BREXIT Impact on Vietnam

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Brexit: What are the Consequences for Asia Pacific?

June 28, 2016

Courtesy of our friends at VietCapital, below are some likely impact of Brexit on Vietnam.

Companies likely benefitting from BREXIT
– Those with large debt denominated in EUR (a few) or GBP (we don’t know any)
NT2 (power) and HT1 (cement) have large debts in EUR, $150mn and $62mn respectively “best way to play this”

Companies likely hurting from BREXIT
– In general, export companies with large exposure to the UK / Europe, and those involved in the supply chain of such companies
VHC – Vietnam’s largest fisheries, exports about 20% of it’s production to Europe, tough business to be in, hence why we don’t cover
GMD (ports & logistics) – Less directly exposed than exporters, GMD could see less traffic in their ports, but it’s hard to quantify, but unlikely major

Macro
– There’s reasons to believe that a BREXIT would weakened the economies and currencies of the UK and Europe in general
– This could lead exports from Vietnam to grow slower than anticipated, or might even decline a little
– Only 2.9% of Vietnam’s total exports are to the UK
– But 19.1% of Vietnam’s total exports go to Europe (including the UK)
– So there’s reason to believe Vietnam will feel the pinch a bit
– Meanwhile, the VND remains very stable vs the USD, and therefore has gained vs the Euro

FDI
– European companies are very much at the low end of the spectrum in terms of FDI in Vietnam…
– Unlikely any impact will be felt here

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