The era of investment in infrastructure, especially roadsAt the webinar “DCVFM’s Talks: Where is the cash flow?”, Mr. Le Anh Tuan, Director of Dragon Capital Investment Consulting, said that there are 5 growth motivations of Vietnam’s economy: stable economic growth, supply chain movement, middle class growth, public investment and low interest rates. In particular, public investment and low interest rates are new motivations. Vietnam’s macro indicators in the first quarter were very good as GDP reached 4.5%, FDI registered capital of nearly 10 billion USD increased by 26%, import and export needles exploded after the pandemic increased by nearly 22%, inflation was at the lowest level in the last 5 years, while foreign exchange reserves increased. Vietnam has the third largest economic opening in the world and is gradually becoming a new global factory. At the same time, the middle class has also been formed very quickly and strongly.
According to leaders of Dragon Capital, Vietnam has many leading indicators in the world such as import-export growth, FDI attraction, growth of the middle class. However, the current state of infrastructure is still below average.
“While the power plants have just enough requirements, the sea route is temporarily okay, the road infrastructure is a serious issue that needs to be seriously dealt with, the same is the case for airways,” said Mr. Tuan.
Specifically, Vietnam has about 500,000 km of roads, but only 25% of them are of good quality. Transport costs are high compared to regional countries – about 20.8% of GDP, others only 8-13% of GDP. If Vietnam can improve this, it will be very competitive in the world. Aviation has exceeded capacity since 2015, 7/22 airports are always operating in a state of over capacity.
In the infrastructure development orientation of Vietnam in the period 2017-2040, the road will be focused over the next 20 years with demand up to 134 billion USD, far ahead of other types.
In the period of 2021-2025, a series of key projects with a total investment of 22.8 billion USD are outlined including Ben Luc – Long Thanh Expressway, North South Expressway, HCM – Thu Dau Expressway, Metro 1 Railway. HCM City, Long Thanh airport phase 1.
Currently, Vietnam’s public debt ratio is low, about 54% of GDP, budget deficit remains low, bond interest rates are low, and external debt is also low. Therefore, Mr. Tuan assessed that the capital source for public investment has never been an issue, but the issue of Vietnam lies in the determination of the Government.
Mr. Tuan said that the Government of Vietnam is well aware of the importance of infrastructure development, but public investment has almost gone sideways over time due to epidemics and anti-corruption issues, resulting in deposits in banks of about ten billion USD.
The political cycle is different now, however. Specifically, 2006 is said to be the beginning of the period of global integration, 2011 is macroeconomic stability, 2016 is to promote the private sector. By 2021, it will be the stage of infrastructure investment, with roads being the first focus.
In addition, the private sector is playing an important role in expressway investment, promoting the implementation process. Expressways implemented in the 2011-2018 period, this block only contributes 31%, while the expressways in the 2019-2020 period will increase to 77%.
Therefore, Mr. Tuan affirmed that infrastructure development is the driving force of economic growth for Vietnam in the next 5-10 years.
Real estate and the bank benefit
In terms of the stock market, foreign activities led the market in the period 2013-2019, but not anymore recently. Since the translation of Covid-19 took place up to now, foreign investors net withdrew nearly 3 billion USD, but the stock market still increased thanks to the booming period of individual investors.
Dragon Capital’s leaders said that, if counted on the top 1,600 enterprises on the floor today, the average income of employees is more than 10,000 USD; If considering the rural area, it is about 5,000 USD. When people’s income increases, in addition to rice and rice, people pay attention to financial investment products.
In addition, securities firms mainly in big cities, mainly HCMC and Hanoi, restrict people everywhere from opening stock accounts. When e-KYC was born, investors did not have to move much to open accounts, leading to a sharp increase in the number of new securities account opening recently.
The stock market’s upturn momentum is constrained by margin borrowing and the congestion system but will be resolved soon.
Equity of securities companies in the period 2017-2020 increased significantly but is still too small for the size of market liquidity leading to the situation that investors want to buy but have no money to buy. Mr. Tuan said that the problem will now be dealt with in 2021, the equity of securities companies is expected to increase this year by nearly 650 million USD (15,000 billion VND), resulting in an increase in the amount of money that can be borrowed on margin by VND 30,000 billion, which is an increase of 30-35%
Regarding the congestion of HoSE, along with the determination of HoSE, the Government and the participation of large corporations, Dragon Capital’s leaders expect that by August, it will be handled. If not, wait for the Korean system in the first quarter of 2022.
Investment advisory director Dragon Capital concluded that infrastructure investment will lead the stock market trend, while real estate and banking are the two sectors that benefit the most.
Real estate (Real estate) is the backbone of Vietnam’s economic development and is still very well. Mr. Tuan forecasts that 2021 is the year to start a new growth cycle with an increase in the number of real estate transactions, high absorption and stability.
Meanwhile, the quality of the banking system is shifting from bad to good. Therefore, investors can temporarily forget about bad debt and only care about how much profit the bank can generate. The banking industry is always the leading industry, accounting for about 28-30% of the VN-Index.
Source: ndh.vn – Translated by fintel.vn