VNDirect expert talks about US inflation risks in Trump's new term

The expert from VNDirect left open the risk that the State Bank of Vietnam will have to raise interest rates if exchange rate pressure gets out of control due to fluctuations in Trump's trade policy next year.

The expert from VNDirect left open the risk that the State Bank of Vietnam will have to raise interest rates if exchange rate pressure gets out of control due to fluctuations in Trump's trade policy next year.

US Variables: Opportunities Come with Risks

On December 12, Dau Tu Newspaper organized a workshop with the theme "Investment 2025: Decoding variables - Identifying opportunities". The workshop is where leading economic experts evaluate existing and potential investment channels, making recommendations to the business community and investors on opportunities and risks. Sharing at the workshop, Mr. Barry Weisblatt David, Director of Analysis, VNDirect Securities Joint Stock Company, made assessments of the impacts after Mr. Donald Trump was elected and took office as President of the United States.

“As for whether the US will impose additional tariffs on Vietnam, I think probably not. The reason for Trump’s tariffs is not only due to the trade surplus with the US but also due to other issues such as US-China competition or immigration issues with Mexico,” said Barry Weisblatt David, who also said that Mr. Trump has good relations with Vietnam. In particular, the recent call between General Secretary To Lam and Mr. Trump is a positive sign.

In his first term, VNDirect representative said that Mr. Trump still did not believe that he had succeeded in assuming the position of US President. However, with 4 years to prepare for his return, VNDirect Director of Analysis believes that Trump's upcoming policy will increase tariffs on goods from China, Mexico, Canada and bring opportunities to Vietnam. Export growth to the US from Vietnam in Trump's first term increased by 25%/year after the US-China trade war broke out, especially thanks to the export activities of B2B enterprises such as FPT.

Mr. Barry Weisblatt David, Director of Analysis, VNDirect Securities Joint Stock Company

Mr. Barry Weisblatt David said that instead of tariffs, the US will focus more on trade defense measures, especially the origin of goods exported to the US. Therefore, the issue of countries taking advantage of Vietnam to avoid US taxes needs special attention.

At the same time, this expert also believes that the biggest risk is not from trade but from inflation. The biggest reason why the Democratic Party failed is because the American people are disappointed with the inflation situation in the US. For the Fed, Chairman Powell will be relatively independent in monetary policy. "Our previous scenario of forecasting that the Fed could cut interest rates three times next year is being challenged by inflation risks from Trump's policies. With the DXY index anchored high, the USD/VND exchange rate will be under a lot of pressure and affect the domestic stock market's developments," said Mr. Barry Weisblatt David. At the same time, this expert also left open the risk that the State Bank will have to raise interest rates if the exchange rate pressure gets out of control due to fluctuations in Trump's trade policy next year.

Public investment stock opportunities: Bright spots ACV, HHV

Sharing his views on investment opportunities in the new context, Mr. Barry Weisblatt David said that the National Assembly set a high growth target (7.5%) in 2024. Meanwhile, the consumer sector contributes 60% to GDP, although it has recovered but has not met expectations. VNDirect assessed that GDP growth could reach 6.9%, but if public investment activities disburse 100% of the plan, GDP could completely reach a growth rate of 8-9%. Enterprises related to public investment such as HHV, ACV will benefit from public investment, the expert from VNDirect suggested investment opportunities next year.

In addition, along with the expectation of upgrading the stock market, Vietnam's national credit rating is a very important factor. According to Fitch and S&P, borrowing costs could decrease by 2% if Vietnam's credit rating is upgraded to investment grade. Directly asking rating agencies such as Fitch and S&P, Mr. Barry Weisblatt David said that these organizations assess Vietnam's fiscal foundation as very strong. However, the minimum capital adequacy ratio (CAR) in the banking sector has not complied with Basel III and the incidents at SCB. Therefore, according to the Director of Analysis of VNDirect, improving the CAR ratio is very important, especially for the group of state-owned banks.

Source: https://baodautu.vn/chuyen-gia-vndirect-noi-ve-rui-ro-lam-phat-my-o-nhiem-ky-moi-cua-trump-d232309.html