Vietnam Business & Weather Briefing (Oct 23): Securities Stocks Likely to be Cheaper

Business Briefing

Gold rate

On October 23, the domestic gold price continued its upward momentum with the highest increase of VND 300,000 per tael.

SJC gold price in Hanoi and Da Nang is listed at VND 66.5 million/tael (buying) and VND 67.52 million/tael (selling). In Ho Chi Minh City, SJC gold is still buying at the same level but sold for VND 20,000 less. DOJI gold price in Hanoi is listed at VND 66.5 million/tael (buying) and VND 67.5 million/tael (selling).

Photo: Zing News

Stock news: Securities stocks likely to be cheaper

The group of securities stocks recently faced a sharper decline than the general market. Many stocks lost up to 70-80% from their peaks. Securities stocks are always the most sensitive group to the fluctuations of the general market. Due to the deep fall of the market over the past month, the market prices of securities stocks have plummeted by 30-40%.

The losses were even larger than the decline when the market hit a bottom during the outbreak of the Covid-19 pandemic. According to Agribank Securities Company (Agriseco), the group of securities stocks has very high volatility and is linked with the stock market’s movements that directly affect business activities. The stock market recently dropped sharply in terms of both liquidity and value, so significant losses in securities stock prices were expected.

In the short term, Agriseco believes that the selling force still weighs on the group and shows no sign of ceasing, therefore, it is still ambiguous to determine the bottom of the group at this time. However, when the market shows signs of recovery, the securities group may have a better bounce than other groups. The price-to-book (P/B) ratio of this group is currently around 1x. Although the ratio is much lower than in previous periods, it is a suitable level when the overall market is deteriorating.

With the volatility of the stock market in the third quarter, it is not difficult to forecast that all activities of securities companies will be affected. Brokerage revenue may drop dramatically due to the overall decline in both liquidity and value. The average transaction value in the third quarter was only VND 16 trillion per session (USD 658 million), a nearly 40% decrease over the same period last year. Some sessions even recorded an average transaction value of only VND 10 trillion. Gross profit plunged due to rising competition, and higher commissions paid to brokers, while transaction fees tend to be lower and lower.

According to Bloomberg, Vietnamese stocks fell to the lowest level in nearly 2 years as selling pressure weighed and overtook the market amid concerns about interest rate hikes. The VN-Index fell more than 18% in the past month, the biggest drop among stock indices globally. As the market is forecast to confront many difficulties, the profit prospects of securities companies in the near future are hardly positive. Therefore, many experts agree that an attractive valuation is not necessarily a confirmation of bottom formation.

Photo: Zing News

Growth forecast: Budget revenue forecast 14.3% higher than plan this year

Budget revenue was forecast to be 14.3% higher than the plan this year but the structure lacked stability as the increase was mainly from land-related revenue. According to the report presented by Minister of Finance Ho Duc Phoc to the National Assembly at the meeting on October 20, budget revenue in the first nine months of this year met 94% of the plan, of which, domestic revenue was equivalent to 88.9% of the plan while the revenue from crude oil and import-export was 11.3% and 8.8% higher than the plan, respectively.

Regarding budget spending, Phoc said that spending in January – September was estimated to meet 60.9% of the plan. The spending for investment and development was equivalent to 48.1%. For the full year, budget spending was forecast to be 14.1% higher than planned. The disbursement rate of public investment was expected at 96%. Vietnam was expected to run a trade deficit of 4.5% of GDP this year, which was within the National Assembly’s allowed limit, Phoc said. The Government would strive to increase budget revenue and enhance savings to reduce the level of overspending, he said.

Chairman of the National Assembly Finance and Budget Committee Nguyen Phu Cuong said that the structure of budget revenue still lacked stability as the increase was mainly from land-related revenue. Local budget revenues were also uneven among provinces and cities, together with problems in the decentralization of revenue sources between the central and local budgets, Cuong said. The disbursement of capital for investment and development remained slow, he added.

Regarding the budget revenue estimates for 2023, Cuong noted that the world was to continue facing increasing risks, uncertainties, difficulties, and challenges. The domestic economy was expected to continue the recovery track but inflation, increasing product costs, supply chain risks, weakening global demand, policy adjustments of major economies and major trade partners, as well as natural disasters would create pressure on the implementation of budget revenue and expenditure targets. The National Assembly’s Finance and Budget Committee urged the Government to develop the financial and budget plan for the 2023-25 period with practicality and feasibility.

Photo: Zing News

Export news: Sweet potato to be officially exported to China

China is considering the import of Vietnam’s sweet potato via official channels, with its customs officers scheduling a virtual survey of growing areas and packaging facilities in Vietnam this week. Unveiling the information, Le Van Thiet, Vice Director of the Plant Protection Department under the Ministry of Agriculture and Rural Development (MARD), said the department is negotiating the official export with the Chinese General Administration of Customs.

Sweet potato is one of Vietnam’s important agricultural products. Most of its plantations concentrate in the Mekong Delta province of Vinh Long’s Binh Tan district with more than 13,000 ha under the crop. In preparation for the official export, Vinh Long’s plant cultivation and protection have completed documents for 22 planting area codes, which together cover more than 500 hectares of sweet potato. The code, one of the factors for product traceability, is a necessary and mandatory condition to export fruits to China.

Thiet said after potato, negotiations for official export will begin for pomelo and coconut. Currently, Vietnam has 11 kinds of fruits that are exported via official channels to China. Of these fruits, Vietnam has signed with China protocols on phytosanitary requirements for three kinds, including mangosteen, passion fruit, and durian, according to VNA.

Photo: Zing News

Weather Forecast

October 24: The North will be affected by the continental cold high-pressure blade with a weakening intensity, resulting in a decrease in humidity. The Central region is affected by the southwest edge of this blade, leading to a slight change in humidity and temperature.

Rain will continue in the area from Quang Binh to Quang Ngai. The South Central Highland and Southern provinces will have rain in late afternoon.