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Markets sort mixed economic signals
Mixed macroeconomic signals and continued lateral movement of stock markets continued in September, but one of the most positive signs was estimated GDP growth of 7.16 per cent for the third quarter, according to a monthly review released by the company Viet Nam Asset Management on October 08.
The GDP rate during September contributed to the combined growth of the first nine months to 6.52 per cent.
The full-year GDP growth target was revised up to 6.7-6.8 per cent, given that the last quarter is usually the most robust period of economic activity.
For the first nine months, industrial production was up 13.8 per cent while retail sales revenue soared 25.4 per cent compared to the same period last year.
While economic growth is edging up, inflation and exchange rates are likely to become issues in the last three months of the year.
The September consumer price index (CPI) came in at 1.31 per cent month-on-month and 8.92 per cent year-on-year.
This was the first month-on-month increase of over 1 per cent since this February.
The sharp acceleration was driven by higher prices of foods, construction materials, gas and education fees, with the latter caused by a seasonal effect.
The exchange rate is another concern, as the unofficial rate, after months of converging with the official rate, suddenly heated up in September, trading at 1 per cent above the upper limit of the official trading band.
The recent fluctuation of the exchange rate in the unofficial market was primarily attributed to strong increases in gold prices in the last two months, accelerating inflation and widening the trade deficit.
The mix of a record-high gold price, an unexpected rise in September's CPI, and the divergence of official and unofficial exchange rates has once again sparked fears of inflation and further devaluation toward the year-end.
The securities market continued its prolonged lateral movement when the VN-Index closed the month at 454.52, almost flat against September.
The report suggests that despite the potential catalyst from corporate earnings in the third quarter, investors will likely remain cautious in October because of a stocks oversupply and mixed macroeconomic signals.
"We are still upholding our long-term interest in the consumer, IT, telecom and pharmaceutical sectors. For short-term seasonal play, we are closely watching natural rubber and some high-dividend defensive stocks. Overall, we strongly advise investors to look closely at individual firm's performances rather than choosing a specific industry," the report said.
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