Lucrative investment opportunities emerge in H2

A conference has been held recently looking at future investment opportunities in the country.

At a conference titled "Scrutinising upcoming investment opportunities," Le Trong Minh, VIR’s editor-in-chief, said, “Many unknown factors have gradually become clear while many variables have become less volatile in the world's political and economic picture. This sends positive signals to Vietnam’s economy in the first half of 2024, opening up the opportunity to speculate and identify possible investment opportunities in the near future.”

Nguyen Tri Hieu, general director of the Toan Cau Institute, cited Bloomberg’s forecast that global gold prices will push past $2,000. “It's unbelievable. I forecast that global gold prices are set to reach $2,500 this year and possibly up to $3,000 next year. I don't see any factors contributing to falling gold prices. Meanwhile, Vietnam’s economy relies heavily on the US economy, which is Vietnam's top export market. Any changes in the US’s monetary policy will have a strong influence on Vietnam's monetary policy as well as domestic markets from stock to gold and other markets.”

The upcoming US election is widely expected to have an outsize global influence on monetary policy.

“When the owner of the White House changes, the national strategy and monetary policy also change. The Democratic Party supports the Fed's loose monetary policy, while the Republican Party maintains a tight monetary policy. If the Democratic Party wins the election this year, it is likely that the FED will reduce interest rates in the third quarter. Falling US interest rates will have a positive impact on Vietnam's monetary policy, reducing pressure on the exchange rate. This is unlikely to happen in case of the Republican victory,” Hieu said.

Dr Le Xuan Nghia, an economist, thinks the role of bank rates will be critical.

“Interest rates are an extremely important indicator of the financial market. I'm also worried that interest rates are on the rise. The interest rate was 0.3 per cent in the first quarter and then jumped to 4 per cent in the second quarter, indicating liquidity is becoming increasingly problematic. With the expectation of economic recovery, of course interest rates will rise because of higher capital demand. Even if we take measures to bring down interest rates, it still tends to increase again,” he said.

“The revised Law on Real Estate Business, Law on Housing, and Land Law will take effect on August 1, which will give a boost to the market from real estate to construction, public and private investments, bonds, and stocks. While public investment disbursement was robust last year, there have been fewer activities this year. The main reason is that people are waiting for new land prices, site clearance, and compensation prices, which will be subject to market principles according to the new regulation.”

In the same vein, Vo Hong Thang, investment director of DKRA Group, said, “These three laws will have a positive impact on the real estate market and the entire economy in the long term. By the end of 2023 until now, since the revised law has been passed, the real estate market shows signs of recovery in Ho Chi Minh City and Hanoi, mainly in affordable apartments, especially Grade B-C apartments, in the big cities. Overall, the absorption has increased, but it was insignificant compared with the pre-pandemic level. These laws will not have much impact in the second quarter of 2024 amid the uncertain global economic environment. It takes 6-12 months for the laws to come into life.”

Amid the discussion, Tran Tuan Tai, director of SonKim Retail, highlighted the potential of distressed assets.

“Institutional and financial investors look for opportunities to acquire distressed assets. Individual investors prefer to invest in real estate stocks as holding land requires a long time and liquidity is not good for investing in apartments. The affordable housing segment actually receives the most attention, based on the fundamentals of the businesses. Institutional, financial, and individual investors will make different decisions,” he said.

“There are also M&A opportunities for investors who are keen on increasing land funds like industrial real estate for light industrial production and logistics,” he said. “Some investors are hunting for retail properties, and premises are being returned during the challenging economic environment. We estimate that retail chains need to operate about 350 stores or more to achieve economies of scale. Thus, they can negotiate with suppliers, reduce logistics costs, and achieve good profits.”

Le Duc Khanh, analysis director at VPBank Securities, also highlighted the important role of monetary policy.

"Global investors, macro investors, and stock investors are very interested in the direction of policies and interest rates. This year, the global stock market has witnessed some improvements. In terms of policy trends, the Fed is likely to trim rates by 25 basis points in September. Another 25-basis-point cut is expected in November or December,” he said.

“In Vietnam, GDP growth is positive in the first and second quarters. Vietnam’s GDP growth is predicted to be higher this year than last year. There are also some breakthroughs in the Vietnam Manufacturing Purchasing Managers' Index (PMI), FDI flows, and industries. Based on business results, some industries, such as real estate or aviation, are still facing challenges. On the other hand, companies in other industries such as chemicals, steel, fisheries, telecommunications, and technology have posted quite outstanding business results. It is vital that we continue to look for opportunities even in a tough market.”

Vietnam Investment Review (VIR) will host a conference to discuss investment opportunities in the remaining months of 2024.

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