The country’s export recovery has led to a 50% increase in the stock prices of leading logistics companies and industrial park developers focused on international trade, according to Michael Kokalari, chief economist at VinaCapital.
In a recent report, Kokalari noted that in early 2023, companies in the US and other developed countries had reduced orders to Asia to clear their bloated inventories. However, by the end of the year, Việt Nam’s export recovery had gained momentum as the destocking process concluded.
By early 2024, Việt Nam’s trade had been growing at 15%. Exports to the US, Việt Nam’s largest market, rebounded from a 21% drop in Q1 2023 to a 24% jump in Q1 2024. This boosted Việt Nam’s air and sea cargo volumes by an estimated 40% and 30% year-on-year, respectively, in the first quarter. Consequently, the stock prices of leading local logistics companies such as Gemadept, Saigon Port, and Saigon Cargo Service Corp, which focus on international trade, surged by 50%, far outpacing the 20% increase in the broader VN-Index.
Capacity at the Cái Mép-Thị Vải deep water port complex, located 60km from HCM City, was set to increase by more than 10% next year, with Gemadept planning to double the number of berths it operates. Similarly, capacity at the Lạch Huyện deep water port complex near Hải Phòng was set to increase 1.5-fold by next year, including an 80% capacity increase scheduled for the end of 2024.
The Government is considering building a dedicated transshipment port at Cần Giờ near Cái Mép-Thị Vải, which could compete with Singapore and Hong Kong for transshipment business, given Việt Nam’s port handling fees are still roughly half those in Singapore, even after a 10% hike earlier this year. Additionally, construction of the new Long Thành Airport continued to progress, with a new cargo terminal set to break ground later this year.
Export Recovery Supports Industrial Parks
“The export recovery has also helped boost industrial park (IP) stock prices. A surge in high-tech exports is driving the recovery and prompting more FDI inflows from high-tech manufacturers who can pay higher IP lease rates,” Kokalari stated. The share prices of industrial park operators have risen around 50%.
Higher exports have encouraged more FDI inflows, with newly registered FDI up over 50% in the first five months of 2024, reaching nearly US$8 billion. Most multinational manufacturers set up factories in industrial parks, pushing up IP lease rates as they tend to be less sensitive about rentals compared to producers of lower value-added products like garments and furniture.
Việt Nam’s export recovery is being driven by high-tech products, typically shipped by air, thus air freight growth is outpacing sea freight. Exports of laptops and other home electronics products grew by more than 30% in the first five months, double the country’s 15% overall export growth.
Limited supply of readily available IP land also plays a role. Occupancy rates at IPs in the north, which attract most high-tech FDI investment, are over 80% on average, while in the greater HCM City area, they top 90%. The combination of price insensitivity among high-tech manufacturers and high occupancy rates pushed up rentals in the north and south by 35% and 15% last year, with a further 7-10% increase expected this year.
