Wealth-Being #23 | Bức tranh chaebol của Hàn Quốc có lặp lại với Việt Nam? | Hyun Dongsik, KIM VN

Key Concepts

• Frontier Market: An economy that is more developed than the least developed countries but too small or illiquid to be a developed market.
• Chaebol (Conglomerate): Large, family-controlled business groups that dominate an economy (e.g., Samsung in Korea).
• Asset Management Company (AMC): Firms that manage pooled funds for investors.
• GDP per Capita: A measure of a country's economic output per person, used here as a benchmark for development stages.
• Foreign Currency Denominated Debt: Debt borrowed in a foreign currency (e.g., USD), which creates systemic risk if the local currency devalues.
• National Champions: Companies selected and supported by the government to compete internationally.

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1. Economic Outlook and Growth Strategy

Mr. Hundong Sik, Chairman of GIM Vietnam, highlights that Vietnam is currently at a pivotal development stage, similar to Korea in the 1970s and China in the 2010s.

• Growth Drivers: Vietnam’s growth is fueled by a diligent, smart, and "hungry" labor force. The country has successfully transitioned from a GDP per capita of $800 (20 years ago) to $5,000 today.
• Target: The government aims for 10% annual growth to reach a $10,000 GDP per capita within the next decade.
• Strategic Advice: Mr. Sik argues that the government should prioritize the quality of growth over raw numbers. He suggests focusing on technology and manufacturing sectors that can compete globally, rather than relying solely on real estate and construction to inflate GDP figures.

2. The Role of "National Champions" and Conglomerates

Drawing parallels to the Korean Chaebol model, Mr. Sik discusses the concentration of the Vietnamese economy.

• The Argument: While concentration in large groups can be a "disaster" if used for personal gain, it is an "unavoidable option" for a small, frontier market to catch up with global competitors.
• Government Responsibility: The government must act as a monitor, ensuring that selected "players" (conglomerates) use state support to develop technology and compete internationally rather than for rent-seeking behavior.
• Risk Management: He warns against the systemic risks of high corporate debt, citing the 1997 Asian Financial Crisis in Korea, which was triggered by short-term, USD-denominated debt. He notes that Vietnam’s current corporate debt-to-GDP ratio (approx. 80%) is manageable but requires careful monitoring.

3. Stock Market Dynamics and Foreign Investment

• Foreign Divestment: The recent net selling by foreign investors (approx. $1.5 billion in early 2024) is largely attributed to global portfolio restructuring—specifically, investors shifting capital toward AI and semiconductor industries in the US (NASDAQ).
• Local Resilience: A significant positive development is the rise of local retail investors. Stock accounts have grown from 2 million (2% of the population) to 12 million (12%) in five years, effectively absorbing foreign selling pressure.
• Market Weakness: The market is overly concentrated in financials (banks) and real estate (approx. 60% of market cap). Mr. Sik emphasizes the urgent need for new IPOs in tech and innovation sectors to provide diversity and attract foreign capital back to the market.

4. Developing the Asset Management Industry

Mr. Sik identifies the lack of professional fund management as a hurdle for long-term stability.

• The "Direct Investment" Phase: Like Korea and China, Vietnam is currently in a phase where individuals prefer direct trading. He expects a shift toward professional management only after retail investors experience market volatility and losses.
• Policy Recommendations:
  • Tax Incentives: Implement tax-exempt funds for long-term investors (7–10 years), similar to the successful model in Thailand.
  • Pension Reform: Allow pension funds to invest in the stock market. Currently, they are restricted to government bonds and deposits, which limits their ability to generate returns and support market liquidity.

5. Synthesis and Conclusion

Mr. Sik concludes that Vietnam is well-positioned for the next 3–5 years, especially with the potential inclusion in emerging market indices. However, to ensure sustainable growth, the country must:

1. Diversify the stock market by listing new, tech-oriented companies.
2. Foster a professional fund management industry through tax incentives and pension reform.
3. Allocate capital strategically toward companies that can compete on the global stage rather than domestic-only players.

Notable Quote: "If I were Vietnam, I’m going to choose the companies who have to compete with international companies, not domestic companies... The person who chooses the player, they have to monitor." — Mr. Hundong Sik.