Some sectors to benefit, others to suffer from China’s reopening: Report

Workers make garment products at the Far Eastern New Apparel Vietnam Co in the southern province of Binh Phuoc. (Photo: VNA)

China has officially announced the easing of COVID-19 prevention measures which have been imposed for three year, and experts have said this is expected to kickstart the country's economic recovery, opening opportunities for some Vietnamese sectors in the medium term.

In a recent report, Agribank Securities Company (Agriseco) said Vietnamese businesses will benefit when China opens its doors and resumes flights between the two countries.

According to Agriseco Research, business groups that can benefit include mechanical engineering, textiles, footwear, electronics, pangasius processing, and automobiles. On the other hand, the prices of some input materials may increase again when demand recovers, such as iron and steel, cement, and base metals.

In addition to the groups that benefit, Agriseco's report also shows disadvantaged groups. For example, experts recommend that investors follow China's output recovery in the fertiliser and chemical industry.

Agriseco analysts point out that when China opens up its economy, it can restore production and remove export restrictions, causing fertiliser prices to continue to fall in 2023. China is the world's leading fertiliser exporter.

However, the country's production cuts created opportunities for Vietnamese businesses to increase their exports strongly in the past two years. Businesses like PetroVietnam Fertiliser & Chemicals Corporation (DPM) and PetroVietnam Ca Mau Fertiliser JSC (DCM) have record growth in business results in 2022. These advantages may be lost if China restores production.

With the above assessment, Agriseco forecasts that the business results of fertiliser enterprises may go backwards in 2023 as fertiliser prices continue to cool down, and there may be a decline in export activities.

Agriseco Research believes that the business results of chemical enterprises will likely go backwards in 2023 due to the cooling of chemical prices and the restoration of production in China, making export activities more competitive./.