How Trump's presidency could affect Vietnam's economy, stock market

By Kha Moc, Thai Ha
Thu, November 7, 2024 | 9:36 am GMT+7

Donald Trump’s election as the United States' 47th President could have a strong impact on Vietnam's economy and stock market, say some Vietnamese analysts.

Steel products at a Hoa Phat factory. Photo courtesy of the company.

Steel products at a Hoa Phat factory. Photo courtesy of the company.

Nguyen The Minh, director of analysis at Yuanta Vietnam Securities, argued that Vietnam would face "many economic challenges".

"Most notably, Vietnam is considered by the U.S. as one that causes a trade deficit. This perception leads to import tariffs and anti-dumping measures as the country is still classified as a non-market economy with a large trade surplus with the U.S.," Minh told The Investor.

In the first 10 months of 2024, the U.S. was Vietnam's largest export market with a turnover of $98.4 billion, while China was the Southeast Asian country's largest import market with $117.7 billion, according to the General Statistics Office.

Currently, Vietnamese products that have very low import tariffs in the U.S. market are wood (0%), seafood (0%), and tires and tubes (4%). Meanwhile, textiles, steel, and galvanized steel are all subject to quite high levies, from 8-25%. Most of these products are not subject to anti-dumping tax.

But U.S. investigations into the origin of Vietnamese goods might become more stringent to ensure that Chinese businesses would not be able to avoid taxes via Vietnam.

On the other hand, reduced demand in the U.S. could cause cheap Chinese goods to flood into other markets, hurting industries in those regions, including Vietnam.

Another disadvantage comes from exchange rate issues. According to ACBS Securities, the Vietnamese dong (VND) in the short term is likely to face greater downward pressure because all the policies proposed by Trump could increase the value of the USD.

Measures such as tariffs on imports and corporate tax cuts are expected to strengthen the USD. In the short term, a stronger USD would increase the risk of depreciation for the VND. Additionally, if U.S. economic indicators remain strong, tax cuts could provide support for U.S. businesses and consumers.

However, higher import costs could cause inflation risks in the U.S., potentially slowing the Fed’s interest rate cuts. A prolonged period of high USD interest rates would increase pressure on VND.

If VND interest rates go north, it would affect the recovery ability of domestic businesses. Profits of the Vietnamese banking industry might be negatively affected. Businesses with high debt costs, especially USD debts, would be negatively impacted.

Minh expects that U.S monetary policies would be operated more flexibly under the Trump administration.

“President Donald Trump supports reducing interest rates, as shown in his policy proposals during the election campaign. I expect a cycle of strong interest rate cuts to support the U.S. economic recovery. Thereby, Vietnam would benefit. Vietnamese enterprises involving areas like seafood, textiles, furniture, stone and logistics would receive positive impacts,” he noted.

Besides, the U.S. raising taxes on imported goods would bring many advantages to Vietnam. Vietnam would benefit from a wave of FDI shifts, with the group most positively affected being industrial park developers.

Historic records show that in the 2018 U.S.-China trade war, President Trump’s decision to tax Chinese goods caused many businesses to move production chains out of China, and Vietnam was one of the destinations.

ACBS added that a number of export business groups that can prove the origin of their goods would benefit. Goods flowing directly or indirectly from China through Vietnam into the U.S. would also bolster profit growth for transportation and warehousing businesses.

Impact on Vietnamese stocks

Minh noted that VN-Index has gone through a trading period with low liquidity due to investor concerns.

“Let's look back at the previous U.S. presidential elections. Before the elections, the liquidity of VN-Index was low and it was less volatile, even negative. But after the elections with new U.S. presidents announced, the index always increased quite positively,” Minh said.

"In the short term, the index may be affected by strong fluctuations and corrections for a few sessions, but the trend is positive in the next few months, even within next year. VN-Index on Wednesday traded quite positively with a rise of 15.25 points,” he added.

However, Minh emphasized that President Trump is known for making many unpredictable decisions, therefore, the Vietnamese stock market might react negatively in the early stages.

Agreeing with Minh, experts from ACBS Securities believe that short-term risks for VN-Index and the Vietnamese stock market might be higher given the Trump administration.

This is mainly due to uncertainties that Trump may bring to the global economic and financial environment. Equity markets often treat uncertainty as “negative” at an early stage and only later could they assess its true impact, they added.

Donald Trump has won the 2024 election and will be President for a second time. Trump’s win marks a stunning political comeback for the former President and celebrity businessman after he lost in 2020 to Joe Biden. His first term as head of the White House is from 2016-2020.

Comments (0)
  • Read More
Elon Musk company okayed to pilot Starlink satellite internet service in Vietnam

Elon Musk company okayed to pilot Starlink satellite internet service in Vietnam

Vietnam has allowed the U.S.'s SpaceX to pilot Starlink low-orbit satellite internet service in the country on a pilot basis until January 1, 2031.

Industries - Wed, March 26, 2025 | 5:18 pm GMT+7

Danish toymaker Lego to open $1.3 bln Vietnam plant next month

Danish toymaker Lego to open $1.3 bln Vietnam plant next month

Denmark's Lego will officially open its factory in VSIP III Industrial Park in Vietnam's southern province of Binh Duong on April 9.

Industries - Wed, March 26, 2025 | 4:18 pm GMT+7

Top Singaporean firms earn high incomes in Vietnam

Top Singaporean firms earn high incomes in Vietnam

Singapore is the second-biggest foreign investor in Vietnam, with over $84 billion in registered investment capital as of end-January and many prominent investors raking in high incomes.

Companies - Wed, March 26, 2025 | 3:45 pm GMT+7

Vietnam, Singapore ink significant deals in Hanoi

Vietnam, Singapore ink significant deals in Hanoi

Vietnamese Prime Minister Pham Minh Chinh and his Singaporean counterpart Lawrence Wong on Wednesday witnessed the signing of many cooperation deals between agencies and enterprises of the two countries.

Economy - Wed, March 26, 2025 | 2:51 pm GMT+7

Vietnam's major policies are reshaping economic development

Vietnam's major policies are reshaping economic development

Major policies are reshaping Vietnam's approach to economic development, which focuses on science, technology, and private enterprises, said a leader at the Vietnam Chamber of Commerce and Industry (VCCI).

Economy - Wed, March 26, 2025 | 12:11 pm GMT+7

PM okays over $10 bln urban area project in central Vietnam

PM okays over $10 bln urban area project in central Vietnam

The over VND260.3 trillion ($10.16 billion) Cam Lam New Urban Area project in the south-central province of Khanh Hoa has received in-principle approval from Prime Minister Pham Minh Chinh.

Real Estate - Wed, March 26, 2025 | 8:58 am GMT+7

S Korea's KIM Fund raises stake in Vietnam's marine transportation firm VIPCO

S Korea's KIM Fund raises stake in Vietnam's marine transportation firm VIPCO

South Korea’s KIM Fund has increased its stake in Hai Phong city-based Vietnam Petroleum Transport JSC (VIPCO, HoSE: VIP) to 2.73%, making it the latter’s second-largest shareholder.

Companies - Wed, March 26, 2025 | 8:30 am GMT+7

Vietnam, Singapore seek cooperation chances in semiconductor industry

Vietnam, Singapore seek cooperation chances in semiconductor industry

The Vietnam Trade Office in Singapore, in collaboration with the Singapore Semiconductor Industry Association (SSIA), organized a hybrid seminar on Monday to introduce Vietnam's potential, advantages, and development strategies for the semiconductor industry.

Southeast Asia - Tue, March 25, 2025 | 10:55 pm GMT+7

OV intellectuals in UK suggest blueprint for Vietnam’s int’l financial hub ambition

OV intellectuals in UK suggest blueprint for Vietnam’s int’l financial hub ambition

Vietnam can rise as a major international financial centre, both regionally and globally, with a strategic vision that highlights transparency, a skilled workforce, modern infrastructure, robust financial markets, and strong international branding, the Vietnam Intellectual Society in the UK and Ireland (VIS) told visiting Vietnamese Permanent Deputy Prime Minister Nguyen Hoa Binh in a recent meeting.

Southeast Asia - Tue, March 25, 2025 | 10:55 pm GMT+7

Vietnam Deputy PM discusses financial center development with ECB

Vietnam Deputy PM discusses financial center development with ECB

Vietnam's Standing Deputy Prime Minister Nguyen Hoa Binh on Monday met with representatives of the European Central Bank (ECB) to discuss plans for the establishment of financial centers in Vietnam, as part of his working visit to Germany – the final stop in his European tour.

Southeast Asia - Tue, March 25, 2025 | 10:52 pm GMT+7

Indonesia keeps commitment on energy transition

Indonesia keeps commitment on energy transition

Indonesian Coordinating Minister for Economic Affairs Airlangga Hartarto on Monday affirmed that the U.S. decision to pull out of the Just Energy Transition Partnership (JETP) will not impact the other partners' commitment to it.

Southeast Asia - Tue, March 25, 2025 | 10:35 pm GMT+7

Malaysia’s electric vehicle sales surge

Malaysia’s electric vehicle sales surge

Malaysia’s automotive industry is gaining momentum, with electric vehicle (EV) sales soaring over the past two years and continuing to rise in 2025, driven by both domestic and international manufacturers.

Southeast Asia - Tue, March 25, 2025 | 10:23 pm GMT+7

Japan turns to Vietnam, Indonesia to tackle truck driver shortage

Japan turns to Vietnam, Indonesia to tackle truck driver shortage

Logistics and transportation companies in Japan have begun recruiting foreign nationals as drivers now that their industries qualify for a special employment visa amid a severe labor shortage.

Southeast Asia - Tue, March 25, 2025 | 10:19 pm GMT+7

Malaysia expected to achieve economic growth of 4.5-5.5% in 2025

Malaysia expected to achieve economic growth of 4.5-5.5% in 2025

The Malaysian economy is projected to expand between 4.5% and 5.5% in 2025, underpinned by resilient domestic demand and ongoing investment activity, despite external uncertainties, according to the country’s central bank Bank Negara Malaysia (BNM).

Southeast Asia - Tue, March 25, 2025 | 10:10 pm GMT+7

Singapore’s core inflation falls in Feb

Singapore’s core inflation falls in Feb

Singapore’s core inflation declined for the fifth straight month in February after falling sharply in January as most spending categories saw smaller year-on-year price increases.

Southeast Asia - Tue, March 25, 2025 | 10:01 pm GMT+7

China’s apparel giant 'unwinds' Texhong Industrial Park expansion in Vietnam

China’s apparel giant 'unwinds' Texhong Industrial Park expansion in Vietnam

China-headquartered Texhong, among the largest core cotton textile suppliers in the world, will “unwind” the expansion of its Texhong Industrial Park (Texhong Hai Ha Industrial Park) in the northern Vietnam province of Quang Ninh, the firm said on Monday.

Industrial real estate - Tue, March 25, 2025 | 9:28 pm GMT+7