VINACHEM

Natural rubber, sea shipping, pharmaceuticals, seafood, oil & gas, and steel enterprises are expected to be under pressure this year, according to securities firms.

The forecast calls for continued fall of the oil price on the world market, global recession, and an economic decline, all of which will affect Vietnam.

Nguyen Duy Hung, president of the Saigon Securities Incorporated (SSI), in an interview with Thoi Bao Kinh Te Viet Nam, said the Chinese economic crisis, if it occurs, will be the biggest threat.

He said that the influences caused by the Chinese economic crisis would be even more serious than that caused by the crisis in the US in 2008.

While the US economy recovered with suitable policies, the possibility is lower for China.

2016 is expected to be an unlucky year for natural rubber manufacturers as the rubber price is still at the low level.
The lower demand from China and the world’s gloomy oil market won’t prevent the rubber price from recovering, according to BIDV Securities (BSC).

Meanwhile, the supply from big manufacturing countries would be high thanks to favorable weather conditions and the removal of the policy on supply source control.

Meanwhile, Vietcombank Securities (VCBS) believes steel manufacturers would still face significant difficulties due to the prolonged oversupply and as manufacturers refuse to reduce production to improve the situation.

It also warned that Chinese imports would be a big threat to domestic manufacturers.

Chinese manufacturers have tried to boost exports to Vietnam to ease the oversupply in their home market.

Meanwhile, under the ASEAN-China free trade agreement, the steel alloy import tariff will be cut to zero percent.

Both BSC and VCBS think that difficulties are awaiting pharmacy firms this year.

The business field would face a decrease in profit margin due to stiff competition which would require higher marketing and sales costs, while the predicted dong devaluation of 5 percent would make input materials more expensive.

BSC warned that the pressure on pharmacy firms would be even worse as a result of the Trans Pacific Partnership Agreement (TPP), under which Vietnam will have to allow contractors from the EU and TPP countries to bid for the right to provide medicine to hospitals.

Seafood companies would also meet difficulties because of the sharp devaluation of currencies and slowly increasing demand from the EU and Japan.

International organizations have predicted that the shrimp price would decrease by 4 percent in 2016 and 13 percent by 2020.

Both Goldman Sachs and Moody’s have predicted that the oil price downward trend would continue in 2016, hovering around US$40-50 per barrel, mostly because of economic growth slowdown in emerging countries.