Public investment a catalyst for various stock groups

Tran Thang Long, head of Research at BIDV Securities Corporation (BSC), has stated that public investment is a crucial driver of economic growth, especially in developing countries like Vietnam.

Public investment volume is set at $32.9 billion for 2025. Photo: baodautu.vn

Theoretically, a 1 per cent increase in public investment would proportionally contribute to GDP growth for that year. However, more importantly, public investment establishes a robust infrastructure foundation that fosters long-term development in various sectors and industries.

BSC forecasts that from 2025, public investment will play an increasingly pivotal role in Vietnam’s economic stability and growth as the government continues to accelerate the disbursement of public investment funds for key projects such as the North-South highway system, Long Thanh International Airport, and new industrial zones.

From the perspective of Tran Hoang Son, Market Strategy director at VPBank Securities Company (VPBankS), 2025 is a significant year, with many important national events, marking the final year of the 2020-2025 term.

It is seen as a year when the government's major resolutions will be heightened, such as Resolution 158 with specific growth targets for 2025: setting GDP growth rates from 6.5-7 per cent, and striving for 7-7.5 per cent. Therefore, the acceleration of public investment disbursement is being prioritised.

According to General Statistics Office, in 2024 public investment disbursement began to accelerate from November, following two sluggish quarters, with the state's capital implementation value reaching $3.16 billion, up 5.6 per cent on-year. This is the highest growth rate since May.

Data from the Ministry of Finance indicates that by the end of December 2024, the nationwide public investment disbursement is estimated at more than $22.06 billion, accounting for 77.5 per cent of the assigned plan.

However, in the stock market, public investment stocks retreated last year. Compared to early 2024, most construction stocks like Cienco 4 Corporation, Deo Ca Traffic Infrastructure Investment JSC, Ho Chi Minh City Infrastructure Investment JSC, recorded a decline of over 10 per cent, while the VN-Index saw a 12 per cent increase in 2024.

According to Tran Hoang Son from VPBankS, the decline in public investment stocks reflects sluggish public investment disbursement last year. However, with the government’s push for public investment and the current attractive stock price levels, BSC experts say this group has substantial growth potential in 2025.

Tran Thang Long from BSC remarked that public investment policy has a spillover effect on various stock groups, directly impacting construction and materials stocks.

Many other sectors, such as logistics, shall benefit indirectly thanks to accelerated infrastructure development, which helps reduce costs and enhance operational efficiency.

Furthermore, sectors like banking, securities, and real estate are expected to revive growth as the economy accelerates and the market becomes more vibrant.

Long emphasised that as the macro environment is anticipated to become more favourable and the stock market more dynamic, these three sectors are the ones investors should focus on in 2025.

Experts, however, also caution about factors affecting public investment disbursement progress. Specifically, site clearance for some projects is delayed due to compensation issues, with many projects facing the risk of escalating costs compared to estimates because compensation is no longer as low as before.

The inspection and auditing of projects in recent times have also impacted project implementation.

Nevertheless, decisive actions, specific legal frameworks, and stronger decentralisation through the amended Public Investment Law could improve public investment disbursement significantly this year.

This year marks the final year of the Medium-term Public Investment Plan 2021-2025, thus the ongoing public investment projects will be expedited to meet the targets. This serves as a significant impetus for infrastructure development, job creation, and stimulating domestic consumption.

The government has set a public investment plan for 2025 at approximately $32.9 billion, up 2 per cent from the initial 2024 plan and an 18 per cent jump compared to the adjusted 2024 plan.

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