by A member of VIETCOMBANK

MACROECONOMIC RESEARCH APRIL 2019

CONTENTS

1 GROWTH

2 INFLATION

3 EXCHANGE RATES

4 INTEREST RATES

5 BOND MARKET

2
 HIGHLIGHTS

The production index of the industry sector increased by 9.2% over the same period last year, but lower than 10.7% in
2018. GDP growth Q1.2019 is forecasted to vary from 6.74%-6.82%.
 FDI enterprises are still the drivers of economic growth but the speed is no longer phenomenal.
 Major projects in operation continue to be the bright spot contributing to the growth.
 Stable contribution of the agricultural sector.
 The growth in aggregate demand for goods and services continues to be maintained.

CPI in May is expected to grow by 0.3% - 0.5% due to the rise of gasoline and electricity prices.
At the end of April, the central exchange rate rose by 0.89% ytd, exchange rates at commercial banks went up slightly at the end
of the month. We believe that exchange rate is vulnerable to upward pressure when global market is surrounded by uncertainties.
However, we still keep VND devaluation against USD at below 2% regarding the reference exchange rates stated by SBV.
Credit growth as at April 17th reached 3.23%. The draft amendment of Circular 36 made a significant impact on our forecast of
deposit rates. VCBS adjusted the forecasts for the increase of deposit interest rates for 2019 to 80 points compared to that of
increasing 50 points at the end of the year as mentioned in the previous reports.
Bond market: Expected that the yields in May as well as in Q2.2019 shall experience minimal change. There is likelihood that
upward pressure on bond yields will heat up in Q3.2019.

© VCBS Research Department ǀ May - 2019 VCBS Research 3

 GROWTH
PRODUCTION INDEX CONTINUED TO GROW.
The production index of the industry sector increased by 9.2% over the same PMI for production industry
period last year, but lower than 10.7% in 2018. 57

56
 The processing and manufacturing industry continued to grow by 10.9%, contributing
55
8.3 percentage points to the overall increase, continued to play a leading role.
54
 Production of electronic products, computers and optical products increased by 1.9% 53
(same period last year increased by 23.6%). Contribution tends to shift from 52
electronics, phone segments to other segments. 51

50
There is a certain shift in the structure of growth contribution (1) between FDI
49
and other enterprises; (2) among sectors within the same FDI sector.

Industrial production index in 4M.2019 compared to the same period last year
PMI ngành sản xuất (Theo HSBC) Ngưỡng PMI 50
of some provinces with large industrial scale is as follows: Hai Phong (+23%);
Quang Ninh (+13.2%); Vinh Phuc (+12.9%); Hai Duong (+9.5%); Dong Nai
(+7.8%); Quang Nam (+7.7%);

PMI in April reached 52.5 points, showing improvement in production

segment compared to Q1.2019.

© VCBS Research Department ǀ May - 2019

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Source: GSO, CEIC , VCBS Research
 GROWTH
CONSUMER DEMAND AND EXPORT – IMPORT ACTIVITIES Retail Sales
400 13

Tn. VND
Total retail sales of goods and consumer service revenue in 350 12

4M.2019 were estimated at VND 1,583.7 trillion, up by 11.9% 300

11
over the same period last year, if excluding price increasing of 250
10
200
9% (same period 2018 increased by 8.9%). 9
150
The growth rate of export turnover in the FDI sector 100
8

decelerated. 50 7

0 6
Macroeconomc indicators 4M.2019 04/16 08/16 12/16 04/17 08/17 12/17 04/18 08/18 12/18 04/19

Inflation: +0.31% (mom) and +2.69% (yoy) Trade Hotel & Restaurant Services & Tourism Growth rate (%)
Export : USD 78.76 bn ytd (+5.8% yoy)
Import: USD 78.05 bn ytd (+10.4% yoy) Import-Export
22

USD bn
Trade surplus: USD 711 mln (ytd)
17
FDI: Registered value in 4M.2019: USD 7.46 bn (28.6%)
Capital contribution and share purchase: USD 7.14 bn (3.2 times higher than the same 12
period in 2018)
7
Goods turnover of some export items in 4M.2019
2

01/16
03/16
05/16
07/16
09/16
11/16
01/17
03/17
05/17
07/17
09/17
11/17
01/18
03/18
05/18
07/18
09/18
11/18
01/19
03/19
-3

-8
+12.6% yoy +9.8% yoy +13.4% yoy Exports Imports Trade Balance

© VCBS Research Department ǀ May - 2019

5
Source: GSO, CEIC , VCBS Research
 GROWTH - FORECASTING
GDP GROWTH Q1.2019 IS FORECASTED TO VARY FROM 6.74%-6.82%.
The production indicator, although no longer GDP growth (qoq)
recognizing sudden growth, is still an important 9%
driving force of the economy.
8%
FDI inflows continued to be an important resource for
6.67%-6.85%
the economy. 7%

6%
Public investment expenditure is expected to 5%
break out only in the second half of 2019.
4%

Expectations for the other sectors: 3%

 The growth in aggregate demand for goods and services
continues to be maintained. 2%
 Projects and works continue to operate and go into
exploitation: Nghi Son Refinery and Petrochemical, 1%
Formosa 2 High Furnace, continue to contribute to the
growth over the same period. 0%
 The FDI enterprises, although no longer experiencing Q1 Q2 Q3 Q4
sudden growth, are still important leaders of the economy.
2015 2016 2017 2018 2019
 Stable contribution of the agricultural sector.

© VCBS Research Department ǀ May - 2019

6
Source: GSO, VCBS Research
 INFLATION
CPI IN MAY IS EXPECTED TO GROW BY 0.4% - 0.6% DUE TO THE RISE OF GASOLINE AND
ELECTRICITY PRICES
CPI in April increased by 0.31%, equivalent to
CPI growth 2.69% yoy due to high demand for travel during
2,5% 20% the holidays and gasoline + electricity prices
increasing; the Food sector declined, contributes
2,0% 16%
to neutralizing the increase in CPI.
1,5% 12%
CPI in May is expected to grow by 0.4% - 0.6%
due to the rise of gasoline and electricity prices
1,0% 8% The price of uninsured health services increased
in May; gas prices rose slightly.
0,5% 4%
The Food sector continued to play a role to curb
0,0% 0%
the rise in CPI.

-0,5% -4%
Inflation, although well controlled in Q1.2019,
01/12
04/12
07/12
10/12
01/13
04/13
07/13
10/13
01/14
04/14
07/14
10/14
01/15
04/15
07/15
10/15
01/16
04/16
07/16
10/16
01/17
04/17
07/17
10/17
01/18
04/18
07/18
10/18
01/19
04/19
is still forecasted to be under pressure for the
next 3-6 months, especially in Q3.2019.
CPI (mom) CPI (yoy)

© VCBS Research Department ǀ May - 2019

7
Source: GSO, CEIC , VCBS Research
 EXCHANGE RATES
CENTRAL RATES CONTINUED TO INCREASE. REASONABLE MEASURES OF SBV.
At the end of April, the central exchange rate rose 23.900
USD/VND Exchange rate
by 0.89% ytd, exchange rates at commercial banks 23.500
went up slightly at the end of the month. 23.100
22.700
The gap between ceiling rate and exchange rate at 22.300
commercial banks maintained but it tended to 21.900
shrink 21.500
21.100
SBV successfully bought USD 8.35 billion. 20.700
04/15 07/15 10/15 01/16 04/16 07/16 10/16 01/17 04/17 07/17 10/17 01/18 04/18 07/18 10/18 01/19 04/19
As expected by VCBS, exchange rates continue to
Reference exchange rate Ceiling exchange rate Floor exchange rate
remain stable, contributing to macroeconomic stability. VCB spot bid exchange rate VCB spot offer exchange rate

Impact on exchange rates in the coming period Events happen in May Expected effects
Reasonable measures of SBV, flexible coordination of operator's tools Tracking on approach from SBV +

FED considered more carefully about the interest rates lifting procedure Minutes of FED’s meeting in May after the decision +
to keep interest rates unchanged.
US – China and US – EU trade tensions Tariff reactivated when negotiations ended up with _
no deal.
Investment flows continue to choose Vietnam thanks to macroeconomic Data on inflows of FII and FDI. +
stability

© VCBS Research Department ǀ May - 2019

8
Source: CEIC , VCBS Research
 EXCHANGE RATES
CENTRAL RATES CONTINUED TO INCREASE. (US-CHINA TRADE WARS RISK)
USDCNY - 10th May Trade talk ended with
7 - 05th May, US
6,9 no deal.
6,8
imposed tariff of
6,7 25% on $200 bn
6,6 worth China - 13th May China
6,5
export goods. announced
retaliatory
- 10th May US tariffs.
23500 USDVND threaten to impose
23400
tax on the
23300
23200 remaining China
23100 export goods,
23000
which is worth ~
Trade war will not end soon
$300bn
99 Dollar index
98
In May, exchange rates quotes at commercial banks climbed up.
97
96 We believe that exchange rate is vulnerable to upward pressure
95
94 when global market is surrounded by uncertainties. However, we still
93
keep VND devaluation against USD at below 2% regarding the
reference exchange rates stated by SBV.

© VCBS Research Department ǀ May - 2019

9
Source: Bloomberg , VCBS Research
 INTEREST RATES
ADJUSTED FORECASTS FOR THE INCREASE OF DEPOSIT INTEREST RATES FOR 2019 TO 80 POINTS
Deposit rates (Unit: %)
Credit growth as at April 17th reached 3.23% continue to
7,50
orient credit growth reasonably with quality and efficiency.
Some draft circulars are open to referendum on topics of 7,00

safety ratio in credit institution operation, electronic wallets

or consumer credit. => Sending message from SBV about 6,50

ensuring the safety, healthy and stable operation of

credit institutions 6,00

Especially, the Draft amendment of Circular 36 made a

5,50
significant change to the level of fluctuation of deposit
interest rates; increasing capital costs for the interbank 5,00
market; making the demand for capital increase of credit
institutions become more urgent. 4,50

VCBS adjusted forecasts for the increase of deposit interest

rates for 2019 to 80 points compared to the forecast of
increasing 50 points at the end of the year in the previous D.R (1 month) D.R (3 months) D.R (6 months) D.R (above 12 months)

reports.
© VCBS Research Department ǀ May - 2019
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Source: SBV, VCBS Research
 BOND MARKET – PRIMARY MARKET
WINNING RATES MOVED SIDEWAYS IN APRIL
50.000 Average issuance tenor
Primary market 15
 The volume of issued bonds 40.000 13
13,03
12,41 12,29

continued to focus on 10 and 15 30.000 11

year tenors. 20.000 9
8,7

 Winning rates changed not much 10.000 7

5,05
5,75

5
in April. 0

01/18
02/18
03/18
04/18
05/18
06/18
07/18
08/18
09/18
10/18
11/18
12/18
01/19
02/19
03/19
04/19
3
2014 2015 2016 2017 2018 4M.2019
KBNN NHCSXH NHPT

Bond releasing plan Q2 & the whole year 2019

Winning rates
GB Auction results Vol (VND bn)
%comple %comple 8,50% 12000
Q2.2019 Issued in Issued in
Tenor 2019 Plan tion 2019 tion Q2.
Plan 4M.2019 April 2019 7,50% 10000
plan plan
5Y 40.000 10.000 4.150 0 10,4% 0% 6,50% 8000

7Y 30.000 5.000 3.550 200 11,8% 4% 5,50% 6000

10Y 70.000 26.000 36.120 4.940 51,6% 19% 4,50% 4000

15Y 78.000 30.000 34.605 6.400 44,4% 21,3%
3,50% 2000
20Y 20.000 5.000 2.585 836 12,9% 16,72%
2,50% 0
30Y 22.000 4.000 1.035 200 4,7% 5% May 02- May 28- June 25 - Jul 23 - Aug 20 - Sep 17- Oct 15- Nov 12- Dec 10- Jan 07- Feb 11- Mar 11- Apr 08 -
May 04 June 01 June 29 Jul 27 Aug 24 Sep 21 Oct 19 Nov 16 Dec 14 Jan 11 Feb 15 Mar 15 Apr 12
Total 260.000 80.000 82.045 12.576 31,6% 15,72%
Volume 5Y 7Y 10Y 15Y 20Y 30Y

© VCBS Research Department ǀ May - 2019

Source: VCBS, Bloomberg, HNX 11
 BOND MARKET – SECONDARY MARKET
EXPECT THE LIQUIDITY OF THE INTERBANK MARKET WILL SOON BE IMPROVED
Average liquidity by session increased and remained high at VND 300
Secondary market
9.657 billion per session in April.

x1.000 VND bn
240
Interbank rates and bond yields increased sharply at the beginning of
180
the month, however declined in the last week of April.
Assessment in May: 120

 Expected that the yields in May as well as in Q2.2019 will be flat 60

or slightly decreased. Risk factors can be realized since Q3.2019.
-
 The interbank rates level is less likely to record sudden

01/17

03/17

05/17

07/17

09/17

11/17

01/18

03/18

05/18

07/18

09/18

11/18

01/19

03/19
movements with consistent management measures of the SBV. Outright Repo

6,0% Interbank rates 8,0% Bond yields

7,0%
4,0%
6,0%

5,0%
2,0%
4,0%

3,0%
0,0%
01/16

03/16

05/16

07/16

09/16

11/16

01/17

03/17

05/17

07/17

09/17

11/17

01/18

03/18

05/18

07/18

09/18

11/18

01/19
2,0%

01/16

04/16

07/16

10/16

01/17

04/17

07/17

10/17

01/18

04/18

07/18

10/18

01/19

04/19
ON 1W 2W 1M
2Y 3Y 5Y 7Y 10Y 15Y

© VCBS Research Department ǀ May - 2019

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Source: Bloomberg, VCBS, HNX
 DISCLAIMER

This report is designed to provide updated information on the fixed-income, including bonds, interest rates, some
other related. The VCBS analysts exert their best efforts to obtain the most accurate and timely information available
from various sources, including information pertaining to market prices, yields and rates. All information stated in the
report has been collected and assessed as carefully as possible.
It must be stressed that all opinions, judgments, estimations and projections in this report represent independent views
of the analyst at the date of publication. Therefore, this report should be best considered a reference and indicative
only. It is not an offer or advice to buy or sell or any actions related to any assets. VCBS and/or Departments of VCBS
as well as any affiliate of VCBS or affiliate that VCBS belongs to or is related to (thereafter, VCBS), provide no
warranty or undertaking of any kind in respect to the information and materials found on, or linked to the report and
no obligation to update the information after the report was released. VCBS does not bear any responsibility for the
accuracy of the material posted or the information contained therein, or for any consequences arising from its use, and
does not invite or accept reliance being placed on any materials or information so provided.
This report may not be copied, reproduced, published or redistributed for any purpose without the written permission
of an authorized representative of VCBS. Please cite sources when quoting. Copyright 2012 Vietcombank Securities
Company. All rights reserved.

© VCBS Research Department ǀ May - 2019

13
 CONTACT INFORMATION

Tran Minh Hoang Le Thu Ha

Head of Research & Analysis Department Senior Analyst

tmhoang@vcbs.com.vn ltha_ho@vcbs.com.vn

© VCBS Research Department ǀ May - 2019

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