Edison Exhibits: The Vietnamese Economy

Published on 22-10-2019 10:00:25

VN index forward P/E multiple vs Asia ex-Japan index
Source: Refinitiv, Bloomberg, Edison Investment Research. Note: Index valuations at 6 September 2019.
% GDP growth, constant prices

Source: IMF, Edison Investment Research

 
As shown in the first chart, Vietnamese equities’ valuations had become overstretched in 2017 and early 2018. A sharp correction in the VN Index last year has brought the forward P/E multiple back in line with Asia ex-Japan; however, growth prospects for Vietnam are superior. Its GDP grew by 7.1% in 2018, among the highest in the world. According to the IMF, this should continue to be the case. As shown in the second chart, it forecasts the country’s GDP to grow at an annual compound rate of 6.5% between 2019 and 2024, whereas growth in Asia ex-Japan is expected to continue to decelerate gradually (led by a slowdown in China).

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