Hanoi (VNA) - Vietnam is poised for strong growth in the second half of 2024, driven by a rebound in the global electronics cycle and continued positive foreign direct investment (FDI), according to economists of HSBC Vietnam.
HSBC Global Private Banking’s mid-year investment outlook report released on June 27 indicates expectations that factors such as improved global economic cycles, expanded profit growth, and central banks cutting interest rates will bring many investment opportunities.
According to the report, Vietnam is on a steady path to recovery, bolstered by the global electronics cycle.
In a recent survey, 60% of businesses operating in Vietnam responded that they plan to invest in technology and digitalisation of their existing business, with the focus on digital payments, e-commerce, and AI. Those companies believe that adopting and enhancing digital services will help them meet customers' expectations for digital convenience and improve efficiencies.
In this context, capital has become the lifeblood of innovative companies. Against that backdrop, HSBC has enhanced its offering to digital-economy companies, launching a dedicated 1-billion-USD ASEAN Growth Fund that can help finance platform companies with a proven track record in generating sustainable cash flows, even if they do not meet traditional financing criteria.
HSBC’s recent survey of businesses operating in ASEAN shows that 74% of whom intend to increase their investment in the region in 2024.
The acceleration of digitalisation in the region has been boosted by government programmes, from Singapore to Indonesia, Vietnam, Thailand, the Philippines and Malaysia.
Vietnam continues recovery path
According to HSBC experts, the latest Purchasing Managers' Index (PMI) of Vietnam continues to show an expansion in manufacturing.
Notably, electronics exports are performing exceptionally well. Meanwhile, the outlook for FDI remains strong due to Vietnam's appeal as an investment destination. Domestic spending presents a diverse picture, with tourism showing signs of recovery and being likely to achieve the goal of 17-18 million visitors this year.
However, the report said despite these positive trends, inflation remains persistent and is approaching the State Bank of Vietnam (SBV)'s ceiling of 4.5%. The Fed's delayed interest rate cuts have strengthened the US dollars in the short term, causing volatility for the Vietnamese dong.
According to HSBC, depending on global central bank directions, the SBV may maintain a cautious stance on its interest rate policy.
HSBC's report is also optimistic about Vietnam’s capital market, saying that the stock exchanges has been one of the better-performing markets in Asia so far this year.
James Cheo, Chief Investment Officer for Southeast Asia and India at HSBC Global Private Banking and Wealth said “Equity valuation is still undemanding. Corporate earnings remain resilient recovering from the trough in 2023.”
The equity market uptrend can be sustained if earnings remain strong, he added.
In late April, HSBC raised its GDP growth forecast for the last two quarters to 6.2% each. For the full year 2024, the bank predicts Vietnam's economy will expand by 6%, matching projections from the International Monetary Fund (IMF) and the United Overseas Bank (UOB)./.
