Considerations to be made in light of US vote outcome

There are some concerns that inflation may persist and the global economic situation is expected to be more volatile. How might the US election results affect the economy in the states and beyond?

Incoming President Donald Trump may set out policies related to reducing corporate income taxes, increasing taxes from importing countries, and input prices.

In addition, the president-elect has suggested many tax cuts and deregulation measures that could boost economic expansion, but also fuel inflation if companies are unable to hire enough people to satisfy rising consumer demand.

However, some other factors can restrain inflation, including the possibility of ending some current wars early, causing the risk of reducing oil supply, while trade measures with China also aggravate the problem of recovering demand from the largest oil-importing economy.

Combined with Trump’s expected withdrawal from climate commitments, easing oil and gas exploitation, energy prices are likely to fall and remain lower, causing inflation due to lower energy prices.

Trinh Ha, a financial market analyst from Exness Investment Bank

What are the prospects for US Federal Reserve rate cuts in the near future?

Fed chairman Jerome Powell said interest rates will fall further, but probably not by much in the next few months. Powell asserted that the economy is not currently sending any signals that the Fed needs to rush to cut interest rates.

Secondly, the US economy is likely to have achieved a soft landing and there is little risk of recession The October non-farm payrolls report was mainly affected by two hurricanes and unemployment figures remained stable. The Fed has no incentive to cut interest rates quickly and expects the neutral rate to be higher by about 2-3 per cent, without having to cut further to stimulate the economy

With such developments, will the pressure on the USD/VND exchange rate be tense?

In fact, the USD increased again right before the election. After Trump was re-elected, the USD also increased with the expectation of a series of new policies. For VND, the central exchange rate has increased to almost a historical level.

With the Fed potentially slowing down interest rate cuts, the US economy possibly making a soft landing and the long-term neutral interest rate being higher, the USD will remain higher than previously expected and the Dollar Index may remain at 102-105.

The USD/VND exchange rate in the coming time will also be under less pressure, and only at some point when liquidity shortages and USD demand increase again.

With bitcoin assets rising recently, is this development related to the US election?

There are many factors leading to bitcoin’s rise, not just related to the US election. However, the world’s largest cryptocurrency has been steadily rising in the run-up to November, especially skyrocketing after the result as Trump has shown clearer support for bitcoin. The president-elect also proposed a national strategic Bitcoin reserve that boosts demand and helps to legalise this asset.

In recent times, it can be seen that the liquidity available to trade bitcoin has decreased significantly. Meanwhile, the money flow that is pouring into the market is increasing.

While the current outlook is bright, investors should note that the cryptocurrency market remains highly volatile. Bitcoin prices can fall sharply in a short period, especially when there are unexpected market movements.

With the relatively good outlook for the US economy and the ability to maintain higher long-term interest rates, how will this affect foreign capital flows into the Vietnamese stock market?

After the US election, the world’s investment cash flow has shifted significantly, with large fluctuations in assets. Accordingly, the US dollar increased sharply, along with the cryptocurrency market with bitcoin setting a record and surpassing the threshold of $80,000 per coin, while gold fell sharply. The US stock market also continued to set records and maintained a fairly good growth streak.

Cash flow returning to frontier/emerging markets in recent times has also shown signs of slowing down due to the better prospects of the US economy. With expectations of keeping interest rates high for longer, cash flow is expected to stay in the US longer, and the Vietnamese market will have to wait longer for the cash flow to reverse.

Domestically, Vietnam’s stock market is facing challenges from the decline in foreign capital flows and cautious investor sentiment. However, now global investment capital flows may be reallocated, creating new opportunities for export businesses and industries that benefit from trade policy. Next year is expected to be a time of great change, requiring stock investors to be agile and have appropriate strategies to adapt to the new context.

Will the upcoming growth momentum of the Vietnamese economy push investment in the coming time?

Expansionary fiscal policy and loose monetary policy remain the mainstays of macroeconomic policies, given the current low consumption. In this context, traditional and new growth drivers, along with removing institutional bottlenecks, will play a key role in helping Vietnam’s economy regain growth momentum with positive prospects.

It is argued that Vietnam is benefiting from the global production shift wave. This trend will continue to promote Vietnam’s foreign investment, boost its import and export, and support economic growth.

Growth momentum will be driven by public investment demand. Along with the economic recovery, private investment should also increase.

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