A.
Economic analysis of Vietnam (up to November 2024)
1. GDP Growth Rate
Gross Domestic Product (GDP) growth is a key indicator of economic health, as it
reflects the overall value of goods and services produced within a country, adjusted for
inflation. In recent years, Vietnam has demonstrated resilience and robust growth despite
global economic challenges, particularly those associated with the COVID-19 pandemic.
Chart 1.1 and Table 1.1. below shows the Vietnam’s GDP growth rate from 2011 to 2023.
Year GDP Growth Rate (%)
2011 6,24
2012 5,25
2013 5,42
2014 5,98
2015 6,68
2016 6,21
2017 6,81
2018 7,08
2019 7,02
2020 2,91
2021 2,58
2022 8,02
2023 5,05
Table 1.1. Specific rate of GDP growth in Vietnam in the period 2011-2023
(Source: General Statistics Office)
Chart 1.1. Vietnam’s GDP growth rate from 2011 to 2023 (Soure: Vnexpress )
After COVID-19 pandemic, Vietnam's economy experienced a strong recovery. In
2022, Vietnam achieved its highest GDP growth in over a decade, with an 8.02% increase,
surpassing $400 billion in GDP for the first time (Ministry of Finance, 2022). This growth
was driven by strong import-export activities, domestic consumption, and foreign direct
investment (FDI) (Ngo, 2022). In 2023, the economy grew by 5.05%, despite facing
unfavorable international and domestic conditions, including disruptions to supply chains,
rising prices, and energy and food security challenges. (Loi, 2023).
Reporting on the socio-economic situation in the third quarter and the first 9 months of
2024, the General Statistics Office announced that GDP in the first 9 months of 2024 is
estimated to increase by 6.82% over the same period last year. Of which, the agriculture,
forestry and fishery sector increased by 3.20%, contributing 5.37% to the increase in total
added value of the entire economy; The industrial and construction sector increased by 8.19%,
contributing 46.22%; The service sector increased by 6.95%, contributing 48.41%. The
Central Institute for Economic Management Research estimates that GDP in 2024 will
increase by 7.06%. The Ministry of Planning and Investment stated that with high efforts of
all sectors and the intensity of implementation in the last month, GDP growth in 2024 can not
only achieve the expected target of 7% but can also reach level higher than the target assigned
by the National Assembly.
2. Inflation
Chart 1.2. below shows the Vietnam’s average CPI rate from 2014 to 2023. Inflation in
Vietnam from 2014 to 2023 has a clear trend of fluctuations, reflecting changes in the
economic situation, especially before, during and after the COVID-19 pandemic. In the post-
COVID-19 period, from 2022 to 2023, CPI reached 3.15% and 3.25% respectively, achieving
the target of controlling inflation below 4% set by the National Assembly (Ngoc, 2023).
Chart 1.2. Vietnam’s average CPI rate from 2014 to 2023
(Source: VnEconomy)
Chart 1.4 below compared the difference between CPI in the first 11 months of 2024 and the
previous month. The Consumer Price Index (CPI) rose by 0.31% in January 2024, driven by
higher medical care, retail power, and domestic rice costs. The CPI rose by 1.04% in February
due to the Lunar New Year, which increased demand for goods and services. In March, the
CPI fell by 0.23% due to lower demand for food and food products. The CPI grew by 0.07%,
0.05%, 0.17%, and 0.48% between April and July as prices for rice, pork, gasoline, electricity,
and health insurance rose respectively. In August, the Consumer Price Index remained
unchanged. The CPI climbed by 0.29% in September, owing to high food prices and tuition
fees for the 2024-2025 school year. During the first nine months of 2024, the average monthly
CPI rose by 0.24%. In October 2024, CPI increased by 0.33% due to the increase in domestic
food, foodstuff, and gasoline prices following world prices, and the increase in rental housing
prices. In November 2024, CPI increased by 0.13% due to the increase in electricity prices,
rental housing prices, and housing maintenance materials. In the 11 months of 2024, the
average monthly CPI increased by 0.24% compared to the previous month (General Office
Statistics of Viet Nam, 2024).
Chart 1.3 The difference between CPI in the first 11 months of 2024 and the previous month
Source: Figures and Events Review of the GSO
Chart 1.4 below compared the CPI growth rate of months in 2023, 2024 compared to the
same period last year. In contrast to 2023, the CPI in the first five months of 2024 has tended
to rise steadily, from 3.37% in January to the highest level of 4.44% in May, as compared to
the same period last year. The CPI growth has tended to decline progressively from June,
going from 4.34% in June 2024 to 2.77% in November 2024. The CPI rose 3.69% in the first
11 months of this year compared to the same time last year. The primary causes include rising
domestic rice prices after export prices, natural disasters, floods, and increased demand from
consumers during Tet and holidays, as well as rising prices for pork; the housing, electricity,
water, fuel, and construction materials group also saw price increases.
Chart 1.4. CPI growth rate of months in 2023, 2024 compared to the same period last year.
Source: Figures and Events Review of the GSO
3. Index of Industrial Production
According to General Statistics Office of Vietnam, Index of Industrial Production (IIP) is an
important indicator, quickly reflecting the development situation of the entire industry in
general and the development speed of each product and product group, meeting the
information needs of State management agencies, investors and other information users.
Chart 1.5 below shows Industrial production index growth rate in the period 2012-2023
Chart 1.5: IIP growth rate in the period 2012-2023
Source: Figures and Events Review of the GSO
Vietnam's Index of Industrial Production (IIP) from 2012 to 2023 has experienced many
fluctuations, reflecting the development and challenges of the economy. In 2020, the Covid-
19 pandemic had a strong impact, causing the IIP to fall to a decade low of only 3.4%, due to
disruptions in supply chains and reduced consumer demand. In 2021, the IIP recovered
slightly, increasing by 4.7%, thanks to epidemic control measures and economic stimulus.
However, by 2023, the IIP will only increase by 2.84%, the lowest level in the past 10 years,
due to declining global consumer demand and pressure from rising raw material costs.
According to the report of the General Statistics Office of Vietnam (2024), the added value of
the entire industrial sector in the first 9 months of 2024 is estimated to increase by 8.34% over
the same period last year. In October, the monthly IIP increased by 4.0% over the previous
month and increased by 7.0% over the same period last year (General Statistics Office, 2024).
According to the Ministry of Industry and Trade of Vietnam (2024), the IIP in November
2024 is estimated to increase by 2.3% over the previous month and increase by 8.9% over the
same period last year. Of which, compared to the same period last year, the processing and
manufacturing industry increased by 11.2%; the electricity production and distribution
industry increased by 5.5%; the water supply, waste and wastewater management and
treatment activities increased by 6.7%; the mining industry alone decreased by 9.8%.
According to estimates by GSO, IIP will rise 8.4% in the first 11 months of 2024 compared to
the same period in 2023 (it climbed by 0.9% during that time). This includes the following:
the mining industry shrank by 7.3%, which reduced the overall growth by 1.2 percentage
points; the water supply, waste, and wastewater management and treatment industry increased
by 9.6%, which contributed 0.2 percentage points; the electricity production and distribution
industry increased by 10.2%, which contributed 0.9 percentage points; and the processing and
manufacturing sector grew by 9.7% (compared to 1.0 percent during the same period in
2023).
4. Unemployment Rate
Chart 1.6 below shows the number of people and unemployment rate of working age in the
quarters of 2022-2024
Chart 1.6: Number of people and unemployment rate of working age in the quarters of 2022-2024.
Source: Figures and Events Review of the GSO
The General Statistics Office reported that in the third quarter of 2024, the number of
employed individuals rose both quarter-on-quarter and year-on-year. Informal workers made
up over 60% of the total workforce nationwide. Unemployment and underemployment rates
among working-age individuals declined compared to the previous quarter and the same
period the previous year. Although the unemployment rate for youth aged 15-24 remained
elevated, it showed a decline relative to both the prior quarter and the same period last year.
(Pham, 2024).
B. Recommended Industries to Investment
1. Banking Industry
The banking industry is the backbone of the economy and also a pillar of the stock market.
This is one of the industry groups with a fairly good growth rate, considered a "king stock"
because it accounts for about 30% of market capitalization, so it has a great impact on the
general index. This is still an extremely important group, regardless of the circumstances
(Phan, 2024). Banks in Vietnam must operate in accordance with the law and under strict
supervision of the State Bank, so they have a very low bankruptcy rate. This is often one of
the safe choices of investors in the stock market (VNSC, 2024).
1.1. Advantages of the Banking industry
The first is a stable monetary policy and support for credit growth. The State Bank has been
maintaining a stable monetary policy to promote credit growth and support businesses. This
creates a favorable environment for the banking industry to continue to develop. In addition,
The Vietnamese Government has approved the "Strategy for the Development of the
Vietnamese Banking Industry to 2025, with a Vision to 2030", identifying the monetary and
banking system as the lifeblood of the economy, playing a key role in the national financial
system. This strategy creates a solid foundation for the long-term development of the banking
industry.
The second is digital transformation and sustainable development. In addition to
macroeconomic factors, the banking industry is also leading the trend of digital
transformation and sustainable development, opening up long-term growth opportunities. At
VPBank, this innovation strategy is being strongly implemented. For example, in 2024 and in
the coming year 2025, VPBank will focus on innovation strategies such as promoting digital
transformation and applying Generative AI in banking activities to improve operational
efficiency; promoting greening of the investment portfolio, increasing funding for green
projects (Huong, 2024).
1.2. Opportunities in investing in Bank stocks
According to the Analysis Center of VPBank Securities Company (VPBankS Research), in
the short term, bank stock prices will have certain fluctuations and shakes. However, profit
growth and therefore equity will gradually recover in the last quarter of the year and growth in
2024 will surpass the low base of 2023. Moreover, the banking industry is closely related to
the economy. Accordingly, VPBankS Research recommends that investors should accumulate
bank stocks for the long term; choose banks with good capital buffers such as BID, CTG,
VCB; MBB, VPB. Thus, with a long-term vision of 3-5 years, investors need to hold and
accumulate stocks of top banking groups (Minh, 2024).
In addition, a recent report by PSI indicates that the asset quality of the banking sector has
begun to improve as the bad debt ratio has decreased. In addition, steady economic growth
and low interest rates have increased demand for loans, thereby boosting credit growth in the
banking sector. According to the report, credit growth in the entire banking sector as of
December 7, 2024 reached 12.5%, and is forecast to exceed 14% for the whole year. In 2025,
credit demand will continue to increase, estimated at 15% thanks to economic recovery,
public investment and export growth, boosting capital demand for manufacturing, real estate
and construction enterprises.
Regarding bad debt, the bad debt ratio increased slowly in Q3/2024 and is forecast to decrease
slightly in Q4/2024 thanks to a positive economic outlook and efforts to handle bad debt. In
2025, banks' asset quality will improve thanks to rapid credit growth and good control of loan
quality, helping to reduce provisioning pressure and expand profit margins.
1.3. Risk in investing in Bank stocks
2. Technology Industry
According to analysts, the information technology industry has become a driving force in the
country's economy, playing a leading role in creating a foundation for the development of the
digital economy, digital society and digital government. In addition, with a population of
more than 100 million people and a working-age population of nearly 70%, the potential for
digital technology consumption in Vietnam is very strong (Hua, 2024). Therefore, this is a
potential option that investors should consider.
2.1. Factors driving the outlook for Technology industry
C. Recommend stocks for investment and Analysis
After a detailed evaluation, I have selected 2 stocks for customers to consider investing in.
The 2 large-cap stocks I have chosen are VCB (Bank for Foreign Trade of Vietnam) and CMG
(CMC Corporation). Of which, VCB belongs to the banking industry and CMG belongs to the
technology industry. These are 2 stocks that have been identified by many experts as potential
stocks in their industries and have the potential to grow well in the future.
1. Financial ratios of VCB (Bank for Foreign Trade of Vietnam)
1.1. EPS (Earnings per share)
EPS, or Earnings Per Share, is a measure of a company's profitability, reflecting the profit the
company earns for each outstanding share. EPS is often used to evaluate a company's
performance and compare companies within the same industry or across financial reporting
periods.
Table 3.1. below shows the EPS figures of VCB and other stocks in the banking industry over
the years 2020, 2021, 2022, 2023 and Q3 2024. All figures in this table are taken from
Vietstock.
Table 3.1: EPS figures of VCB and other stocks in the banking industry over the years 2020, 2021, 2022, 2023
and Q3 2024 (Unit: VND)
Based on the EPS data table of banks, it can be seen that VCB (Vietcombank) is the most
worth investing stock in the industry. First of all, VCB's EPS is always leading, significantly
higher than other stocks in the banking industry such as TCB, MBB, CTG, BID and VPB,
affirming the superior position of this bank. Not only that, VCB's EPS also maintains a steady
and strong growth momentum, from 4.975 (in 2020) to 6.507 (in 2023). Meanwhile, other
banks such as VPB or CTG have large fluctuations or significantly lower EPS levels. This
shows that VCB's business operations are not only effective but also very stable, suitable for
investors who prioritize safety and long-term potential. Thanks to this stability and
outstanding performance, VCB is a bright choice for any investor looking for a bank stock to
invest in.
2. P/E Ratio (Price-to-earnings Ratio)
The price-to-earnings (P/E) ratio is one of the most important metrics for evaluating stocks. It
is the ratio of a stock's market price to its earnings per share (EPS). It is a popular ratio that
gives investors a better sense of a company's value. A high P/E ratio suggests that investors
believe it has high growth potential, while a low P/E ratio suggests that growth is expected to
slow. A higher P/E ratio can be a sign of a company with superior growth prospects.
Table 3.2. below shows the P/E ratio of VCB and other stocks in the banking industry over the
years 2020, 2021, 2022, 2023 and Q3 2024. All figures in this table are taken from Vietstock.
Table 3.2: The P/E ratio of VCB and other stocks in the banking industry over the years 2020, 2021, 2022, 2023
and Q3 2024.
Based on the P/E data table of banks, it can be seen that VCB is an attractive investment
option thanks to its stable and reasonable P/E. In the period of 2020-2024, VCB's P/E
fluctuated from 12.34 to 14.85, reflecting investors' confidence and expectations for
sustainable growth of the bank. Compared to competitors such as BID or VPB, which have
highly fluctuating P/E, VCB shows outstanding stability. Meanwhile, although TCB and MBB
have lower P/E, this is associated with modest EPS growth rates, making them less attractive
than VCB. In particular, VCB's P/E is completely consistent with its industry leading position
and outstanding profitability, making this stock a safe and potential choice for both the short
and long term.
3. ROEA and ROAA
Table 3.3. below shows the ROEA and ROAA ratio of VCB and other stocks in the banking
industry in Q1, Q2 and Q3 2024. All figures in this table are taken from Vietstock.
Table 3.3: ROEA and ROAA ratio of VCB and other stocks in the banking industry in Q1. Q2 and Q3 2024.
From the table above, it can be seen that VCB's ROEA remained high through the first
quarters of 2024, reaching 5.07% (Q1), 4.57% (Q2), and 4.61% (Q3), higher or equal to many
other banks, while the ROAA index was also stable at 0.44% to 0.47%. Compared to
competitors such as VPB or TCB, VCB not only showed good efficiency in using capital and
assets but also had less fluctuations, ensuring safety for investors. This is a clear
demonstration of VCB's sustainable profitability and leading position in the banking industry.
