Monthly Newsletter – October 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 September 2024, Vietnam’s economy recorded impressive growth, with many sectors achieving significant results that create momentum for development in the remaining months of the year. Bilateral trade between Vietnam and international partners continued to rise, contributing to the positive growth of total import-export turnover. The inflation rate remained stable, staying below the target level. Deposit interest rates of commercial banks remained stable, while foreign investment reached its highest level since the beginning of the year, and foreign M&A activities (share purchases) showed signs of recovery. The exchange rate experienced a slight decrease during the month.

GDP Growth
The Gross Domestic Product (GDP) for Q3 2024 is estimated to have grown by 7.4% year-on-year. Specifically, the agriculture, forestry, and fisheries sector increased by 2.6%, only surpassing the growth rate of Q3 2021 during the 2020-2024 period, contributing 4.1% to the overall added value of the economy. The industry and construction sector grew by 9.1%, contributing 48.9%, with the manufacturing sector being the highlight of the economy, growing by 11.4%—the highest growth rate for the same period in the last six years. The services sector increased by 7.5%, contributing 47.0%. For the first nine months of 2024, GDP is estimated to have grown by 6.8% compared to the same period last year. ASART raises its GDP growth forecast from 6.2% to 6.5% for 2024.


Source: GSO, ASART analysis

Inflation and Interest Rates
Inflation in September rose by 2.63% compared to the same period last year. The average inflation for the third quarter of 2024 increased by 3.48% compared to the third quarter of 2023. In total, inflation over the first nine months of this year rose by 3.88% compared to the same period last year, while core inflation increased by 2.69%. These figures indicate that the prices of goods and services continued to remain stable in September, and the inflation rate remains below the government’s target level.


Source: GSO, ASART analysis

By the end of September and beginning of October, deposit interest rates remained stable for state-owned commercial banks, while rates for private commercial banks increased slightly by 0.1% to 0.5%. At VPBank, the savings deposit rates rose by 0.2% across all tenors, with the 12-month rate set at 5.4% per year. SHB also adjusted its rates, increasing them by 0.5% for the 6-month term, now at 4.7% per year; and by 0.3% for the 9 and 12-month terms, with rates of 4.7% and 5.2% per year, respectively. Overall, 12 banks had increased their rates. This was the month with the fewest banks adjusting rates since early April.

Trade Activities
In September 2024, Vietnam’s total trade value is estimated to have reached USD 65.81 billion, representing a 10.9% year-on-year increase. Exports are projected at USD 34 billion, up 10.7% year-on-year, while imports are estimated at USD 31.8 billion, reflecting an 11.0% year-on-year increase. Consequently, the trade surplus for September 2024 is estimated at USD 2.3 billion. For the first nine months of 2024, the preliminary total import and export turnover reached USD 578.5 billion, an increase of 16.3% compared to the same period last year, with exports rising by 15.4% and imports by 17.3%. The trade balance recorded a surplus of USD 20.79 billion.


Source: GSO, ASART analysis

Investment and M&A
In September 2024, total Foreign Direct Investment (FDI) flows into Vietnam reached USD 4.26 billion, marking the highest level since the beginning of the year and accounting for 17.2% of the country’s total investment in the first nine months. By the end of September, the total registered FDI in Vietnam exceeded USD 24.8 billion, an increase of 11.6% compared to the same period in 2023, while the actual capital disbursed from FDI projects was estimated at around USD 17.3 billion, reflecting an increase of 8.9%.

Meanwhile, FDI M&A activities (share purchase) continued to decline sharply, recording 2,471 transactions with a total capital contribution of USD 3.6 billion, a decrease of 26.2% compared to the same period last year.


Source: GSO, ASART analysis

Exchange Rates
The offer USD/VND exchange rate (Vietcombank) at the end of September continued its downward trend, decreasing from 25,030 to 24,740, reflecting a 1.15% drop compared to the beginning of the month. The rate has remained stable with a slight decline, influenced by the weakening of the US dollar as the FED lowered interest rates in September.


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

M&A SPOTLIGHTS

Vietnam Consumer – Masan Group will acquire a 7.1% stake in WinCommerce from SK Group for a value of USD 200 million. Additionally, both parties have agreed to extend the exercise period of SK Group’s put option on MSN by up to 5 more years. – NutiFood, a company in the nutritional food sector, acquired a 51% stake in KIDO Foods, Vietnam’s leading ice cream producer. The deal value was not disclosed. Recycling – Cedo, one of Europe’s largest suppliers of private label household consumable products, acquired Vinatic, a high-quality sustainable waste management business, to expand its footprint in Vietnam. The deal value has not been disclosed.   Technology – LPBank is planning to acquire a 5% stake in FPT Corporation, with an estimated value of around 10 trillion VND (equivalent to over USD 400 million).

The World Technology – Qualcomm proposed acquiring Intel, but the negotiations remain unclear and may face antitrust hurdles. This deal could strengthen the competitive position of the U.S. in the semiconductor industry. – Salesforce acquired Own Company, a provider of data protection and management solutions, for USD 1.9 billion to accelerate the growth of its data security and privacy products. – Blackstone and Vista Equity Partners acquired Smartsheet, the enterprise platform for modern work management, in an all-cash transaction valued at approximately USD 8.4 billion. Healthcare – Malaysia’s IHH Healthcare is set to acquire 100% ownership of Island Hospital, a local private hospital chain, for USD 901 million. Logistics – DSV, The Danish forwarder has agreed to acquire DB Schenker from the state-owned railway company Deutsche Bahn for USD 15.85 billion, positioning it to become the world’s largest freight forwarder.” Telecommunications – Verizon has acquired fiber-optic internet provider Frontier Communications in an all-cash deal worth USD 20 billion, aiming to expand its subscriber.

RELEVANT NEWS & INFORMATION

Vietnam Vietnam strengthens bilateral relations and diplomacy – General Secretary and President To Lam and South Korean President Yoon Suk Yeol agreed to strengthen the Comprehensive Strategic Partnership between Vietnam and South Korea and aim for USD 150 billion in trade by 2030.   – President To Lam visited the United States from September 22-24 to attend the Future Summit and met with US President Biden, marking his first official trip in his new role. Then, President To Lam will make a state visit to Mongolia, Ireland, and France from September 30 to October 7, 2024. Vietnam secures major global investments – Samsung will invest an additional USD 1.8 billion in screen and electronic component manufacturing in Bac Ninh. – SpaceX plans to invest USD 1.5 billion in Vietnam to develop the satellite internet sector. – Polaris Inc., a leading US power sports vehicle manufacturer, has officially opened a USD 36 million factory in Ba Thien II Industrial Park, Vinh Phuc province. – The premium Chinese electric vehicle brand Zeekr, a subsidiary of Geely Holding Group, has partnered with Tasco Auto to enter the Vietnamese electric vehicle market. They are collaborating to build a Lynk & Co car assembly plant in Thai Binh province, Vietnam. – The Ministry of Industry and Trade proposes adjusting Power Plan VIII, including the development of small-scale nuclear power and increasing solar power capacity. – CS Wind, a leading manufacturer of wind towers from South Korea, signed an agreement with DongTam Group to build a USD 200 million win power equipment plant in Southeast Asia Industrial Park, Long An. – USD2.4 billion foreign investment registered in real estate in first eight months, over five times higher y-o-y, accounting 20% of USD 12 billion newly registered capital. Other public information – Typhoon Yagi is estimated to cause USD 1.6 billion in damage to northern provinces and could reduce Vietnam’s GDP growth for the year by 0.35%.   – The Ministry of Construction forecasts that rising land costs will lead to a 15-20% increase in housing prices in 2024.   – The State Bank of Vietnam has reduced the interest rate for collateralized lending (OMO) to 4% per year from the previous rate of 4.25% per year, which had been maintained since the beginning of August.   – The interbank VND interest rates have decreased significantly across all maturities under 1 month, and the interbank exchange rate has dropped for 8 consecutive weeks.   – Gojek, the Indonesian ride-hailing and food delivery platform, will stop its business operations in Vietnam starting from September 16th.

The World Global economic landscape – Intensifying geopolitical conflicts in the Middle East have caused global gold prices to reach new highs and oil prices to surge. – The Fed has cut interest rates by 0.5%, marking the first reduction since 2020, in an effort to prevent a decline in the labor market and support the U.S. economy. – Eurozone inflation dropped to a three-year low of 2.2% in August, prompting expectations of ECB interest rate cuts in September, and The European Central Bank (ECB) continued to cut interest rates by 0.25% on September 12, marking the second reduction this year. – China’s central bank (PBoC) will cut reserve requirement ratio by 0.5% and further reduce key interest rates to support the economy. – On September 18, the Bank of Indonesia cut interest rates to 6% for the first time in three years to support the economy as inflation has decreased to a low level. – Starting from September 25th, Thailand will distribute USD 4.4 billion in cash to its citizens in an effort to boost its economy and overcome the current average growth rate of just 2% per year.

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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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