Macro/ Strategy

Manufacturing sector maintained the recovery momentum.

Follow the expansionary in June, the Index of Industrial Production (IIP) in July-2024 continued the growth with an increase of 11.2%YoY. Overall, for the first seven months of 2024, the IIP is estimated to increase by 8.5% compared to the same period last year.

The PMI in July 2024 also showed that manufacturing activities maintained their expansion momentum when recording at 54.7 points, unchanged from the previous month. Similar to June, the data in July showed that Vietnam's manufacturing sector continued to improve with impressive growth in new orders and expectations that new orders will continue to improve in the final months of the year.

Hot inflation data but expected to cool down at year end.

Headline inflation heat up as the reading spiked to 4.36%YoY in 07/2024. The rise in CPI was continued to driven by the high shelter and food prices while Vietnamese government started to raise the wages of public workers by 30% . Overall in 7M2024, CPI was climbed by 4.12%YoY.

However, educational cost which contributed by 0.5 percentage point in CPI will not have any impact on 4Q/2024.

VND strengthen should allow the State Bank of Vietnam to loose monetary policy.

After a period of aggressively sold USD intervention and cash withdrawal by SBV with the expectation of FED cut rate, the exchange rate in the free market has shown signs of cooling down.

We expect that as exchange rate and inflation cool down at the end of the year, the SBV will have more room to loosen and maintain interest rates at a reasonable level to support domestic enterprises to continue the recovery.