Recent trading sessions have seen a sharp rise in Vietnam’s apparel and textile stocks, signaling the country’s increasing influence in the global garment industry. This boost follows a crisis in Bangladesh, a major competitor in the textile market.
Within two days, key Vietnamese textile companies experienced notable stock gains. Sông Hồng Garment JSC (MSH) led with a 7.9% increase, followed by TNG Investment and Trading JSC (TNG) at 5.6%, Binh Thanh Import – Export Production & Trade JSC (GIL) at 3.2%, Thành Công Textile Garment Investment Trading JSC (TCM) close to 2%, and Vinatex (VGT) at 5%. Smaller-cap stocks also benefited, with Việt Tiến Garment Corporation (VGG) up by 5%, DamSan JSC (ADS) gaining 7.3%, and GARCO 10 (M10) rising 3.4%.
Political unrest in Bangladesh has significantly disrupted its garment industry. On August 5, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) ordered a halt to garment production due to safety concerns. Although factories resumed operations on August 7, this disruption has already raised global fears of potential supply chain interruptions, especially during the critical periods of Christmas merchandise shipments and upcoming spring and summer orders.
As the world’s second-largest textile exporter, Bangladesh is crucial to the global fashion supply chain, with 2023 exports reaching $47 billion. Major brands such as Zara, H&M, Uniqlo, and Carrefour heavily rely on Bangladeshi suppliers. The recent unrest has shaken the confidence of international buyers, with SM Mannan Kochi, Chairman of the BGMEA, warning that eroded trust could have long-lasting negative impacts on Bangladesh’s textile industry.
Việt Nam is set to benefit from these challenges. The Việt Nam Textile and Apparel Association (Vitas) predicts that international buyers will increasingly shift their orders to Việt Nam, compensating for disruptions in Bangladesh. This shift is expected to gain momentum as Bangladesh’s production capacity declines during the peak season, coupled with rising labor costs that erode its price advantage.
Vietnam’s textile sector offers several competitive advantages over Bangladesh, extending beyond environmental sustainability to include production quality, timely delivery, strategic geographical positioning, and political stability. According to Nguyễn Minh Hoàng, Head of Analysis at First Vietnam Securities, the country’s investment in advanced machinery and skilled labor enables rapid diversification in production, a significant edge over Bangladesh’s focus on basic garment manufacturing.
The positive outlook for Vietnam’s textile exports is reflected in the rising share prices of apparel and textile companies. As the country continues to absorb redirected orders from Bangladesh, these stocks are poised for further gains. Vietnam’s textile export value has increased by 3% in the first seven months of 2024, with key markets, including the US, showing steady growth.
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