The first few months of the year which are full of struggles caused by the effects of COVID-19 have made the investment prospects of several industries change majorly.
The Bank of Investment and Development of Vietnam Securities Company (BSC) has published its report updating notable investment themes in the second quarter and the whole of 2020.
After the National Assembly passed the undertakings of changing the investment for, The Prime Minister has instructed to speed up the procedures so that it can start construction in August 2020. BSC notes that in the case of the old PPP investment form, the earliest commencement time would be in January or February 2021.
The total investment of 11 North-South expressway projects and aviation-related projects such as Long Thanh airport is 129,073 billion VND, accounting for 18.4% of the total realized public investment capital from the State budget in 2020.
The total public investment capital from the State budget is estimated to be approximately 700,000 billion VND, 2.2 times higher than the realized capital disbursed in 2019. BSC believes that public investment in 2020 is expected to improve significantly faster than it is previously expected.
Some industries and businesses can benefit directly from a public investment such as steel (HPG, HSG), cement (HT1), building materials group (KSB, CTI), construction (LCG, C4G, HBC, CTD), electrical construction (PC1), asphalt (PLC) and some industries that will indirectly benefit from the implemented infrastructure like real estate (DXG, NVL, DIG, NLG) and industrial park (GVR, D2D, SZL).
According to the expected divestment list in 2020, SCIC is expected to divest in 85 joint-stock companies. Some high-value investments can be paid great attention to such as Steel Corporation - VNsteel (94% of capital), Vinatex (53% of capital), BMI (51% of capital), BVH (3% capital), FPT (6% capital), NTP (37% of capital), TRA (36% of capital) and DMC (36% of capital). BSC expects SCIC to accelerate the divestment process to help increase the contribution to the State budget.
With the impact of the epidemic for domestic investors to prepare resources as well as balance the portfolio, MSCI has put back the deadline to upgrade Kuwait to emerging markets by November 2020 instead of May 2020 as before.
Therefore, the proportion of Vietnamese stocks in the frontier remains, leading to a narrowing of the expectation of attracting foreign cash flow from this increase. However, we can still expect the possibility of a Vietnam mutation being upgraded in 2021.
According to BSC, the prospect of a banking group will no longer be as optimistic as the beginning of the year. If the epidemic is well controlled in the second quarter of 2020, the banking sector can maintain a double-digit profit growth rate of 16.5%.
Credit growth, according to BSC, will be at 10.5% and NIM may be affected by the support provided to affected businesses and the deadline for a listing schedule of banking group will be based on the project "Restructuring the securities market and insurance market until 2020 and orientation to 2025". Similarly, the retail sector will be affected by social distance and changing consumer habits.
On the positive side, the declining oil price supports the business activities of businesses and consumers thanks to the decline in raw materials in the same direction as oil prices.
Some groups of businesses that can be directly benefited from oil prices include fertilizer (DPM, DCM) with gas price as one of the main fuel sources, tires (DRC, with rubber being the input raw materials), chemicals (DGC, CSV), plastics (NTP, BMP), steel (Iron ore prices), and cement (Coal).
BSC notes that the price movement of other groups of materials is relatively correlated with the price of oil, and the movement of these commodities largely depends on the supply-demand of that product.
China is considered the factory of the world, where the global supply chain has been broken by the disease that interrupts the production of businesses. As factories recognize the need for diversification (location, product portfolio), reducing the dependence on a country like China, businesses are planning to move to neighboring countries.
With the advantages of geographical location, cheap labor costs, tax incentives of the Government, and attracting FDI from economic agreements, Vietnam is expected to be an attractive destination in this shifting chain. Some industries will benefit significantly, including construction and infrastructure (KSB, CTI, C4G, HBC, CTD, etc.), industrial real estate with enterprises with large land bank ready to welcome new opportunities (KBC, BCM, IDC, GVR, PHR, etc.)
BSC notes that this process may slow down in 2020 due to the Covid-19 epidemic, causing fieldwork and surveys to be delayed, then later, the movement wave will continue to accelerate and attract new investment capital to Vietnam, and businesses (infrastructure, real estate industrial zones, construction, ...) will have positive long-term prospects.
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