The information that China has gradually loosened its domestic pandemic prevention measures from early December and is expected to fully open the economy in the second quarter of 2023 can positively impact businesses and stocks in many industries.
Vietnam’s economy as a whole and businesses in many sectors are expected to benefit from China’s economic reopening after Beijing implemented its Zero-Covid policy for months.
According to the Asian Development Bank (ADB), the world economy is facing three headwinds. These are China’s blockade decisions because of the Covid pandemic, the race to tighten monetary policy against inflation by many central banks, and the prolonged conflict between Russia and Ukraine.
China’s plan to reopen its economy and signals of loosening monetary policy in some Asian countries are bright spots that can boost the recovery of many economies in the region.
In fact, China began to loosen pandemic prevention measures from the beginning of December 2022. It is expected that the world’s second-largest economy will fully open in the second quarter of 2023. This is positive news for the world because China’s good trade and services with other countries amounted to nearly 7.000 billion USD in 2021.
Businesses that export a lot of goods to China will benefit.
Regarding Vietnam, Mr. Vu Manh Hung, VnDirect Securities expert, said that the group of stocks will benefit from China’s economic opening roadmap including aviation, seafood, cement, rubber, steel, textiles, retail, and rice.
In addition to the beneficiary industries, some industries are negatively affected, according to VnDirect, for example, the fertilizer industry.
China is gradually loosening its pandemic prevention measures. (Photo by CNBC)
According to Savills Vietnam, as China considers loosening control requirements, many airlines have announced the restoration of flight routes between China and Vietnam. This is a positive signal, helping to accelerate the recovery of Vietnam’s resort industry.
According to VinaCapital’s report, the opening of China will stimulate growth for Vietnam in 2023. China is currently Vietnam’s largest trading partner and has a large number of tourists to Vietnam.
TPS Securities said that China’s loosening of Zero-Covid is expected to have a positive impact on global trade, reconnecting supply chains that have been interrupted.
Currently, Beijing has agreed to fully open its border with Hong Kong from mid-January 2023, just before the Lunar New Year.
However, China’s opening can also cause commodity prices to rise sharply. For now, many economies in the world are still struggling with high inflation, including most European countries, the United States, and many Asian countries.
Crude oil prices have also risen sharply recently, with WTI oil’s price increasing by more than 11% over the past three weeks to 80 USD/barrel.
Besides, the Chinese authorities have recently had many policies to support real estate and infrastructure investment. The price of many goods such as cement, iron, steel, etc can increase rapidly again.
However, the impact of China’s opening on the world economy is still unclear. It is unsure what China’s post-zero-covid policies will be.
Recently, the number of Covid cases in China has increased sharply. Zhejiang province – the manufacturing center of China, announces one million new cases of Covid-19 every day, and the number can double around New Year’s Day, possibly to 2 million. Most likely, Beijing will have to consider opening policies when the health system can be overloaded.
Thus, the opening of China also needs more time.
Recently, the World Bank lowered its forecast for China’s economic growth in 2022 to 2.7% (compared to 4.3% in June). However, the World Bank said that the Chinese economy will return to 4.3% in 2023 thanks to the reopening.
Meanwhile, ADB lowered its forecast for China’s economic growth in 2022 from 3.3% to 3% and also expected an increase in 2023 of 4.3%. Morgan Stanley is more optimistic with a forecast increase of 5.4% in 2023./.