Monthly Newsletter – November 2024

Dear valued clients and friends,

Each month we provide a market overview and pick out the M&A transactions, investment activities, regulation updates, and event highlights that we find relevant to your businesses to share with you in order to help you make informed decisions, solve problems, or gain a new perspective.  

Our execution, experience, and in-depth understanding of the market have assisted many of our clients in solving their most difficult problems, augmenting the right strategies, finding targets, connecting with investors, and closing deals successfully. So stay informed with us, and make the right decisions for your businesses and investments!

MARKET OVERVIEW
In October 2024, Vietnam’s economy sustained positive growth across all three key sectors. The agriculture sector continued its steady growth trajectory, while the industrial sector advanced robustly, with a 4% increase compared to September and a 7% year-over-year rise, leading to an 8.3% growth rate over the first ten months of the year. The services sector also performed well, with total retail sales of goods and consumer service revenue growing by 8.5%. Exports remained strong, resulting in a significant trade surplus. Macroeconomic stability persisted, with inflation under control and major economic balances maintained. Exchange rates and interest rates also held relatively steady. ASART maintains its GDP growth forecast for Vietnam in 2024 at 6.5%.


Source: GSO, ASART analysis

Inflation and Interest Rates
Food prices continued to rise due to the impact of storms, becoming one of the main factors pushing October 2024 inflation up by 0.3% compared to the previous month, 2.5% higher than December 2023, and 2.9% higher year-over-year. However, with the average inflation rate for the first 10 months of 2024 at just 3.8%, the target of keeping inflation under 4.5% remains well within reach.


Source: GSO, ASART analysis

Since the beginning of October, six banks have reduced interest rates, including Agribank, Techcombank, NCB, VPBank, CB, and LPBank, with a decrease ranging from 0.1% to 0.4%. In contrast, eight banks have raised interest rates slightly, including NCB, Agribank, Techcombank, MSB, LPBank, Eximbank, ABBank, and Bac A Bank, with an increase of 0.1% to 0.4% for both in-branch and online savings deposits across terms ranging from 1 to 60 months. Compared to September, the number of banks raising interest rates in October has decreased significantly, while the number of banks lowering rates has increased. Overall, while there have been opposite movements in interest rates, they remain within a stable range.

Trade Activities
In October 2024, Vietnam’s total trade value is estimated at USD 69.2 billion, representing a 13.4% year-on-year increase. Exports are projected at USD 35.6 billion, up 11.3% compared to the same period last year, while imports are estimated at USD 33.6 billion, reflecting a 15.9% year-on-year increase. As a result, the trade surplus for October 2024 is estimated at USD 2 billion. For the first ten months of 2024, the preliminary total import and export turnover reached USD 647.9 billion, an increase of 18.8% compared to the same period last year, with exports rising by 17.5% and imports by 20.2%. The trade balance recorded a surplus of USD 23.3 billion.


Source: GSO, ASART analysis

Investment and M&A
In October 2024, total Foreign Direct Investment (FDI) inflows into Vietnam reached USD 2.46 billion, accounting for 9% of the country’s total investment in the first 10 months of the year. By the end of October, total registered FDI in Vietnam exceeded USD 27.26 billion, a 1.9% increase compared to the same period in 2023, while the actual disbursed capital from FDI projects was estimated at approximately USD 19.58 billion, reflecting an 8.8% increase.

Meanwhile, FDI M&A activities (share purchases) continued to decline sharply, recording 2,661 transactions with a total capital contribution of USD 3.68 billion, down 30% compared to the same period last year. Of these, 966 transactions involved capital contributions to increase the charter capital of businesses, with a value of USD 1.87 billion, while 1,703 transactions involved foreign investors purchasing domestic shares without increasing the charter capital, amounting to USD 1.81 billion.


Source: GSO, ASART analysis

Exchange Rate
The VND/USD selling exchange rate (Vietcombank) at the end of October rose sharply, from 24,740 to 25,450, marking an increase of 2.87% compared to the beginning of the month. The rise in demand for foreign currency to support imports, combined with the State Treasury’s move to increase USD purchases since early October, has created a shortage of foreign currency supply in the market. Additionally, the balance of payments remains under short-term pressure (with a deficit of over 6 billion USD in the first half of 2024), which are the main factors driving the significant fluctuations in the exchange rate during October.


*Ask rate on the last day of the month
Source: Vietcombank, ASART analysis

INVESTMENT AND M&A SPOTLIGHTS

Vietnam Real Estate – Keppel Singapore will sell 70% of its stake in two major real estate projects, Saigon Sports City and Saigon Centre Phase 3, to Dai Phuoc and Vinobly, with an estimated total value of around USD 308 million. – Bitexco officially transferred 100% of its stake in Saigon Glory, the developer of the One Central HCM (Ben Thanh Quadrant) project, to Phuong Dong Real Estate Company. Pharmaceutical – Lotus Pharmaceutical acquired the leading anti-inflammatory product Alpha Choay in Vietnam and Cambodia from Sanofi for USD 50 million. The acquisition will include Sanofi’s trademark, marketing authorization, and manufacturing know-how. Technology – SK Group acquired 100% of Iscvina Manufacturing for USD 300 million, a South Korean company specializing in semiconductor manufacturing and trading, operating in Vinh Phuc province. – Singapore telco M1 Limited, a Keppel subsidiary, has acquired a 70% stake in Vietnam’s ADG for VND719 billion (USD 28.3 million) to expand in the Vietnamese IT sector. F&B – Sabeco will publicly acquire 43.2% of the capital in the Saigon Binh Tay Beer Group – Sabibeco for an estimated value of approximately USD 34 million, thereby becoming the parent company with an ownership stake of 65.9%.

The World Technology – Following Qualcomm, Apple and Samsung are also looking to acquire Intel to expand chip production and reduce dependence on current suppliers. – Siemens has reached an agreement to acquire Altair Engineering, a prominent provider of industrial simulation and analysis software, for around USD 10 billion. This deal will enhance Siemens’ position as a top technology company and reinforce its leadership in the industrial software sector. Retail Chain – Couche-Tard raised its offer for Seven & I Holdings to USD 47 billion, creating the largest M&A deal between a foreign company and Japan. Energy – Abu Dhabi’s ADNOC has reached an agreement to acquire German chemical company Covestro for USD 16.3 billion. This marks ADNOC’s largest acquisition to date and represents the biggest foreign acquisition by a Gulf state, as nations in the region aim to diversify away from oil in response to the global shift towards cleaner energy sources. Education – Neuberger Berman Private Markets, EQT, the Canada Pension Plan Investment Board, and other global institutional investors have completed the acquisition of Nord Anglia Education for USD 14.5 billion. Nord Anglia, a prominent global education provider, operates more than 80 schools across 33 countries.

RELEVANT NEWS & INFORMATION

Vietnam Vietnam strengthens bilateral relations and diplomacy – Vietnam established a comprehensive partnership with Mongolia to focus on national securities and cooperate in 7 fields including law, transportation, culture, sports, tourism, cybersecurity, science, education, and diplomacy, aiming to a deeper and trusted cooperation between the two countries. – Vietnam and Ireland have signed multiple memoranda of understanding to cooperate in areas such as cybersecurity, education, trade, environment, culture, arts, and national defense following General Secretary To Lam’s visit. – France became Vietnam’s 8th comprehensive strategic partner, focusing on defense, security, and cooperation in fields such as trade, science, diplomacy, culture, education, transportation, agriculture, and internal affairs, with the aim of deepening the bilateral relationship. – Prime Minister Pham Minh Chinh met with Lao Prime Minister Sonexay Siphandone on 8th October, reaffirming the strong Vietnam-Laos relationship and committing to enhance the comprehensive connectivity of the two economies, particularly in infrastructure, transportation, investment, and tourism. – ASEAN established a comprehensive strategic partnership with South Korea, emphasizing the enhancement of economic cooperation, focusing on connecting economies, and promoting collaboration in the fields of culture, tourism, education. – Vietnam and China have signed 10 important cooperation documents, including railway connectivity, human resource development, agricultural supply chains, economic cooperation, customs, media, education, and cross-border payments. – Vietnam and the UAE signed the Comprehensive Economic Partnership Agreement (CEPA) on October 28, marking Vietnam’s first free trade agreement (FTA) with a country in the Middle East. – Vietnam and Qatar sign multiple important cooperation agreements during PM’s visit. – Vietnam and Saudi Arabia have signed a Memorandum of Understanding on economic and trade cooperation to strengthen relations and facilitate business between the two countries. Vietnam secures major global investments – Trump Organization to develop USD 1.5 billion golf course and hotel project in Vietnam through partnership with a subsidiary of real estate developer KinhBac City (KBC). – South Korean industrial conglomerate Hyosung Group plans to inject another USD 4 billion into Vietnam. – Mitsubishi Estate, under Japanese conglomerate Mitsubishi, is set to invest JPY13.5 billion (USD 89.5 million) in two large-scale logistics facilities under its logistics facility brand Logicross. – German wind power group PNE AG to invest USD 4.6 billion into the 2,000-MW-capacity offshore wind farm in Binh Dinh province. – Chinese EV manufacturer Chery has obtained an investment registration certificate for a joint venture with Geleximco Group in Thai Binh province. The project, with an estimated total investment of USD 800 million, aims to complete the factory by 2026, targeting a production capacity of up to 50,000 vehicles annually. – Chinese battery manufacturer Gotion Inc. is set to invest USD 275 million in a lithium battery plant in Ha Tinh province. The facility is designed with a production capacity of 5 GWh per year. Other public information – General Luong Cuong was elected by the National Assembly as the Vietnamese President for the 2021-2026 term.   – Starting from October 11, 2024, the average retail electricity price will be 2,103 VND/kWh (excluding value-added tax). This adjustment represents an increase of 4.8% compared to the current average retail electricity price.   – Vietnam entered the Top 100 countries and territories with the highest Economic Freedom Index in the world for the first time, ranking 99th.   – Since the start of the year, SJC gold bars have risen 15.5 million VND (21%), and 9999 gold rings by 24.3 million VND (38%), marking the highest increases in 10 months. Since the start of October, the USD has been rising rapidly. Compared to the price at the beginning of the year, the USD has risen by 1,022 VND/USD, a 4.2% increase, and is growing at almost the same rate as in May.   – Vietnam’s AI market size reached 547.1 million USD in 2023, and it is projected to grow to 2.06 billion USD by 2032, with an annual compound growth rate of 15.8%.   – Temu, a prominent e-commerce platform owned by China’s PDD Holdings, launched in Vietnam. In Indonesia, Temu is currently banned to protect SMEs – the backbone of the economy, contributing 60% to GDP and generating 97% of jobs, from the threat of being “destroyed” by the influx of cheap products.   – The Russian nuclear energy corporation, Rosatom, will continue to support Vietnam in developing technology and training high-quality human resources, including experts, engineers, and skilled workers in the field of nuclear energy for peaceful purposes.

The World Global economic landscape – Members of the U.S. Congress proposed a bill to terminate Permanent Normal Trade Relations (PNTR) with China. China would face import tariffs similar to those imposed on countries without normal trade relations with the U.S., such as North Korea and Cuba.  – Japan’s largest convenience store chain, 7-Eleven, decided to close 444 stores and adjust its business model after receiving a USD 47 billion acquisition offer last week. – On October 17, the European Central Bank (ECB) cut its key interest rate for the third time, bringing it down to 3.25% amid weakening economic growth and inflation in the eurozone. – Russia’s GDP has increased by 3.6% this year, accounting for 3.55% of global GDP, surpassing Japan to become the fourth-largest economy in the world. The Central Bank of Russia (CBR) also raised the interest rate to 21%, the highest ever, to address high inflation driven by increased military spending.

EVENT HIGHLIGHTS
30TH ANNIVERSARY CELEBRATION OF THE AUSTRALIAN CONSULATE-GENERAL IN HO CHI MINH CITY

Last month, our Founder and CEO, Binh Le Vandekerckove, a proud Australian and RMIT alumnus, had the honor of attending the 30th Anniversary Celebration of the Australian Consulate-General in Ho Chi Minh City!

The event marked a significant milestone in the cooperative and friendly relationship between Vietnam, Ho Chi Minh City, and Australia, attracting many domestic and international delegates and business leaders.

In her opening remarks, Ms. Sarah Hooper, the Australian Consul-General in Ho Chi Minh City, reflected on the 30-year journey of the Consulate-General’s establishment and development. She expressed her heartfelt gratitude to the authorities, people, and businesses of Vietnam and Ho Chi Minh City for their attention, support, and invaluable contributions to the ever-growing relationship between the two countries.

A highlight of the event was the lively panel discussion titled “1994-2024: Then and Now,” where delegates and business leaders exchanged ideas, reflected on the past journey, and discussed future opportunities for collaboration.

On this special occasion, ASART extended our congratulations to the Australian Consulate-General in Ho Chi Minh City and wished that the relationship between Vietnam and Australia will continue to strengthen and flourish in the years to come.

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Disclaimer 
This newsletter is of general nature. It is for informational purpose only. It is not intended to serve as advice or recommendation, or to address the circumstances of any entity, individual, or matter. No one should rely and/or act on the information presented without appropriate professional advice from ASART. ASART accepts no liability for the content of this newsletter, or for the consequences of any actions taken based on the opinions and information provided. Where it contains statements, estimates, and projections with respect to the anticipated future performance of Vietnam, markets, companies, employees and related figures, such statements, estimates, and projections may or may not prove to be correct. There is neither representation nor guarantee made on the accuracy and completeness of the content presented. Any person or entity who uses this newsletter to form a discussion, decide, or perform any actions must verify all relevant matters including all the information and statements contained in this newsletter, and must rely upon their own enquiries, investigations, judgement rather than upon the information and statements contained herein. ASART does not accept responsibility for any information contained herein and disclaims all liability to any entity, person, and matter arising out of or in connection with this newsletter.

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