Review of economic information week 25-29/11

The central exchange rate decreased by 44 VND, the VN-Index increased by 22.36 points compared to the previous weekend, and the pressure to disburse public investment capital in the remaining time of the 2024 budget year is still very large... are some notable economic information in the week from November 25-29.

Economic information review

Overview

The pressure to disburse public investment capital in the remaining time of the 2024 budget year is still very large.

The 2024 state budget investment plan assigned by the Prime Minister to ministries, central and local agencies is 680,075.8 billion VND, including: 247,726.9 billion VND from the central budget and 432,348.9 billion VND from the local budget. In addition, the 2024 local budget balance capital assigned by localities increased compared to the plan assigned by the Prime Minister, updated to the end of November 2024, at 70,019.1 billion VND; the capital plan of previous years allowed to be extended up to the reporting time is 56,807.2 billion VND. Thus, the total plan assigned for 2024 as of November 30 is 806,902.1 billion VND.

According to the report of the Ministry of Finance, the estimated disbursement of public investment capital by the end of November 2024 is VND 438,852.7 billion, reaching 54.4% of the overall plan, reaching 64.52% of the plan assigned by the Prime Minister. The estimated disbursement rate in the first 11 months of 2024 is lower than the same period last year (the same period in 2023 reached 59.4% of the plan and reached 65.1% of the plan assigned by the Prime Minister).

According to the Ministry of Finance, there are still difficulties and problems affecting the disbursement progress that have not been completely resolved, such as: problems related to policy mechanisms; site clearance, land use planning and material supply; problems in completing investment procedures, disbursement processes of ODA projects, etc. that need to be actively and proactively resolved by ministries, branches, localities and investors to speed up the disbursement progress of public investment capital. In particular, the biggest difficulty that will arise in 2024 is common materials for the construction of large projects, especially traffic projects.

To achieve a public investment disbursement rate of over 95% as planned by the Prime Minister, in the remaining 2 months of the 2024 budget year (up to January 31, 2025), the whole country needs to disburse about 207 trillion VND (equivalent to about 30% of the plan assigned by the Prime Minister). Facing the possibility of not completing the 2024 public investment disbursement plan, on November 7, 2024, the Prime Minister issued Official Dispatch No. 115/CD-TTg on resolutely implementing tasks and solutions to promote public investment disbursement in the last months of 2024. Some key groups of solutions from now until the end of the year include:

(i) continue to implement the proposed solutions that have been issued by the Government and the Prime Minister, emphasizing the solution on urging and directing. The Prime Minister has directed the establishment of 7 Government Working Groups headed by Deputy Prime Ministers and 2 Ministers of Finance and Planning and Investment to urge disbursement; promote the mechanism of Government members working with localities to urge disbursement of public investment capital; (ii) organize implementation, this is a group of quite difficult solutions whose main responsibility belongs to ministries, branches and localities; (iii) remove difficulties: in addition to difficulties in common materials, there are other difficulties for a number of projects such as procedures, especially project adjustment procedures; (iv) strengthen discipline and order in public investment, especially promoting the application of information technology to manage public investment as quickly and effectively as possible.

In addition, according to the Ministry of Planning and Investment, the breakthrough solution to promote long-term public investment disbursement is identified as an institutional solution. The Law on Public Investment (amended) was submitted to the National Assembly at the 8th Session of the 15th Term, along with the amendment of 4 laws related to investment, including the Law on Planning, the Law on Investment, the Law on Investment under the form of public-private partnership and the Law on Bidding. The market expects that the amended Laws, when effective, will contribute to thoroughly resolving current problems and backlogs. Specifically, regarding the draft Law on Public Investment (amended), 05 major groups of amended policies in the proposal dossier in the Law Project include: (i) a group of policies to institutionalize pilot and specific mechanisms and policies allowed to be applied by the National Assembly; (ii) a group of policies on continuing to promote decentralization and delegation of power; (iii) policy group on improving the quality of investment preparation, resource exploitation, and capacity to implement public investment projects of localities and state-owned enterprises; (iv) policy group on promoting the implementation and disbursement of ODA capital plans and preferential loans from foreign donors; (v) policy group on simplifying procedures; supplementing and clarifying concepts, terms, and regulations, ensuring the consistency and uniformity of the legal system.

Domestic market summary week from November 25-29

In the foreign exchange market, during the week of November 25-29, the central exchange rate was adjusted by the State Bank in a downward trend, especially sharply decreasing in the last two sessions of the week. At the end of November 29, the central exchange rate was listed at 24,251 VND/USD, sharply decreasing by 44 VND compared to the previous weekend session.

The State Bank of Vietnam's transaction office continues to list the USD buying and selling rates at 23,400 VND/USD and 25,450 VND/USD, respectively.

The interbank USD-VND exchange rate during the week from November 25 to November 29 gradually decreased over the sessions. At the end of the session on November 29, the interbank exchange rate closed at 25,372, down 60 VND compared to the session at the end of the previous week.

The dollar-dong exchange rate on the free market increased sharply at the beginning of the week and then decreased slightly again. At the end of the session on November 29, the free exchange rate increased by 40 VND in both buying and selling directions compared to the previous weekend session, trading at 25,690 VND/USD and 25,790 VND/USD.

Interbank money market, week from November 25-29, interbank VND interest rates continued to decrease sharply through sessions in all terms. Closing on November 29, interbank VND interest rates were traded at: overnight 3.13% (-1.47 percentage points); 1 week 3.90% (-0.86 percentage points); 2 weeks 4.49% (-0.37 percentage points); 1 month 4.79% (-0.19 percentage points).

Interbank USD interest rates fluctuated slightly across all terms last week. On November 29, interbank USD interest rates were: overnight 4.60% (unchanged); 1 week 4.67% (+0.01 percentage point); 2 weeks 4.71% (+0.01 percentage point) and 1 month 4.76% (unchanged).

In the open market last week from November 25 to November 29, in the mortgage channel, the State Bank offered 7-day term with a volume of VND54,000 billion, interest rate kept at 4.0%. There were VND53,999.85 billion in winning bids, there were VND68,000 billion maturing last week in the mortgage channel.

The State Bank of Vietnam (SBV) bid for 28-day SBV bills, with interest rates. VND9,980 billion were won, with interest rates remaining at 4.0%. VND7,950 billion of bills matured last week.

Thus, the State Bank of Vietnam (SBV) withdrew a net VND16,030.15 billion from the market last week through the open market channel. There were VND53,999.85 billion circulating on the mortgage channel, and VND20,080 billion in SBV bills circulating on the market.

Bond market, November 27, the State Treasury successfully bid 4,000 billion VND/10,500 billion VND of government bonds called for bid, the winning rate reached 38%. Of which, the 10-year term mobilized 3,000 billion VND/5,500 billion VND of the call and the 30-year term mobilized 1,000 billion VND/1,500 billion VND of the call. The 5-year and 15-year terms called for bids of 2,500 billion VND and 1,000 billion VND respectively but there was no winning volume in either term. The winning interest rate for the 10-year term was 2.68% (+0.02 percentage points compared to the previous auction) and for the 30-year term was 3.15% (+0.05 percentage points).

This week, on December 4, the State Treasury plans to offer VND9,000 billion in government bonds, of which VND1,500 billion will be offered for the 5-year term, VND5,000 billion for the 10-year term, VND1,000 billion for the 15-year term, and VND1,500 billion for the 30-year term.

The average value of Outright and Repos transactions in the secondary market last week reached VND16,072 billion/session, a sharp increase compared to VND13,878 billion/session of the previous week. Government bond yields last week fluctuated slightly across all maturities. At the end of the session on November 29, government bond yields were trading around 1 year 1.85% (+0.004 percentage points compared to the session at the end of last week); 2 years 1.86% (+0.004 percentage points); 3 years 1.88% (+0.004 percentage points); 5 years 1.97% (+0.003 percentage points); 7 years 2.28% (-0.001 percentage points); 10 years 2.76% (unchanged); 15 years 2.96% (+0.001 percentage points); 30 years 3.16% (unchanged).

Stock market, week from November 25 to November 29, the stock market performed quite positively when all 3 indices closed the week in green. At the end of the session on November 29, VN-Index stood at 1,250.46 points, up sharply by 22.36 points (+1.82%) compared to the previous weekend; HNX-Index added 3.35 points (+1.51%) to 224.64 points; UPCoM-Index increased by 1.04 points (+1.13%) to 92.74 points.

Average market liquidity reached about 12,900 billion VND/session, down from 15,000 billion VND/session of the previous week. Foreign investors net sold slightly nearly 222 billion VND on all 3 exchanges.

International news

The Fed released the minutes of its November meeting, and the US recorded important economic indicators. In the minutes of the meeting released on November 26, the Fed noted that GDP growth has been solid since the beginning of the year. The pace of job growth has slowed significantly, the real unemployment rate has increased but remains low. Consumer price inflation is much lower than what was recorded in 2023. The total PCE and core PCE price indexes in September were 2.1% and 2.7% respectively compared to the same period last year.

The Fed forecasts that US GDP will grow slightly below potential between 2025 and 2027, leading to a slight increase in the unemployment rate. Inflation is forecast to continue to slow as supply and demand in the market gradually balance.

Regarding monetary policy, members of the Federal Open Market Committee (FOMC, part of the Fed) considered the decision to begin easing monetary policy in September to be appropriate, and the risks to achieving the employment and inflation goals were roughly balanced. To support these goals, the FOMC decided to lower the policy interest rate by 25 basis points, from 4.75% - 5.0% to 4.50% - 4.75%. The FOMC will continue to rely on future economic data to make further decisions.

Regarding the US economy, the country's GDP increased 2.8% compared to the previous quarter in the third quarter according to the second preliminary report, without adjusting the initial statistical results and matching the forecast.

Regarding US inflation, the core PCE and total PCE price indexes in the country both increased 0.3% month-on-month in October, equal to the increase of the previous month and matching the forecast.

Compared to the same period in 2023, core PCE and total PCE increased 2.8% and 2.3%, respectively, in October, both expanding from the 2.7% and 2.1% increases recorded in September.

In the real estate market, pending home sales in the US increased 2.0% month over month in October, following a 7.5% increase in the previous month and against forecasts of a 2.1% decrease. Compared to the same period in 2023, pending home sales last month increased 7.0% year over year. The average home price in the US increased 0.7% month over month in September, following a 0.4% increase in the previous month and stronger than forecasts of a 0.3% increase.

Thus, housing prices in this country in the third quarter increased by about 0.7% compared to the previous quarter and increased by 4.3% compared to the same period in 2023.

Finally, on the labor market, the number of initial unemployment claims in the US for the week ending November 22 was 213 thousand, contrary to the forecast of a flat level of 215 thousand the previous week. The average number of claims for the most recent 4 weeks was 217 thousand, down slightly by 1.25 thousand compared to the average of the previous 4 weeks. This week, the market is waiting for the detailed report on the US labor market for November, which will be announced on December 6, Vietnam time.

The Eurozone received some important economic news. First, on inflation, the headline Eurozone CPI rose 2.3% year-on-year in November, preliminary data showed, up from 2.0% in the previous month and in line with forecasts. Core CPI rose 2.7% year-on-year last month, flat from October and against forecasts for a slight increase to 2.8%.

In Germany alone, the CPI in November fell slightly by 0.2% month-on-month after rising 0.4% in the previous month, matching the forecast. Compared to the same period in 2023, the German CPI increased by 2.2% year-on-year in November, higher than the 2.0% increase in October. Finally, the Ifo survey organization said the German business confidence index was at 85.7 points in November, down from 86.5 points in October and below the forecast of 86.1 points.

This week, the Eurozone awaits information related to the labor market and retail sales for October, announced on December 2 and 5, Vietnam time, respectively.

Source: https://thoibaonganhang.vn/diem-lai-thong-tin-kinh-te-tuan-25-2911-158326.html