Kenno Vietnam Pulse | October 2024

Kenno Vietnam Pulse | October 2024

As Vietnam continues to thrive among Asia’s top destinations for foreign investment, Kenno remains committed to keeping its global audience informed about key developments through the 'Kenno Vietnam Pulse' series.

In October 2024, Vietnam set a new target for annual GDP growth, driven by a rebound in production and export sectors. The country entered a free trade agreement with the UAE, launched its first commercial 5G network, saw a significant boost in FDI, and elected a new State President.

Click here to read this full article on Kenno's website, or continue below if you prefer to stay on LinkedIn.

Macroeconomic Highlights

Since the start of 2024, Vietnam's export and manufacturing sectors have shown continuous recovery. Official statistics released on October 6th revealed that GDP growth rates exceeded expectations, reaching 7.4% in Q3 and 6.8% for the first nine months of 2024. In response, the Prime Minister of Vietnam set a target of 7.5%-8.0% GDP growth for Q4 to achieve an annual growth rate of 7.0% for 2024. Several banks have also raised their GDP growth estimates for Vietnam.

New GDP growth rate estimates for Vietnam in 2024 from various banks, compiled by Kenno.

As anticipated last month, the disruptive impacts of Typhoon Yagi on Vietnam’s economy proved short-lived. Notably, the production sector showed signs of rebounding, with the PMI rising from 47.3 in September to 51.2 in October.


Vietnam-UAE Free Trade Deal Established

In October 2024, Vietnam signed a Comprehensive Economic Partnership Agreement (CEPA) with the United Arab Emirates (UAE), concluding a year of negotiations and marking Vietnam's first free-trade agreement with a Middle Eastern country.

The CEPA covers various areas, including trade in goods, trade remedies, customs, sanitary measures, government procurement, intellectual property, and legal and institutional affairs. Notably, the UAE will remove tariffs on 99% of Vietnamese exports, while Vietnam will eliminate tariffs on 98.5% of UAE exports.

Vietnam Prime Minister Pham Minh Chinh (left), met with UAE President Sheikh Mohammed bin Zayed Al Nahyan, during his official visit to the UAE. Source: Vietnam News Agency

In the first nine months of 2024, the trade value between Vietnam and the UAE totalled approximately USD 5.0 billion, with Vietnam achieving a trade surplus of USD 3.7 billion. During this period, Vietnam’s exports to the UAE reached USD 4.3 billion, increasing 43.7% year-over-year.

Currently, the UAE stands as Vietnam’s largest export market and most prominent trade and investment partner in the Middle East. This agreement is expected to strengthen Vietnam's connections to Western Asia and Africa as well.

Additionally, under the agreement, both countries have committed to advancing digital transformation and green development initiatives. These goals are critical for future-proofing Vietnam’s emerging economy and attracting increased foreign investment.

With manufacturing and export central to Vietnam’s GDP growth, we at Kenno believe that enhanced trade will also drive local demand and consumer markets, positively impacting our investment focus on domestic consumption.


Vietnam’s First 5G Network Launched by Viettel

After five years in development and a three-month test phase, Viettel Group has launched Vietnam’s first commercial 5G network and mobile packages. Offering speeds up to 10 times faster than 4G and near-zero latency, 5G will support high-value industries such as AI, IoT, and advanced manufacturing— key components of Vietnam’s evolving digital economy.

Viettel’s official 5G network launch event took place in Hanoi. Source: Vietnam Government Portal

Following the recent 2G network shutdown, this infrastructure update is expected to accelerate the domestic transition to 5G-compatible devices. As consumers upgrade, demand in Vietnam’s electronics and telecommunications sectors is likely to surge, benefiting companies in the technology supply chain and fostering local production of advanced electronics.

For Vietnam, 5G will be instrumental in supporting its shift from low-cost manufacturing to higher-value technology and industrial sectors, in line with the country’s goals for digital and sustainable development. The large-scale coverage of next-gen connectivity is expected to boost productivity, expand e-commerce, and attract investment in supporting industries.

At Kenno, we view 5G adoption as a positive signal for growth across our portfolio, particularly in electronics retail and high-tech sectors including AI. Vietnam has been the fastest-growing digital economy in ASEAN over the past two years, and currently has over 18% of its GDP driven by digital sectors. The country’s digital economy is set for even stronger growth by 2030 with rising income, higher urbanisation, and the dominance of a digitally native generation.


Hyosung's $4B Investment in Vietnam Fuels Growth

On October 14th, Hyosung Corporation announced a significant USD 4 billion investment in Vietnam, bringing its total investment in the country to USD 8 billion. Hyosung, a diversified conglomerate involved in chemicals, industrial machinery, IT, trade, and construction, is currently the third-largest South Korean investor in Vietnam, following Samsung and LG.

Vietnam Prime Minister Pham Minh Chinh (right) welcomed Chairman Cho Hyun-joon of Hyosung Group in Hanoi. Source: Vietnam Government Portal

In the first nine months of 2024, Vietnam saw a continued rise in foreign investment, with total registered FDI reaching USD 24.8 billion, up 11.6% year-over-year. This latest major inflow from Hyosung further indicates global confidence in Vietnam's stability and potential as a growing manufacturing hub in the APAC region.

Hyosung is directing its investment into various sectors, including data centres, high-tech materials, aviation biofuel, and carbon fibre manufacturing. Additionally, it has invited the UAE's Abu Dhabi National Oil Company (ADNOC) to form a three-way partnership in Vietnam, focusing on clean energy. This collaboration is expected to not only foster opportunities in supporting industries like high-tech materials and infrastructure, but also attract further investment from the Middle East to Vietnam.

Kenno analysts believe this international partnership signals growth potential across multiple sectors, particularly in industrial real estate, technology, and consumer goods. Specifically, developers of industrial parks and ready-built facilities stand to benefit from this development. Industrial expansion is also expected to drive local job creation, income, and consumption.


Vietnam Elected New State President

Vietnam has recently appointed Luong Cuong, a permanent member of its Secretariat, as the new State President for the term ending in 2026. This election is expected to further solidify Vietnam’s political stability, bolstering economic growth and attracting foreign investment.

President Luong Cuong takes the oath of office at a National Assembly ceremony in Hanoi. Source: VnExpress

As head of state, representing Vietnam in both foreign and domestic affairs, the President plays a crucial role in maintaining political balance and upholding international commitments. With this key leadership position filled, Vietnam is well-positioned to build upon its stable governmental structure and robust economy, fostering a more favourable business environment.

We believe that strengthened governance and trade relations will enhance the outlook for Vietnam’s manufacturing and export sectors, as well as other critical industries, thereby driving demand for local suppliers and services.


Stay in the know!

And that’s a wrap for this month’s edition of Kenno Vietnam Pulse. We hope you enjoyed reading and found valuable insights into Vietnam’s market landscape. Feel free to subscribe to our monthly newsletter via our website for timely, factual, and actionable updates directly in your inbox each month.

Should you need a closer look at investment opportunities in Vietnam, we invite you to connect with us for more information and tailored advice. Simply send us a DM on LinkedIn or reach out via [email protected].


Disclaimer:

This document is prepared by Kenno Asset Management Pte. Ltd. ("Kenno"), the investment advisor for the Asia Top Picks Fund which is open only to professional investors. This marketing communication does not constitute investment advice. Please refer to Kenno’s official fund documents before making any final investment decision.

The information provided in this document is accurate as of the time of writing. Kenno does not guarantee the ongoing accuracy or completeness of this information and is not responsible for updates or changes after publication.

Paul Durrant

Co-Founder and CEO at Conduit Group

4 个月

Thanks, Mikael.

Duy Nguyen

Full Digitalized Chief Operation Officer (FDO COO) | First cohort within "Coca-Cola Founders" - the 1st Corporate Venture funds in the world operated at global scale.

4 个月

??

Mikael Nastamo

Chief Executive Officer | Kenno

4 个月

Well done Minh Diep! ??

要查看或添加评论,请登录

Kenno的更多文章