Textile, retail, seafood, beer, oil and gas, securities, seaports and shipping, airport services, and aviation will be negatively influenced in the short term due to the epidemic caused by the new nCoV virus, according to the analysis of the SSI securities company. There are only 4 industries that may benefit from this epidemic, including pharmaceutical, information technology, electricity, and water.
On 3rd February, the SSI securities company announced its recent analysis of the impact of the nCoV epidemic on 23 industries. Estimating the influence of the virus on different sectors, the Investment Analysis and Consulting Center of SSI says that in the context of import playing an important role in the Vietnamese economy, any disruption coming from important suppliers such as China will become a challenge for the economic development of Vietnam.
>> Impact of novel coronavirus on Vietnam’s economy
Vietnam has closed several of its border gates with China (Lao Cai, Lang Son) until the upcoming 8th of February. This equals trade restrictions between China and Vietnam at a certain level. On the other hand, Vietnam has implemented a visa restriction for guests from areas in China seriously affected by the corona virus.
With the aforementioned development, SSI experts state that agricultural products export and tourism will have to suffer, at least in the short term. Out of the 23 industries surveyed, 9 were reported to be negatively affected by nCoV. Meanwhile, only 4 of them would gain profit, including pharmaceutical, information technology, electricity, and water.
For example, in the textile and apparel industry, SSI says that the epidemic does not have a direct impact on the demand for garment products, however, the slowdown of China's GDP could have a negative impact on the long-term consumption. Besides, the production and business activities of Vietnamese textile enterprises would be negatively affected as many textile factories in China would remain close in January and February. This poses a big problem as currently, China is the largest market of raw materials for Vietnam.
Regarding the retail industry, there will be a decrease in the amount of shopping done by people as consumers are refrained from coming to public places to limit the chances of being infected, and consumption will shift to other necessary healthcare products instead of things like ICT. However, the consumption habit may shift from traditional commerce (traditional market) to modern commerce and online shopping to ensure hygiene.
Regarding seafood, SSI forecasts that export to China might decrease due to the out-of-home consuming habit being directly influenced by the Corona virus. Last year, the Chinese market accounted for 16.5% of the total fishery export, 16.1% of the shrimp export, and 33% of the catfish export of Vietnam. Moreover, the long Lunar New Year holiday may affect the export revenue in the first quarter of 2020.
In terms of the beer industry, SSI thinks that in addition to the negative impacts caused by the 100 Decree on restricting the drawbacks of alcoholic beverages, the beer consumption demand will also be severely damaged as consumers avoid coming to public places and out-of-home spending.
Notably, regarding securities, SSI says that the market mentality will be negatively affected in the short future. However, if we can control the epidemic, the market will immediately recover, as it has done in the past. Nevertheless, this company still keeps its neutral opinions regarding the securities industry in 2020.
Regarding ports and shipping, as consumption in China may be negatively affected in the short term due to concerns about virus outbreaks, SSI believes that exports to China will be adversely affected in the first quarter of 2020. This will negatively affect the volume of goods transported through seaports in Vietnam. E-commerce and courier demand are expected to increase sharply as people restrict going out in the near future.
Airport services related to cargo and passengers will be affected. Passengers from China accounted for about 40% of Vietnam's total passengers in 2019, and this number will plummet in the short term. Freight activities related to China will also be reduced due to lower demand from Chinese consumers and limited production.
According to SSI, all airlines can be negatively affected by the Virus incident, because travel demand may be reduced, especially in tourism activities related to China.
>> Vietnam’s import & export interrupted amid coronavirus outbreak