Strategy Note /

Vietnam lockdown eases, now for the next test

  • About 270 cases, 45,000 in quarantine and zero deaths in a population of 96 million: Remarkable results from...

  • ...Early international travel restrictions, quarantining, contact tracing and a well-enforced national lock-down

  • Now, the next test as the lockdown eases and a mass migration out of urban centres before a four-day weekend starts

Vietnam lockdown eases, now for the next test
Hasnain Malik
Hasnain Malik

Strategy & Head of Equity Research

Tellimer Research
30 April 2020
Published byTellimer Research

A month ago, we wrote about the initiation of a nationwide lockdown in Vietnam, despite very low infections and zero Covid-19 deaths. We drew the conclusion that even in countries with a successful healthcare response, and it is hard to find one as successful as the official data in Vietnam suggests, the negative economic impact of social distancing could not be avoided. 

The Vietnam lockdown is now easing. Of course, there is plenty of evidence of economic damage: according to the Government Statistics Office, 85% of companies have been negatively affected and 5mn workers have been furloughed or lost jobs (mainly in manufacturing, retail, and hospitality).

The next test is whether the gradual restart of social and economic activity drives any new spike in infections. Because of the incidence of a four-day weekend (Reunification and Worker Days) and the mass urban to rural migration this has sparked, a pretty stern version of this test is occurring straight away.

In the month of April, Vietnam equities, measured by the HCM Stock Index, are up 17%, well ahead of the MSCI EM, FEM and FM indices (up 9%, 7%, 6%, respectively). Trailing price/book and price/earnings are both about 25% below the 5-year median. Vietnam remains our favourite equity market in global small EM and FM, although low foreign ownership room remains a constraint.

Merely 270 Covid-19 cases, 45,000 people still in quarantine, but zero deaths

Ho Chi Minh City exodus for Reunification and Workers’ Day (30 April-1 May) public holidays