The future of the Trans-Pacific Partnership (TPP) trade deal? was thrown into doubt early last year when the US withdrew. Vietnam was widely expected to be the largest beneficiary of the pact. Progress has now been made on the revised Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), minus the US, with stocks in Vietnam’s textile firms reacting positively. Vietnam’s textile stocks appear to have reacted positively to news the renewed Trans-Pacific Partnership (TPP) trade deal is moving forward – with the country widely expected to be one of the biggest beneficiaries of the pact.
The future of the TPP agreement was thrown into doubt early last year when President Donald Trump pulled the US out of the agreement. He had described it as a “disaster” during his election campaign, claiming it would threaten domestic jobs by introducing lower -wage competition.
Vietnam was expected to be one of the main beneficiaries of the deal. It was seen as a huge opportunity for companies to move production from high cost locations like China, to places like Vietnam; a country that has a great advantage over other Asian manufacturing destinations thanks to its low-costs and direct access to the US and Japan – both part of the TPP. A Global Economic Prospects report published by The World Bank Group in 2016 suggested Vietnam would see the largest GDP gains from the agreement – at 10% – by 2030.
One year on from Trump withdrawing from the deal and the 11 remaining countries are now moving forward with the trade pact, now renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The deal, which is expected to eliminate 98% of tariffs in a marketplace worth close to around US$13.7trn, and deliver 18 new free trade agreements between the parties, is expected to be signed in March in Chile. The progress on the deal has sent the stocks of some of Vietnam’s largest garment and textiles firms climbing since the start of the year. The Viet Tien Garment Corporation has seen its stocks grow 45% in the last month, while shares of TNG Investment and Trading have increased 17% in the last month. Thanh Cong Textile
Garment Investment Trading has seen its share price soar 111% in the past year.
Leading garment and textile group Vinatex has gained more than 66% in the first 18 trading sessions in 2018. In the past week alone, the company says its stocks have risen 41%. The company believes this is likely due to the positive progress made with CPTPP and the potential opportunities from the Vietnam-EU Free Trade Agreement (EVFTA), which is expected to take effect this year. Vinatex also has plans to divest 53.5% of state holdings in the company in 2018. Total revenues for the group in 2017 are estimated at VND45.55bn (US$1.98m), up 10.7% over 2016. Pre-tax profit remained relatively flat at VND1.43bn. The company is targeting revenues of VND48.50bn and a pre-tax profit of VND1.45bn for 2018, up 6.5% and 1.1%, respectively. Vietnam’s textile and garment industry is targeting exports of US$34bn in 2018, up 10% on 2017, as it looks to invest more in technology to boost productivity and shorten delivery times, and increase its focus on markets such as Australia and Russia.