Liechtenstein-based Lumen Vietnam Fund maintains positive outlook for Vietnamese stock market

Liechtenstein-domiciled Lumen Vietnam Fund has said it maintains a “positive outlook” for the Vietnamese stock market in the last months of 2024 and into 2025, given both external and internal driving factors.

In its September note, the fund said the global market has entered a new cycle of monetary easing, prompted by recent actions from the U.S. Federal Reserve and the People's Bank of China (PBoC).

Following the Fed's interest rate cut, the PBoC lowered its key interest rates to stimulate the economy and support capital markets. Other central banks have also joined in by cutting their rates. The State Bank of Vietnam (SBV) injected about $2.7 billion into the banking system via open market operations (OMO) in the last week of September.

At home, the economic outlook for Vietnam in the final months of 2024 remains optimistic, with several international financial institutions such as HSBC, Citibank, and Shinhan Bank having revised their GDP growth forecasts for Vietnam upwards.

“This positive macroeconomic trend is anticipated to positively impact corporate earnings in the coming 1-2 quarters,” the fund commented.

Furthermore, the Vietnamese government is taking proactive measures to achieve a stock market status upgrade. After an extended wait, on September 18, the Ministry of Finance approved a non-prefunding circular that allows non-prefunding transactions for foreign institutional investors. starting from November 2.

“While immediate foreign inflows might remain moderate, this regulatory reform is a significant step forward, instilling investor confidence in Vietnam’s market. It could also pave the way for an Emerging Market upgrade, with FTSE's review anticipated in September 2025,” said the fund.

The fund highlighted a turnaround in the foreign flow. Foreign investors net sold $93.6 million this month. However, excluding a one-off VIB transaction where a foreign account sold $108.2 million via put-through, foreign investors were net buyers of over $14.6 million.

The fund was also upbeat about the government’s efforts in reforming the legal framework. “Vietnam's economy has faced challenges due to regulatory bottlenecks, but the ongoing push for reforms by both the Party chief and the Prime Minister is a promising catalyst.”

Up to 12 laws are expected to be passed by the National Assembly in the upcoming session, which will further boost public investment, attract more FDI, and improve resource efficiency across all sectors of the economy.

It also noticed clearer signals from the real estate market. The recent success of Vinhomes Co Loa has alleviated concerns about liquidity and is expected to enhance Vinhomes' net earnings, thereby strengthening Vingroup's financial position.

“This progress, supported by the new leadership's proactive approach to economic growth and problem-solving, reduces the risk of a potential domestic economic shock in the future.” Lumen Vietnam Fund shared that it will maintain its strategy of a diversified investment portfolio of 30-40 stocks, with a particular focus on event-driven and special situations.

The key sectors of focus are: financial, real estate, industrial, energy, and consumer discretionary and consumer staples sectors.

Lumen Vietnam Fund recorded returns of 1.58% in September, bringing the year-to-date performance to 14.83%, on par with a 14.9% increase of the VN-Index, which tracks the Ho Chi Minh Stock Exchange.