Macroeconomy

• The Index of Industrial Production (IIP) in February 2025 continued to decline by 2.2% MoM but increased sharply by 17.2% YoY. The average increase for the first two months (8.9%) is still lower than the government’s target of 9.5% for 2025. The fourth consecutive month of decreasing new export orders signals persistent headwinds for the manufacturing and export sectors in pursuit of their growth goals;
• The total retail sales of goods and consumer services in February 2025 were estimated at VND561.67 trillion, up 9.43% YoY. Recently, the government sent an official telegram directing the Ministry of Finance to examine the possibility of further extending tax reductions, including a VAT reduction for the second half of this year and all of 2026. We hold that prolonging the tax reduction period is essential to aid consumer growth, as retail sales growth remains sluggish, the first two months' growth remains below the pre-Covid-19 average (11.22% from 2013-2019), and the 12% target for 2025;
• For public investment, State Budget investment capital in February 2025 was VND37,928 billion, up 7.6% MoM and 35.08% YoY. For the first two months, cumulative public investment disbursement reached VND73,176 billion, 8.26% of the annual plan, up 19.94% YoY. In 2025, public investment disbursement is planned at over VND885 trillion, a record. If fully disbursed, it's estimated to contribute 2.28 percentage points to 2025 GDP growth;
• The CPI rose by 2.91% YoY in February. The CPI in March will face ongoing pressure from the Housing and Building Materials groups (due to rising rental, electricity, and water costs), pharmaceuticals and medical services (primarily due to higher medical service costs under Circular 21/2024), and food (driven by a 30% YoY live hog price rise). Conversely, petroleum and rice prices are offsetting CPI pressures. It is predicted that the CPI for March will continue to rise within 3-3.5%;
• Up to March 6, 2025, the VND depreciated by 0.08%. The USD pressure has eased significantly since early March, driven by stagflation concerns and expectations that the Fed will reduce interest rates more than initially anticipated. As the pressure from the USD has lessened, the VND is anticipated to exhibit greater stability in the near future.

Stock market

• Stock market trends in February 2025 – Gains maintained amid US tariff concerns, fueled by growth policies and market upgrade prospects.
• Market gains with sector divergence. There is differentiation among stocks within outperforming sectors (banking, financial services, IT, chemicals, etc.).
• US trade policies in February had minimal impact on vietnam, easing investor concerns.
• The average daily trading value on HSX in February 2025 reached VND 15,855 bn, up 39.2% mom and 5.8% compared to the Q4 2024 average. Trading value across 3 exchanges reached VND17,861 bn, up 39.3% MoM. The trading market rebounds post-Tet holiday, driven by growth policies, supportive monetary measures, and a diminution of initial external pressure concerns.
• Net outflows by foreign investors are observed in multiple Asian countries, including Vietnam's stock market, amid us trade policy uncertainty. Foreign investors net sold VND 9,592 bn on HOSE, focusing on Food & Beverage, Banking, and IT Sectors. Foreign investor net selling pressure may persist next month amid ongoing external uncertainties.