Vietnam Stock Exchange Recap
National Assembly (NA) - Buoys market sentiment with plans for Ministries mergers
November witnessed the VN-Index decline by -1.2% versus October. Investor sentiment was buoyed by Government pro-market announcements regarding improving the nation's economic efficiency. Specifically, proposed changes include: 1) The Ministry of Finance (MoF) merging with the Ministry of Planning and Investment (MPI); 2) The Ministry of Construction merging with the Ministry of Transport; 3) The Ministry of Information and Communications merging with the Ministry of Science and Technology; 4) The Ministry of Agriculture and Rural Development merging with the Ministry of Natural Resources and Environment; 5) Dismantling the Ministry of Labor, Invalids and Social Affairs.
Swift reductions in 'recurring expenses' are expected to be realized - and, the merging of Ministries will have a positive impact on the state budget. We expect to hear further details in the first quarter of 2025. Once the new Ministries have been assembled and take effect a substantial reduction in 'recurring expenses' as a percentage of the state budget will be achieved. As things now stand, about 70% of the state budget is 'recurring expenses'.
For comparative reference, many OECD nations have 'recurring expenses' at 50% or less of their budgets (exhibit: General government expenditures amount to 46.3% on average across OECD countries in 2021). Therefore, the Government of Vietnam's efficiency drive is expected to be viewed very favourably by foreign indirect investors (FII) and locals, alike.
Investor can see the full Newsletter below:
