{"id":69281,"date":"2020-06-05T08:19:00","date_gmt":"2020-06-05T01:19:00","guid":{"rendered":"https:\/\/yuanta.com.vn\/?post_type=phan-tich&#038;p=69281"},"modified":"2020-06-05T08:19:00","modified_gmt":"2020-06-05T01:19:00","slug":"tiger-in-the-making-ii-the-structural-growth-story-is-intact","status":"publish","type":"phan-tich","link":"https:\/\/yuanta-uat.ysvn.com.vn\/en\/analysis\/tiger-in-the-making-ii-the-structural-growth-story-is-intact","title":{"rendered":"Tiger in the Making II &#8212; The structural growth story is intact"},"content":{"rendered":"<p><a href=\"http:\/\/yuanta-uat.ysvn.com.vn\/wp-content\/uploads\/2020\/06\/Vietnam-Country-Outlook-Tiger-in-the-Making-II.pdf\">Vietnam Country Outlook &#8212; Tiger in the Making II<\/a><\/p>\n<p>What\u2019s new?<br \/>\n\u25ba COVID-19 and the US-China trade war have created a demand shock.<\/p>\n<p>\u25ba But demographics, urbanization, and increased wealth are incredibly strong long-term drivers.<\/p>\n<p>\u25ba FDI has fallen YTD, but will recover to new heights as manufacturers seek diversification from China.<\/p>\n<p>\u25ba But\u2026 Emerging markets Index inclusion is still probably a few years away.<\/p>\n<p>Market outlook<br \/>\n\u25ba Vietnam remains an attractive investment destination.<br \/>\n\u25ba The VNI has rallied 34% since the panic in March to just under 900 despite persistent foreign net selling.<br \/>\n\u25ba Our 2020 VNI target: 1000 points. But stock selection is crucial in Vietnam.<br \/>\n\u25ba Investors should focus on quality companies and think long term rather than trying to time the market.<\/p>\n<p>Structural growth story is intact<br \/>\nThe key thematic drivers of the Vietnam investment opportunity are still in place, in our view. Our 2019 report titled \u201cA Tiger in the Making\u201d presented four broad themes that support a highly positive long-term country outlook. But this was long before COVID-19 and the resulting economic shutdowns and political fallout sent the global economy\u2014and possibly globalization itself\u2014into a metaphorical ditch.<\/p>\n<p>Investors are now wondering if the structural fundamentals have shifted. In our view, they have not. Of course, the short term global and regional impact negative, but Vietnam is one of the few national that is still likely to post positive GDP growth in 2020. We also expect a sharper-than-average recovery in 2021E. This is after revisiting the four key arguments of our thesis to determine whether they remain valid:<\/p>\n<p>1) Surging foreign direct investment to transform Vietnam into the world\u2019s next manufacturing export powerhouse. Despite a YTD decline in FDI, we believe that COVID actually supports this story given Vietnam\u2019s successful response and the wider geopolitical fallout.<br \/>\n2) Multi-decade demographic dividend from Vietnam\u2019s young, well-educated,<br \/>\nand dynamic population. No change here \u2013 demographic momentum is incredibly powerful and not easy to shift.<br \/>\n3) Rapid urbanization and middle class growth. COVID has been a setback for wealth creation, but this is temporary rather than structural.<br \/>\n4) MSCI Emerging Markets Index inclusion may require patience. Limits on foreign ownership remain the core issue, not the disease or geopolitics. Although foreign investors have been persistent net sellers, we think this will reverse given the country\u2019s strong growth outlook.<\/p>\n<p>We remain bulls on Vietnam and continue to view it as an attractive long-term investment opportunity. However, stock selection is key, as ultimately high-quality companies tend to outperform the overall market. This is especially true in 2020 given the extremely limited visibility on global macroeconomic outcomes. Thus, we recommend focusing on stocks with strong balance sheets, high-quality management teams, solid cash flow, and preferably a domestic focus.<\/p>\n<p>Our top picks are VCB, VHM, KDH, and HCM \u2013 all of which are easy for foreign investors to buy and hold. Several other names are outside our official coverage universe but also tick the \u201cquality\u201d box, including VNM, HPG, and FPT.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Vietnam Country Outlook &#8212; Tiger in the Making II What\u2019s new? \u25ba COVID-19 and the US-China trade war have created a demand shock. \u25ba But demographics, urbanization, and increased wealth are incredibly strong long-term drivers. \u25ba FDI has fallen YTD, but will recover to new heights as manufacturers seek diversification from China. \u25ba But\u2026 Emerging&#8230;<\/p>\n","protected":false},"author":10,"featured_media":0,"template":"","class_list":["post-69281","phan-tich","type-phan-tich","status-publish","hentry"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.3 (Yoast SEO v23.4) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Tiger in the Making II -- The structural growth story is intact | Yuanta Vietnam<\/title>\n<meta name=\"description\" content=\"Vietnam Country Outlook -- Tiger in the Making II What\u2019s new? 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