Macroeconomic outlook. GDP growth of 6.8% through 9M 2024 exceeded our expectations at the start of the year, led by recoveries in exports, inbound tourism and foreign direct investment, and we upgraded our 2024F GDP growth forecast to 6.9% in October. Despite the risks to external trade if incoming US President Donald Trump raises import tariffs in 2025, we raise our 2025F GDP growth forecasts from 6.8% to 7.2% in anticipation of more supportive fiscal policy in Vietnam, following the recent announcement of a 30% increase in the 2025F public investment plan. We forecast 7.5% GDP growth in each of 2026F and 2027F, led by further expansionary fiscal policy and ongoing recovery in the real estate sector and consumption.

Corporate earnings. We continue to forecast a strong recovery in corporate earnings growth in 2024/25 based on our aggregate bottom-up forecasts for HSX-listed stocks under our coverage of 15% for 2024 and 22% for 2025.

Interest and exchange rates. We expect the USD/VND exchange rate to remain stable in 2025/26/27. The US presidential election result could continue to support the DXY Index in first quarter of 2025 and could limit Fed rate cuts to some extent. However, according to Bloomberg consensus forecasts, the DXY US Dollar Index will gradually decline toward end-2025 and 2026. In addition, we continue to expect solid foreign inflows into Vietnam from FDI, remittances, a merchandise trade surplus and a narrowing services trade deficit to support the SBV in managing the USD/VND exchange rate. This should enable the State Bank of Vietnam (SBV) to accumulate FX reserves and maintain policy rates at relatively low levels by historical standards.

Valuations. VN-Index P/E and P/B valuations are below their ten-year historical averages and look undemanding vs ASEAN and global emerging market peers.

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