Impact of Falling Gold Prices and Dong Exchange Rate on Vietnam's Economy and SJC/PNJ Investments

Key pointsOn September 21, 2024, international gold prices fell, influenced by expectations of prolonged high interest rates from the U.S. Federal Reserve. This has affected the Vietnamese dong exchange rate and domestic gold prices, drawing attention to investor behavior. Notably, SPDR Gold Trust's selling of gold indicates changes in the gold market. Fluctuations in gold prices also impact the daily lives of Vietnamese people, as gold ownership remains strong in marriage and real estate transactions. The decline in gold prices may affect gold-related stocks such as SJC and PNJ.
Business impactFor Japanese companies, stability in the dong exchange rate is a prerequisite for business planning. Fluctuations in gold prices and U.S. interest rates affect exchange rates, necessitating a review of procurement costs for manufacturing and apparel-related companies. Investment decisions must consider exchange rate risks.

Key pointsDeputy Prime Minister Ho Quoc Dung stated that logistics is a crucial part of the national economic infrastructure and influences overall economic competitiveness. The reduction of logistics costs may affect future investment decisions, and the government has clarified its intention to make logistics a pillar of national strategy. Vietnam's logistics costs are higher compared to other emerging countries, which is seen as a factor undermining the competitiveness of export companies. In the future, stocks related to ports and industrial zones are expected to attract attention.
Business impactFor Japanese companies, improvements in logistics infrastructure will directly enhance supply chain efficiency. Companies with manufacturing bases in Vietnam will need to reassess their cost structures due to advancements in logistics reform, making it important to monitor related information.

Key pointsAn electronics company known for its famous slogan 'Wherever there is electricity, there is electric light' has seen its net profit decrease by approximately 60% after audits in 2025 due to recent management changes. This decline is particularly influenced by a subsidiary's unrecognized tax provisions for investments, leading to additional tax expenses. The company's stock will be under management starting April 2026, having fallen to one-fifth of its value over the past decade.
Business impactThis case highlights the importance of investment decisions and transparency in financial reporting, indicating that Japanese companies need to reassess investment risks in the Vietnamese market and implement appropriate risk management strategies.

Key pointsUS Trade Representative Jamison Greer stated that negotiations for a trade agreement with Vietnam have made significant progress and are very close to a final outcome. On September 21, he met with President To Lam in New York, expressing intentions to strengthen economic, trade, and investment relations between the two countries. If the agreement is concluded, it is expected to expand cooperation opportunities between the two nations.
Business impactThis agreement could present new business opportunities for Japanese companies, particularly in the trade sector, which will need to pay attention to future developments.

Key pointsR3 Lithium CEO Lynn Austin has recognized the growth of Vietnam's electric vehicle market and expressed interest in establishing a production and recycling ecosystem for electric vehicles. He indicated a willingness to explore partnership opportunities as Vietnam aims for net zero by 2050.
Business impactJapanese companies should pay attention to the growth of Vietnam's electric vehicle market and seek new business opportunities through collaboration with R3 Lithium. Investment in electric vehicle-related technologies and recycling of resources is particularly important.

Key pointsBy 2036, it is projected that approximately 20% of Vietnam's population will be aged 60 and over, which is expected to have long-term impacts on the insurance and financial markets. With structural changes in the economy, it is necessary to consider aging risks in investment decisions. The insurance industry, in particular, should expedite the development of products and services for the elderly.
Business impactJapanese companies need to reassess their product offerings and marketing strategies in preparation for the increasing demand for elderly services in the Vietnamese market.

Key pointsHo Chi Minh City is proposing regulations to cut electricity and water supply to facilities that violate construction, land, fire safety, and environmental regulations. This proposal is based on the Urban Development Law set to take effect in 2026 and will apply if there is non-compliance with corrective demands from administrative agencies, particularly for serious violations of fire safety and environmental protection laws. This is expected to facilitate the rapid identification and resolution of illegal constructions.
Business impactIf this regulation is enacted, Japanese companies will need to strengthen compliance in their construction projects. There will be a heightened need for awareness regarding construction permits and environmental regulations to prevent violations.