The year 2015 was an exciting year for many Asian markets. Maybank Kim Eng stock company boils down the economic performance of seven countries and one special administrative region into one consolidated report. Vietnam’s economy has been improving and holding an edge in competitiveness compared to other markets as highlighted in the research.
Sustaining Stronger Growth Momentum
Vietnam’s six-year high GDP growth of 6.88% in 2015 was undoubtedly the direct result of the “hard-regained” macro stability achieved over the past three years and more importantly, the unprecedented level of institutional reform since the opening up of the country in 1986.
Reforms of state-owned enterprise, the financial sector and public spending have likewise contributed to Vietnam’s ultra-high growth. Market-wise, 2016 is likely to be another exciting year. This is due to a shortened settlement cycle, the launch of derivatives, further process of lifting foreign ownership limits, a large pipeline of IPOs, more stringent disclosure requirement and a potential introduction of intraday trading.
Rising infrastructure development
Despite investing 9% of GDP for infrastructure development to support rapid growth in 1995-2000, overall infrastructure in Vietnam is still inadequate to meet strong FDI in the country as well as domestic demand. Infrastructure investment is expected to double in 2016-2020 compared to 2011-2015.
However, there are still some factors deterring further FDI investment in Vietnam’s despite low labor cost and stable political landscape; namely inadequate roads and ports, lengthy administrative procedures and ambiguous regulations.
Vietnam is the biggest beneficiary in TPP
The World bank estimates the Trans-Pacific Partnership (TPP) agreement could add 8% to Vietnam’s GDP and 17% to its real export over the Únext 20 years. As a result, Vietnam will witness a rise in FDI and manufacturing activities, including construction of high-quality residential and industrial buildings. Textile and garment produces also will benefit from TPP, as the duty on Vietnam’s textile exports to the US will be cut to 0% from 17%.
Rise of IPOs and new listings in 2016
Around 400 companies have listed in Vietnam between 2011 and 2015. The year 2016 could be another remarkable year as more companies will be listed. More importantly, the government will further divest in companies it had partially sold but still maintains control or influence in.
Maybank Kim Eng expects 45% of Vinamilk (VNM) to be sold, giving investors more opportunities to participate in one of the most successful SOEs as the company operates efficiently and has expanded strongly after being equitized.