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Balance of Payments of Vietnam in 2018 - 2023

Success and failure sub-components
1. Theory (Playing quiz on Nearpod)
Question 1: What are the factors to determine which country a person is a resident of?
A. Nationality
B. Parents’ nationality
C. Duration of staying
D. Birthplace
E. Major official income
Question 2: Match the related keyword pairs
Current Account – purchases of goods and services
Capital Account – sales of assets
Financial Account – including FDI and portfolio
Question 3: The J-curve illustrates relationship between ... and ... when a currency …
A. Trade balance - Exchange rate – appreciates
B. Export - Exchange rate – depreciates
C. Trade balance - Time – depreciates
D. Export - Time - appreciates
Question 4: Which of the following factors has an inverse relationship with international
trade flows?
A. Cost of labor
B. Stocks indexes
C. Inflation
D. National Income
2. Overview of Balance of Payment of Vietnam
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During the period from 2018 to 2021, Vietnam's overall balance consistently
remained in surplus. The peak was in 2019 when Vietnam's BOP surplus reached over
$23.25 billion USD, equivalent to 8.88% of the GDP for that year. In 2020 and 2021,
despite facing numerous challenges due to the Covid-19 pandemic, Vietnam still
achieved an overall surplus balance of over $16.6 billion USD and $14.3 billion USD
respectively. Thanks to Vietnam's consistently surplus BOP, Vietnam's foreign relations
position has strengthened. However, in 2022, Vietnam's overall balance dropped
significantly to a deficit of $22.7 billion USD, primarily due to errors and omissions and
also difficulties in the reduction of both Current and Financial Account.
 Regarding the current account, during the period from 2018 to 2020, there
was a consistent surplus reaching $15,1 billion USD in 2019. However, there was a sharp
decline in the following two years, 2021 and 2022, due to the strong outbreak of Covid,
resulting in a deficit of $8,2 billion USD in 2021. Nevertheless, Vietnam managed to
control and reduce the deficit to $1,1 billion USD in 2022. Import-export balance always
had a significant proportion within Vietnam's current account.
 Throughout the period from 2018 to 2023, the financial account of
Vietnam consistently showed surplus and accounted for a large proportion of the overall
balance, especially in 2021, reaching $30,837 billion USD, with the largest proportion
coming from Foreign Direct Investment (FDI). FDI investment in Vietnam remained
stable at over $15 billion USD annually for the past five years.
 It's worth noting that the level of errors and omissions in Vietnam's
Balance of Payments is quite substantial. During the 2018-2022 period, among them,
unrecorded inflows or omissions throughout the period from 2016 to 2021 amounted to
nearly $8.95 billion USD, while unrecorded outflows amounted to nearly $53.42 billion
USD. This poses a significant challenge to Vietnam's macroeconomic management.

3. Successful subcomponent: Balance of Trade

3.1. Overview of Vietnam’s Balance of Trade
3.1.1. Dependence on FDI

Proportion of Foreign Direct Investment in total expert of Vietnam 2018-2023

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FDI accounts for a significant proportion of Vietnam's exports. Specifically, after

signing the Bilateral Trade Agreement (BTA) with the United States and Vietnam's
accession to the World Trade Organization (WTO) in 2007, the FDI sector has been
leading Vietnam's export industries. The involvement of the FDI sector in various
industries and sectors, especially its concentration in the manufacturing industry and
some other sectors, is an important factor driving the restructuring of Vietnam's economy
towards modernization. It contributes to building a dynamic economic environment,
increasing production capacity, and diversifying high value-added products in our
country's economy.
Moreover, FDI also promotes exports, contributing to Vietnam's trade surplus and
thereby boosting GDP growth. The value of exported goods by FDI enterprises accounted
for 27% in 1995 and nearly tripled to nearly three-quarter of the total export turnover of
the country in the period 2018-2023.
In 2022, the total registered FDI capital in Vietnam reached nearly 27.72 billion
USD, with the realized FDI capital hitting a record of 22.4 billion USD, marking a 13.5%
increase compared to the same period in 2021. This is the highest realized FDI capital in
the past 5 years (2017-2022). This resulted in a trade surplus of nearly 12 billion USD
which significantly contributed to economic growth and development.

3.1.2. Vietnam's Import and Export from 2018 to 2023

Vietnam's import and export have always increased since 2018. In particular,
although 2020 and 2021 were affected by Covid 19, Vietnam's trade balance has always
increased strongly and maintained a surplus during this period. It is even reaching its
peak in 2022 with total exports of 371 billion USD.
However, in recent times, due to the global recession, total import and export
turnover has been gradually decreasing since mid-2022 until now. However, BOT still
has a positive point: accumulated in the first 7 months of the year, Vietnam's trade surplus
reached 16 billion USD while the total for the whole year 2022 was only 12 billion USD.
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a. Exports
- Items:

Vietnam's primary export items over the years continue to constitute a significant
portion (80%-90%), primarily falling within the category of processed industrial goods.
Mobile phones and components have always been the most exported item since
2018 until now. In 2022, this item will be the largest, accounting for nearly 15% of total
export turnover.
Next is Computers, electronics and components, which always rank 2nd, with
12.32% in 2022. These numbers and trends have not changed much during the 5 years
since 2018. Even during the COVID-19 pandemic, the revenue from these products
continued to rise, thanks to Vietnam's pandemic prevention strategy, which optimized
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production. Additionally, the global shift to remote work stimulated the demand for
electronic devices.
Vietnam is always remembered for its good competitive advantage in the textile
and footwear industry due to its strong development. Therefore, these two categories are
always popular in foreign markets and have high export levels, accounting for about 10%
and 7% of total exports in 2022.
- Countries:

The United States is Vietnam's leading export partner. Specifically, the total trade
volume of goods between Vietnam and the United States reached 109 billion USD,
accounting for 29.3% of Vietnam's total export turnover in 2022. Thanks to this, Vietnam
has become the 8th largest trading partner of the United States.

b. Imports
- By categories
During the period from 2018 to 2023, Vietnam's imports have shown a same trend
with export, with two prominent categories being computers, electronic products,
components, and machinery, equipment, tools, and spare parts. In 2022, these two
categories accounted for nearly 23% and 12,6% in the total import respectively. The
reason for this is that Vietnam's exports primarily consist of high-tech products, and as a
result, Vietnam needs to import production materials to meet the demand for these output
goods.
- By countries
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China is Vietnam's main importing partner. The 2022 data reveals that the import
volume from China reached 117 billion USD, accounting for 32,84% of the country's
total import turnover. Because supporting industries producing raw materials for export
in Vietnam are not yet developed, Vietnam is forced to import from China.

3.2. How can Vietnam achieve that success?

3.2.1. Vietnam signs Free Trade Agreements (FTA)
EVFTA Agreement (2018)
- The free trade agreement will make changes in tax exemptions and remove most
tariff barriers, 65% of exports from Europe to Vietnam will be immediately tax-
free along with the reduction of some lines and other taxes => creating
opportunities for FDI enterprises, especially strengthening cooperation between
small and medium enterprises of the two sides
- Attract more investment capital flows from other markets outside the EU to
Vietnam to enjoy commitments from the agreement, helping to increase
investment capital flows into Vietnam
+ Japan was the first country to open an agreement to invest 8.3 billion USD (32
projects) in Vietnam immediately after the contract was signed, especially in the
processing and manufacturing industry (1.68 billion USD in 2018, 3.6 times higher than
in 2017). Capital flow from Japanese FDI enterprises at the end of 2019 was 59.3 billion
USD and continued to increase in the following years.
+ Korea expanded economic and trade cooperation with Vietnam, especially after
EVFTA, increasing investment capital into Vietnam by large enterprises in the electronics
industry such as Samsung (18 billion USD), Hyundai, and LG, ...
- The proportion of the EU market to FDI enterprises globally is large => has the
potential, to bring significant benefits to Vietnam
+ The EU's foreign direct investment capital accounts for 47% of total foreign
direct investment (FDI) worldwide and attracts 20% of the world's FDI from outside the
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EU, thereby opening up great opportunities for Vietnam to attract high-quality FDI
enterprises around the world through free trade agreements with the EU

3.2.2. The quality of key export products improved well

- Export diversification of products
+ Vietnam diversifies export products, not only relying on raw materials but also
increasing processed and high-tech products => improving the trade balance, creating a
trade surplus
+ The structure of export goods improved positively: the export share of raw
materials and minerals decreased from 1.9% to 1.6% and the processed industrial goods
increased from 82.9% to 84.3% (2018); Export turnover in 2019 grew well: computers,
electronic products, and components increased by 21.5%, textiles increased by 7.8%,
footwear increased by 12.8%, machinery, equipment, and spare parts increased by 11.9%,
etc..
+ The structure of key industries will change significantly (by 2022): labor-
intensive industries such as textiles, garments, and footwear will give way to high-tech
product groups.
+ Some export products in Vietnam have occupied significant positions: leather
and footwear products: ranked second in the world's exports (after China) (2022), above
countries with a tradition of exporting these products. this item (like Italy, Spain)
- More and more FDI is shifting to Vietnam => there are many new technologies
and capital to increase the quality and quantity of products (in terms of
manufacturing materials and design) => there is potential to become a new big
factory in the world in the future
+ Products produced from FDI in Vietnam are guaranteed in quality and have good
competitiveness in the international market because foreign brands when produced in
Vietnam have teams that strictly manage product quality. products, with modern
production processes and strict testing
+ In the first 2 months of 2022, Vietnam's export turnover reached 53.79 billion
USD, up 10.2% over the same period, of which the foreign-invested sector (including
crude oil) reached 39.5 billion USD (accounting for 73.4%). Products produced by FDI
enterprises account for a large proportion of the total export value of key products

3.2.3. Cheap labor, good environment, many incentives for FDI => exports from
good FDI enterprises:
Why is there so much FDI investing in Vietnam?
- The government has many open-door policies for foreign investors: exemption
and reduction of taxes (corporate income tax, import tax on some industries), exemption
and reduction of rent, land use,..., there are many good incentives. Some specific
examples of tax incentives for FDI enterprises:
+ Newly established businesses that meet preferential conditions are entitled to a
tax rate of 10% throughout their operating period
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+ The tax rate of 17% throughout the operating period applies to businesses such
as People's Credit Funds, Cooperative Banks, and Microfinance Institutions.
+ There are also a number of other tax exemptions and reductions for businesses in
the fields of agriculture, and fisheries,...
- Healthy production ecosystem
+ Political and religious stability (helping Vietnam have peace and prosperity): For
example, in some countries in the region, except Singapore, from 1990 onwards, it is easy
to see that most regional countries Regions such as India and Thailand have both
experienced coups or political and religious crises. Meanwhile, Vietnam's political system
is always stable, this is a guarantee of cohesion to implement consistent economic
policies, contributing to an improved business environment.
+ The Investment Protection Agreement (EVIPA) strengthens businesses'
confidence that they will be protected => FDI has more confidence to lay the foundation
for development in Vietnam
+ The internal strength of the Vietnamese economy is increasingly developing in
the global economy
- The supply chain wave is shifting to Vietnam
+ The US-China trade war has caused many companies to shift production from
China to India and Vietnam
+ The US and other countries such as Japan and South Korea have many large
factories and headquarters in China, but to minimize dependence and most of the risks
caused by COVID-19, they decided to shift the chain. supply to Vietnam and India,
peaking in 2021, large companies in the world simultaneously shifted investment capital
and production factories to Vietnam, typically Apple (USA), Nintendo (Japan), ...
+ Vietnam has cheap labor costs and available resources, so it attracts a lot of FDI
from Europe, China, America,...

=> From the above reasons, along with the proportion of investment capital from
FDI into Vietnam increasing significantly from 2018 (more than 46 million USD) to 2022
(more than 93 million USD) and accounting for a large % of Vietnam's import and export
(from 2018 to present) helps diversify products => increased exports, trade balance
surplus

3.3. Positive Impact

3.3.1. Stable Economic Growth:
During this period, Vietnam's economy achieved stable and high growth, despite a
temporary decline in GDP growth in 2020 and 2021 due to the Covid-19 pandemic.
However, GDP remained stable and outperformed many regional counterparts, reflecting
sustainable development.
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 Job Creation and Income: The trade surplus created many jobs and
additional income for the people of Vietnam, improving their quality of life. Export
growth contributed to the creation of 8.7 million new jobs during the 2018-2023 period.
Average monthly income in urban areas reached 5.945 million VND in 2022. This figure
increased by nearly 10.6% compared to 2018 and by 11% compared to 2021.
 Promoting Regional Economic Development: Export-driven growth
promoted economic development in regions with export potential, helping reduce
development disparities between different regions. Some regions that attracted numerous
Foreign Direct Investment (FDI) projects include:
o Bac Ninh: Bac Ninh Province has become one of Vietnam's major
industrial centers, with FDI accounting for over 50% of the total social investment. Large
multinational corporations like Samsung, Foxconn, and Delphi have invested in Bac
Ninh.
o Hai Phong: The city of Hai Phong also attracted strong FDI inflows, with
numerous significant projects in industries, seaports, and logistics.
o Quang Ninh: Quang Ninh Province became an attractive destination for
foreign investors, with substantial projects in tourism, resorts, and industry. For the past 6
years, QN has continuously maintained the highest PCI level in Vietnam.

3.3.2. Effective Financial Management:

- Exchange rate: The Vietnamese government implemented careful financial
management measures to ensure the stability of the Vietnamese Dong and prevent the
risk of significant exchange rate fluctuations. Although there was a surge in the exchange
rate in the third and fourth quarters of 2022, it was well-controlled and gradually
decreased to around 23,700 VND by the end of the year.
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- Control foreign exchange reserves: Vietnam's consistent trade surplus generated foreign
exchange earnings, boosting the money supply and supporting economic growth.
Vietnam's foreign exchange reserves increased from $32 billion USD to $110 billion
USD during the 2018-2023 period.
3.3.3. Enhanced Competitive Capacity: Trade surplus allowed Vietnamese
businesses to access international markets, learn from experiences, and enhance their
competitive capacity. This contributed to the transformation of the growth model from
resource-based to value-added.
These positive impacts of the trade balance have supported Vietnam's economic
stability, growth, and regional development.

4. Failure: Foreign Portfolio Investment (FII)

4.1. Overview of Foreign Portfolio Investment
4.1.1 Characteristics of Foreign Portfolio Investment
 High liquidity: FPI assets, like stocks and bonds, are easily bought and
sold in active markets, allowing investors to convert their holdings into cash quickly and
efficiently.
 Significant Reversibility: FPI investments can be swiftly adjusted or sold
in response to changing market conditions, economic factors, or investor preferences,
making them highly reversible.
 High Instability: FPI markets can experience rapid and unpredictable price
fluctuations due to factors such as economic events, policy changes, and investor
sentiment, leading to a high degree of market instability and volatility.
 Investors do not directly engage in the management of the issuing
company or the overall management of the securities issuing authority.
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 FPI is more speculative than investment. Most foreign investors often

buy in large, even massive quantities with the aim of creating scarcity, driving prices
significantly higher than usual, and then selling in the short term to profit from price
differentials.

4.1.2 Overview of Foreign Indirect Investment in Vietnam

Along with foreign direct investment (FDI), foreign indirect investment (FII) also
shares the characteristic of being greatly influenced by the movement of cheap capital
flows. Recently, as the U.S. Federal Reserve increased interest rates 5,25% - 5,5%, the
influx of cheap capital began to slow down in developing countries and showed a
tendency to reverse towards developed countries.

 Foreign Indirect Investment

When looking at the big picture, the scale of FII activities in Vietnam is limited
and has not had a great impact on the macro investment environment, receiving
inadequate attention and management from state management agencies. Moreover, FII
has been used as a secondary source, implementing capital for directly funded projects.

Starting from 2020, foreign indirect investment began to trend downwards both in
terms of the number of investments and the value of capital contributed. This number is
the lowest with -1,256 billion USD. Covid-19 pandemic greatly affected the global and
Vietnam's mergers and acquisitions (M&A) market. M&A deals require direct
participation in market research and due diligence on target companies, and the
pandemic's restrictions on travel significantly impacted the decision-making ability of
foreign investors.
Although there has been a slight improvement since 2021, this is an unsustainable
item, fluctuating a lot from quarter to quarter. 2021 is a brilliant year for the Vietnamese
stock market, but FIIs also did not record a large surplus.
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 Foreign transaction scale on Vietnam stock market

Vietnam’s stock market is a frontier market that is still nascent, of which
presently, the proportion of transactions by foreign investors is still minor.

The proportion of foreign investors' buy + sell activity relative to the total market
volume exhibited a clear downward trend from 2018 to 2022. Starting at approximately
35.78% in 2018, foreign investors held a substantial and influential position in the
Vietnamese market, reflecting confidence and active participation.
However, this proportion gradually declines to about 14.80% in 2021,
characterized by challenges and uncertainties. While there was a modest recovery to
approximately 15.80% in 2022, the downward trajectory underscores the effects of global
events, risk aversion, and market volatility on foreign investor sentiment and engagement
during this five-year period.

 Net buying and selling trend of foreign block

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Foreign investors' buying and selling activities from 2018 to 2022 reveals a
dynamic pattern of their sentiment and trading activity in the Vietnamese market:
 Starting with modest net buying of about 41.204 billion VND in 2018, the
trend briefly turned negative, with -2.059 billion VND in 2019.
 However, the most significant shifts were observed in 2020 and 2021. In
2021, the figure further deteriorated to approximately -62.431 billion VND, signifying a
significant increase in net selling. This heightened negative figure suggests that foreign
investors escalated their selling activity during 2021, potentially due to persistent
uncertainties or challenges in the market. The change from 2020 to 2021 highlights the
profound impact of external factors and investor sentiment on trading patterns in the
Vietnamese market.
 In contrast, 2022 saw a noteworthy reversal, indicating a return to net
buying, possibly driven by improved market conditions at the end of the year. This trend
underscores foreign investors' adaptability and responsiveness to evolving economic and
market factors, illustrating their ability to navigate challenges and capitalize on
opportunities in the Vietnamese market.
 After a strong buying period at the end of 2022, the trading trend of foreign
investors on the Vietnamese stock market has reversed. A significant portion of the
selling pressure is coming from the ongoing trend of capital withdrawal in some large
ETFs, especially the top 3 ETFs in the market, namely Fubon ETF, DCVFM
VNDiamond ETF, and DCVFM VN30 ETF, with a total portfolio size of nearly 50,000
billion Vietnamese Dong (approximately 2 billion USD). The derivatives market is
developing, but providing very limited opportunities for foreign investors to be interested
in.
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 For over a year now, foreign investors have been consistently net sellers,
and the cumulative net selling value from the beginning of 2023 to the end of September
28th on HoSE has reached nearly 5,500 billion Vietnamese Dong.

In summary, the stock market has witnessed significant fluctuations. The

management mechanism to monitor the disclosure of information has been ineffective, as
evidenced by recent, consecutive breaches related to securities manipulation conducted
by some businessmen. These might be the negatives that have driven professional foreign
investors’ reluctance to invest with FII capital in securities transactions in Vietnam.

4.2. Why is it a failure?

4.2.1. High Interest rates and strong currency in US
United States Fed Funds Rate

To control inflation, the Fed has continuously raised interest rates since 2022,
causing the fed interest rate to escalate from 0.25% to 5.25%-5.5% today. When the
Federal Reserve (Fed) raises the basic interest rate in the US, investing in the US
becomes more attractive to investors. Expected profits from assets such as bonds or bank
deposits also increase, which can lead foreign investors to invest or transfer funds
back to the US and withdraw capital from developing country markets like Vietnam
to take advantage of higher interest rates.
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When the USD increases in value, the currencies of other countries become
weaker. This could create exchange rate fluctuations and downward pressure on the value
of other currencies, including currencies in foreign exchange markets like VND. In 2022,
the VND depreciated by 3%, even a period in November where the VND
depreciated by 9%. This may discourage them from investing in this market because
investing in a depreciating currency causes them to lose a huge portion of their profits.

4.2.2. Vietnam market is not an attractive market

- In 2022, the VNIndex witnessed a downtrend, which dropped by 32% from

approximately 1500 to 800. Liquidity in the previous period was low. In 2022,
the average session trading volume will reach 653.96 million shares and the
average session trading value will reach 17,004 billion VND; down 11.30% in
volume and 21.24% in value respectively compared to the average session in
2021. => Bailing out trend
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- Vietnam is still a frontier market. There are 9 reasons why MSCI is still saying
no to the upgrade of the Vietnamese market including: "foreign ownership limit",
"remaining foreign room", "equal rights of foreign investors", "degree of freedom
in the foreign exchange market", "investment registration and account opening",
"market regulations", "information flow", "clearing and settlement" and
"transferability ". Although this is a goal that was set more than 10 years ago, there
are still many factors that are difficult to achieve before 2025 such as foreign
ownership limit and clearing and settlement. More than one year is too short a time
for the Vietnamese stock market to quickly operate new technologies and laws to
meet the remaining 9 criteria. => Not an attractive investment destination for
foreign investors

According to data until the end of March 2023 compiled by Vietnam Bond Market
Association, the size of the Vietnam corporate bond market (13,57% GDP) is still quite
modest compared to other countries in the region. This makes FII less attractive in
Vietnam.

4.2.3. Vietnam market is inefficient

There are still opportunities for stock price manipulation due to existing legal
loopholes. (Trinh Van Quyet - prosecuted and arrested on charges of "manipulation" and
"hiding securities information") It can impact the investment returns and performance of
investors lead to disappointment and distrust in the market for FII

In the second half of 2022, the Vietnam corporate bond market faces the
widespread of investors' negative sentiment and fear because of the incidents that
occurred at Tan Hoang Minh and Van Thinh Phat (issuing bonds against the law).

Many financial tools are still lacking such as:

 Not have shorting stocks: Shorting a stock is when you open a position by
borrowing shares you don’t own to sell to another trader and hope for the stock price to
go down and then close your short position by buying the stock at a lower price and
returning your borrowed shares.
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 Daily Trading Limit is low: Daily Trading Limit is the limit of price
fluctuations of a stock during a trading session. In Vietnam, HOSE is ±7%, HNX is
±10% and UPCoM is ±15%, quite low in comparison to ±20% at NASDAQ (USA) and
±30% in Korea.
 Asymmetric information: occurs when there are infringe on information
transparency and information disclosure responsibility
 Investors in VN still suffer from herd instinct: they lack information,
financial literacy and analytical skills about the market and the companies they invest in
so they may follow actions of other investors that they consider experienced or
informative.

=> Inefficient market, not has been possible to deploy “T+0 Transaction” (the
ability to complete a stock transaction the same day it was made) to increase
attractiveness for foreign investors

4.3. Negative impact

4.3.1. Loss of investors' trust and liquidity breakdown
The scandals mentioned above have caused both domestic and foreign investors to
lose confidence in the Vietnam financial market. This can be easily seen on all three
markets:
 For the bond market, since the outbreak of the Tan Hoang Minh bond case, the
market has shown signs of liquidity congestion. Businesses that issue bonds find it
difficult to continue issuing rollover debt, issue new bonds, regardless of whether
they are good or bad businesses because the market has been frozen.
 In 2022, The money market is the same, liquidity is severely broken. After the
SCB bank incident, almost all banks lost confidence in each other, interbank
lending activities were broken, evidenced by interbank interest rates at times up to
10%. This break on the market 2 forces banks to mobilize on market 1 (the civilian
mobilization market) with interest rates up to 9-10%. This is a very risky thing for
the financial market.
 The stock market is similar, with 1/4 to 1/5 of liquidity at peak times, stocks
plummeted, investors sold at any price.
=> This leads to a serious liquidity break of the entire financial system, leading to a
break in the blood circulation of the economy.
4.3.2. The shut down of many businesses
The breakdown of the financial system will gradually be transmitted to the real
economy, which is the production and business activities of enterprises. When all
channels of capital for businesses no longer operate, it will affect their production and
business activities. If this situation is not resolved, then next will be a wave of business
closures, layoffs, output growth decline, and risk to the entire economy. In fact, up to
124,700 businesses had to close operations in the first 8 months of 2023. This number
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increased by nearly 15,6% compared to the same period.

5. Forecast 2023
5.1. Balance of Trade
 Although the first and second quarters were relatively gloomy due to the shortage
of orders from the main export partner - the US facing recession, but by July 2023,
Vietnam had a trade surplus of up to 16 billion USD - more than the cumulative
whole year 2022 (12 billion USD)

 Recent hot news is that the relationship between the United States and Vietnam
has been upgraded to a comprehensive strategic partnership. This is a historic
moment and will open a new era for Vietnam. Goods between VN and the US will
be easier to trade, many items will gradually meet the quality to be exported to the
US, helping to reduce the dependence of exports on FDI and create more added
value.
 SBV and the Government have continuously supported the economy since the
beginning of the year through monetary policy and expansionary fiscal policy:
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lowering operating interest rates, reducing VAT by 2%, … This has caused: The
exchange rate increase VND/USD is gradually increasing again because the US
has not stopped tightening their monetary policy. It is expected that from now until
the end of the year, the Fed will still have one more interest rate hike.
 The upcoming fourth quarter is the season of festivals for the US. A series of
holidays such as Christmas, New Year … Therefore, US imports always tend to
increase again from November and help VN export strongly in this period

=> Looking at the 4 factors above, the consumer demand of Americans will return
in the coming period. Thanks to that, Vietnam’s exports will gradually improve in the
fourth quarter, helping the balance continue to have a large surplus.
Semiconductors, footwear, textile especially will be the groups that benefit most
from this trend.
5.2. FII
- Positive view of VNIndex in short term:

 The market has many fluctuations in the short term but still in the sideway up. It is
expected that from now until the end of the year, VNindex will still follow this
trend.
 Regarding liquidity, the market has continuously set records since the end of June
with billion-dollar trading sessions.
 Deposit interest rates have dropped sharply, only 5-6%. Therefore, money is
gradually shifting from savings to higher-yielding investment channels such as
stocks.

Long-term:
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 The VN stock market is still striving to improve the missing factors with the
expectation of being upgraded to an emerging market in 2025. It is estimated that
VN will have 7.2 billion USD of investment each year - a super attractive level of
investment, if upgraded to an emerging market.
 The individual corporate bond trading exchange officially came into operation, the
KRX system is still in the process of being deployed and is expected to be
operational soon,… helping the market operate more efficiently.

However, FII is a high speculative item:

 Vietnam’s interest rate is lower than the Fed, money still flows back to the US
 Looking at the chart, it can be seen that foreign investors tend to buy when the
market drops sharply and sell to take profits when the market is in an uptrend.

 Since the beginning of the year until now, foreign investors have continuously
been net sellers, except for January and March. This number will continue to go
down when VNIndex is still expected to increase at the end of 2023.
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=> Currently, although Vnindex is still in an uptrend and has many prospects to continue
improving in the future, it no longer has an attractive discount as before. Therefore,
foreign investors will not disburse strongly in the coming period and FII this year will
still be gloomy.