Impact of Yen Carry Trade Changes on Vietnam's Economy

Key pointsForeign investors have turned to net buying in the Vietnamese stock market, purchasing 4.012 trillion VND (approximately 24.31 million USD). Notably, there was also a net purchase of 2.83 trillion VND (approximately 17.15 million USD) in matching transactions, indicating a shift from the previous trend of net selling. This movement is attracting attention among market participants and serves as an important indicator of capital inflow trends into Vietnam.
Business impactThe net buying by foreign investors may promote capital inflows, particularly in the financial and real estate sectors. For Japanese companies, this is expected to improve the funding environment for local subsidiaries and positively impact relationship building with business partners.

Key pointsRecently, the Japanese yen has reached a seven-month high, raising concerns about the unwinding of yen carry trades. This movement could affect emerging markets as a whole, particularly raising concerns about changes in capital inflows into Vietnam's economy and investments. As the yen strengthens, procurement costs may rise, and position unwinding could occur, necessitating caution from investors.
Business impactFor Japanese companies, a stronger yen directly impacts export competitiveness and local procurement costs. In particular, the manufacturing sector may need to reassess material procurement and capital investment plans denominated in yen.

Key pointsVietnam's President Vo Lam's visit to France is expected to promote investment cooperation between the two countries, particularly in technology, R&D, and human resource development. France's technological capabilities and Vietnam's anticipated market growth will strengthen their complementary relationship. Ongoing joint projects are specifically focused on infrastructure, energy, AI, and biotechnology.
Business impactFor Japanese companies, technological cooperation with France presents new business opportunities. It is crucial to seek partnerships in infrastructure and energy sectors, which may lead to technology transfer and new market development.

Key pointsU.S. Treasury Secretary Scott Bessen is exerting pressure for the appreciation of the Japanese yen, which may affect the Vietnamese economy and Asian currencies. There are concerns that a stronger yen could impact the exchange rate of the Vietnamese dong and the competitiveness of export companies.
Business impactFor Japanese companies, a stronger yen may affect the cost of direct investment (FDI) in Vietnam, necessitating careful consideration in cost calculations and remittance plans, particularly in the manufacturing sector. Cautious decision-making considering foreign exchange risk is required.

Key pointsIn Vietnam's stock market, the VN-Index is stabilizing at a new price range with low trading volume, leading to a scarcity of short-term trading opportunities. Market participants are finding it difficult to motivate buyers and sellers to engage actively, with investors waiting for a clear trigger. The prolonged low trading volume may compel a reassessment of future investment strategies.
Business impactFor Japanese companies, the short-term stagnation in the stock market is considered to have minimal direct impact; however, trends in the manufacturing supply chain and FDI should be evaluated from a medium to long-term perspective, necessitating caution. Individual investors should be particularly careful in making investment decisions in a low liquidity environment.