Fundamental and Technical Analysis of Vietnam
HOSE:VNINDEX
1. Fundamental Analysis
The chart above illustrates Vietnam's GDP growth (VNFGDPG). The data clearly shows a significant decline after the COVID-19 crisis, indicating that Vietnam's economy was substantially impacted by the pandemic. Prior to COVID-19, GDP growth was relatively stable, but a sharp decline occurred during the pandemic, reflecting economic contraction. The recovery of the VNINDEX (Vietnam Index) after the COVID crisis serves as an indicator of the country's economic recovery and the financial market's response.
2. Technical Analysis
The VNINDEX represents the movement of the Vietnamese stock market index, which has shown an upward trend in the long term. However, there are clear signs of corrections and recoveries over the past few years. Between 2018-2020, there was significant fluctuation, with a steep drop during the COVID-19 period (2020), followed by a recovery in the subsequent year. After 2021, the index has been rising, and it is currently facing resistance around the 1,287-point level, indicating a possible attempt to break through this resistance. The upward arrow symbol shown in the chart suggests a potential for the index to breach this level, which could indicate a continuation of the upward momentum.
3. Additional Insights for Analysis
The recovery of the VNINDEX aligns with the broader economic recovery trend post-COVID-19. The steadiness of the VNFGDPG could point to other economic factors still influencing the country's growth.
If compared with other countries in the region, how do you view Vietnam’s economy?
When comparing Vietnam's economy to other emerging markets, especially in Southeast Asia (ASEAN) such as Thailand, Indonesia, the Philippines, and Malaysia, Vietnam stands out in several key areas:
1. Economic Growth
Vietnam has maintained a relatively high GDP growth rate over the past decade compared to other countries in the region. Especially before the COVID-19 pandemic, Vietnam was recognized as one of the fastest-growing economies in the group.
The Philippines and Indonesia also have robust economic growth, driven by the expansion of industries and foreign investment.
Compared to Thailand and Malaysia, Vietnam’s economic growth has been more prominent. Both Thailand and Malaysia have experienced slower growth in recent years, particularly in sectors like tourism and exports, which were heavily impacted by the COVID-19 pandemic.
2. Industrial and Export Development
Vietnam is regarded as a new manufacturing hub of Asia, especially in electronics, textiles, and heavy industries. Vietnam is a major exporter of these products, particularly to large trading partners like China, the U.S., and Europe, which has helped its economy recover quickly post-COVID.
Indonesia is strong in energy and natural resources, being a major exporter of oil and natural gas in the region, while the Philippines has seen growth in information technology and business process outsourcing (BPO).
On the other hand, Thailand and Malaysia face challenges due to their heavy reliance on tourism and decreased foreign investments.
3. Foreign Direct Investment (FDI)
Vietnam has been a major destination for foreign direct investment (FDI), especially from companies shifting manufacturing out of China to avoid the U.S.-China trade war. This has driven strong growth in Vietnam’s manufacturing, technology, and construction sectors.
The Philippines and Indonesia also attract FDI, particularly in mining, energy, and IT sectors, but challenges related to infrastructure and political stability make them slightly less attractive compared to Vietnam.
Malaysia, while still receiving considerable FDI, has seen its growth slow in recent years, which makes Vietnam more appealing in comparison.
4. Challenges and Opportunities
Opportunities: Vietnam has significant growth potential due to its large working-age population, low labor costs compared to other regional competitors, and economic policies that promote exports and foreign investment.
Challenges: Infrastructure and bureaucratic inefficiencies remain obstacles to attracting further FDI when compared to countries like Malaysia, which has more developed infrastructure.
5. Impact of COVID-19
Vietnam has shown one of the fastest recoveries from COVID-19 in terms of GDP growth in the region, especially when compared to countries like Thailand, which relies heavily on tourism and was severely affected, and Indonesia, which struggled with controlling the pandemic in its initial stages.
However, global economic uncertainties still pose challenges for all countries in this group.
Conclusion:
Vietnam stands out for its strong economic growth, industrial development, and substantial foreign investment, especially in the post-COVID-19 period. Compared to other countries in the region, Vietnam seems to be better positioned for recovery and continued growth. However, challenges related to infrastructure and political systems could slow its future expansion.
