Macro Outlook Report

2H20 Macro outlook

2020E GDP growth at 3.0% given recoveries in domestic consumption and public disbursement

Vietnam Macro Outlook - 2Q20

+ Public investment acceleration + EVFTA effective from 2Q20 Risks: + Demand-supply shocks by COVID-19 + Economic growth forces interrupted

Vietnam Macro Economic Overview - October 2019

The Index of Industrial Production (IIP) in October rose to 9.2% YoY, slightly decreasing compared to the data in September, mainly due to the plunge in coke and refined oil production. However, PMI has been in a downtrend in three consecutive months, which led this index down to 50 points – the lowest in the last four years. This will be a worrisome factor to the processing and manufacturing sector during the year-end period as the growth rate of new order number will turn down sharply. Inflation also needs to be closely watched in the last two months as pork price moves are unpredictable. It is most likely that there would be a trade deficit in November and December as companies will import a large volume of manufacturing and consumer goods for year-end production activities and preparation for Lunar New Year. Liquidity in the banking system in the last two months may be not abundant as the Circular No.58/2019/TT-BTC will affect the deposit sources of the State Treasury at commer

Macro economic outlook - 4Q/2019

Vietnam’s 3Q GDP figures show more evidence of the SBV’s successful sterilization – with inflation in check, the VND stable, and exports remaining robust – and provides ample policy room for 4Q and into 2020E. Implications for our 4Q outlook include: 1) GDP growth to remain healthy at 6.9%-7.0%, albeit at a slower pace than 2017-2018 amid the ongoing US-China trade war; 2) CPI to moderate further to 2.49% and average 2.6% for all of 2019 (with core inflation manageable at 1.9% YoY); 3) money supply and credit growth of 13% and 14%, respectively, to keep the USD/VND exchange rate stable at VND23,350 by year-end and keep depreciation mild at 0.5%-1.0% YTD. Processing and manufacturing should continue to drive solid GDP growth as recovery of mobile phone manufacturing keeps export growth positive in 4Q. Falling trade demand from ongoing trade tensions between the US and China will likely slow 4Q GDP growth to 6.9%-7.0% and below 2017-2018 levels. Inflation has already fallen to the lowe

Macro Economic Overview - August 2019

IIP in August was still positive thanks to a surge in coal production and an moderate increase in mobile phone production. PMI in August tumbled over July, mainly because of the weakening signs in investment goods.

Vietnam Macro Economic Overview - July 2019

IIP in July slightly rebounded compared to June’s. Domestic demand strongly increased, which also resulted in higher retail sales. Agriculture sector still recorded a low growth. CPI inched up in July and the average CPI in the first 7 months of 2019 was the lowest in the last 3 years. A trade surplus was posted in July, thanks to a surge in export growth. Total registered FDI slowed down compared to the same period last year, while disbursed FDI remained stable. USD/VND exchange rates were relatively stable in July, interbank and unofficial exchange rates decreased to the buying rate at SBV. There was a slump in interbank exchange rates in July, and a net-withdrawal from the SBV in OMOs. Primary and secondary government bond trading in July was busy in July with a large trading volume.

Vietnam Economic Outlook Report 2H.2019

GDP growth: GDP growth in the first two quarters of 2019 was modest with the main force of processing – manufacturing sector. GDP in 2019 is forecast to have a positive growth of 6.6 – 6.8%. Inflation: Inflation in the 1H.2019 hit its 3-year lows, but the inflation pressure is expected to come back due to the increase in the government administrated prices. The average inflation rate in 2019 is under control, stays around 3.5 – 4.0%. Monetary policy: The SBV management of monetary policy was quite easing in 1H.2019, but in the last six months, it will be more prudent under the pressure of core inflation. Exchange rate: The VND dipped 0.54% YTD and is expected to depreciate 2 – 2.5% in the whole year of 2019.

Vietnam Macro Stock Market Outlook in 2H 2019

- The VN-Index corrected -3.1% in Q2, but overall, it still maintained an increase of 6.4% from the beginning of this year. - Foreign investors have been net-buying since 2019 with the total value of more than VND10,000 billion. - VN-Index Q1 earnings dropped significantly. As a result, we cut earning growth outlook for 2019 down to 9% (lower than the growth of 13% - 15% in 2015-2016). - Domestic macro factors continued to affect the market moves but external factors may have a bigger impact. The reasonable price for VN-Index in the second half of the year is in a range of 930-1000 points. - Retail and IT sectors have a positive outlook in the 2H of 2019. Meanwhile, the banking, real estate, petroleum, electricity, and pharmaceutical sectors were neutral, although opportunities still exist in some stocks with their own stories.

Vietnam Macro Economic Overview - May 2019

CPI in May gained 0.49% MoM and the average CPI in the first five months climbed 2.74% YoY – the lowest 5-month average CPI in the last three years. In May, inflation is the most concerned factor in addition to exchange rates, whereas oil and gas prices went up and prolonged hot weather raised the demand of electricity consumption. Figure 1 shows CPI movements by main sectors. Transportation and housing – construction materials (rising 6.49% and 4.20% YoY respectively) are the two sectors that had a large contribution to CPI in May (0.25% and 0.20% MoM). Food and food stuff witnessed insignificant gains (+0.05% MoM, 5.54% YoY) as prices of substitute goods like beef, poultry meat, and seafood surged under the impact of the African swine fever. Core inflation in May inched up 0.13% MoM and 1.9% YoY – in five consecutive months, and approached the target set by the Government (2% YoY) – this means that the remaining room for the State Bank of Vietnam (SBV) to loosen monetary policy is no

Vietnam Macro Economic Overview April 2019

The index of industrial production (IIP) in April climbed 0.6% MoM and 9.5% YoY, in which manufacturing and processing still played a key role and boosted the overall growth (+1.2% MoM; +10.5% YoY). IIP of the whole sector was at a moderate level, with IIP of manufacturing and processing saw a two-digit growth in 11 consecutive months. Production of mobile phones increased sharply over the same period in 2018, + 17.2% YoY, and exports of phones and components thus maintained a positive growth rate of +12% YoY in April. This is a positive signal while Samsung's new product line this year opened for sale one week earlier than in 2018 (March 8, 2019 compared to March 16, 2018). In particular, on April 22, Samsung announced to delay the selling date of Galaxy Fold, but this may not affect the manufacturing and exports of Vietnam as in the beginning of 2017. This is the market-penetrative product (estimated to account only for 1% of the total Samsung shipments), and many experts do not c