong fell nearly 1% this week, including ~0.3% yesterday, and ~0.3% over last weekend. Investors are probably comfortable if depreciation stays below 2% YTD. Meanwhile, the official reference rate is up 0.9% YTD, so Vietnam’s unofficial FX rate is still within the official band of +/- 3%. Depreciation is being driven by: 1) DXY index, 2) risk aversion, as evidenced by gold prices, 3) USD flows.