Vietnam's top forwarder Gemadept Corp (GMD) forecast its profit next year would jump 50 percent from this year as it puts an office building, a port and a warehouse into operation.
"Even if we cannot increase our current business, next year we will have, maybe, a 50-percent profit increase compared to 2007," Gemadept CEO Do Van Minh told Reuters in an interview on Monday at the company's Ho Chi Minh City headquarters.
Minh did not say if the forecast profit was pre-tax or net, but Gemadept has projected an increase in net profit this year of 25 percent to 30 percent from last year's net 156 billion dong ($9.7 million).
Source: Reuters
Showing posts with label Forecast. Show all posts
Showing posts with label Forecast. Show all posts
Tuesday, September 11, 2007
Thursday, September 06, 2007
Vietnam to export steel by 2010
Under the strategy on steel industry development from 2007-2015 with a vision towards 2025, which has been approved by the Prime Minister, Vietnam strives to export 0.5mil tonnes of steel of different kinds.
According to the Ministry of Industry and Trade, the total volume of finished steel to be demanded by 2010 will be 11-12mil tonnes. The figures will be 15-16mil tonnes by 2015 and 24-25mil tonnes by 2025.
The general goal of the steel industry is to satisfy at the highest possible level the demand for steel products of the national economy and make steel for export. As for cast iron production, Vietnam aims to churn out 1.5-1.9mil tonnes by 2010, 5-5.8mil tonnes by 2015 and 10-12mil tonnes by 2025. As for ingot steel production, the local industry strives to put out 3.5-4.5mil tonnes by 2010, 6-8mil tonnes by 2015 and 12-15mil by 2025. Meanwhile, the production of finished steel is expected to provide 6.3-6.5mil tonnes by 2010, 11-12mil by 2015, and 19-22mil tonnes by 2025, including 11-13mil tonnes of flat steel and 0.2mil tonnes of special products.
Not only aiming to satisfy domestic demand, the strategy says that Vietnam will export steel products. However, the targeted exports prove to be modest: 0.5-0.7mil tonnes of cast iron and steel of different kinds by 2010. The volume to be exported 15 years later, by 2025, will be 1.2-1.5mil tonnes.
The strategy mentions the six big projects, saying that the implementation of the six projects, scheduled for 2007-2015, will be the most important tasks. These include 1. the Ha Tinh Steel Combinate (expected capacity 4.5mil tonnes/year, to be operational in 2011) 2. Dung Quat Complex (5mil tonnes/ year, the second phase of the project to begin in 2011) 3. South Korea’s Posco’s hot and cold rolled and galvanised steel mill (3mil tonnes/year) 4. the plate rolled steel mill to be invested in by India’s ESSA and a local partner 5. the project on expanding Thai Nguyen Cast Iron and Steel Mill and 6. the Lao Cai Steel Combinate.
Besides high capacity cast iron blast furnaces, Vietnam will also pay appropriate attention to developing medium- and small-scale workshops in northern mountainous areas, including Lao Cai, Tuyen Quang, Cao Bang, Ha Giang, Yen Bai, Bac Kan with the total capacity of 1mill tonnes a year.
In the 2016-2015 period, Vietnam will focus on producing steel with electricity-run furnaces and consider producing special steel products used in engine manufacturing and national defence.
Under the recently approved strategy, Vietnam will need $10-12bil from 2007-2025 for the investment in steel mills, of which $8bil will be used in 2007-2015. In order to have such a huge capital, Vietnam will have to diversify capital sources while pushing up the equitisation process.
Eight groups of solutions for the steel industry’s development are mentioned in the strategy, including ones on investment cooperation, material source development, training staffs, investment in science and technologies, and environmental protection as well.
Source: VNE
According to the Ministry of Industry and Trade, the total volume of finished steel to be demanded by 2010 will be 11-12mil tonnes. The figures will be 15-16mil tonnes by 2015 and 24-25mil tonnes by 2025.
The general goal of the steel industry is to satisfy at the highest possible level the demand for steel products of the national economy and make steel for export. As for cast iron production, Vietnam aims to churn out 1.5-1.9mil tonnes by 2010, 5-5.8mil tonnes by 2015 and 10-12mil tonnes by 2025. As for ingot steel production, the local industry strives to put out 3.5-4.5mil tonnes by 2010, 6-8mil tonnes by 2015 and 12-15mil by 2025. Meanwhile, the production of finished steel is expected to provide 6.3-6.5mil tonnes by 2010, 11-12mil by 2015, and 19-22mil tonnes by 2025, including 11-13mil tonnes of flat steel and 0.2mil tonnes of special products.
Not only aiming to satisfy domestic demand, the strategy says that Vietnam will export steel products. However, the targeted exports prove to be modest: 0.5-0.7mil tonnes of cast iron and steel of different kinds by 2010. The volume to be exported 15 years later, by 2025, will be 1.2-1.5mil tonnes.
The strategy mentions the six big projects, saying that the implementation of the six projects, scheduled for 2007-2015, will be the most important tasks. These include 1. the Ha Tinh Steel Combinate (expected capacity 4.5mil tonnes/year, to be operational in 2011) 2. Dung Quat Complex (5mil tonnes/ year, the second phase of the project to begin in 2011) 3. South Korea’s Posco’s hot and cold rolled and galvanised steel mill (3mil tonnes/year) 4. the plate rolled steel mill to be invested in by India’s ESSA and a local partner 5. the project on expanding Thai Nguyen Cast Iron and Steel Mill and 6. the Lao Cai Steel Combinate.
Besides high capacity cast iron blast furnaces, Vietnam will also pay appropriate attention to developing medium- and small-scale workshops in northern mountainous areas, including Lao Cai, Tuyen Quang, Cao Bang, Ha Giang, Yen Bai, Bac Kan with the total capacity of 1mill tonnes a year.
In the 2016-2015 period, Vietnam will focus on producing steel with electricity-run furnaces and consider producing special steel products used in engine manufacturing and national defence.
Under the recently approved strategy, Vietnam will need $10-12bil from 2007-2025 for the investment in steel mills, of which $8bil will be used in 2007-2015. In order to have such a huge capital, Vietnam will have to diversify capital sources while pushing up the equitisation process.
Eight groups of solutions for the steel industry’s development are mentioned in the strategy, including ones on investment cooperation, material source development, training staffs, investment in science and technologies, and environmental protection as well.
Source: VNE
Vietnam eyes more ambitious 2008 growth of 9.2 pct
Vietnam said on Thursday it has raised its economic growth target to between 9.1 percent and 9.2 percent next year from an earlier 8.7 percent, with the aim of boosting incomes and reducing poverty.
Prime Minister Nguyen Tan Dung told a cabinet meeting on Wednesday that GDP growth of 9 percent or more was attainable, the government said in a report on its Web site (www.chinhphu.gov.vn).
Dung told the cabinet that Vietnam should strive for an investment rate of 41-42 percent of GDP next year in development projects with priority given to attracting foreign investment, speeding privatisation, building highways, airports and ports.
"This is a breakthrough step to achieve industrialisation and modernisation," Dung said in the government report.
Vietnam has one of the fastest-growing economies after China, but needs big improvements in infrastructure to achieve its goal of becoming an industrialised country to compete in the regional and global economy.
The higher GDP growth target was aimed at raising Vietnam's per capita income to $1,000 in 2008 and cutting the number of poor families to 11 percent from 14.75 percent forecast for this year, Dung said.
Previously, the government had a per capita income target of $1,000 by 2010.
Government projections for 2008 are all above the targets set by the Planning and Investment Ministry (MPI), which aimed for GDP growth in 2008 of 8.6-8.9 percent and per capita income reaching $956 to $960, the ministry said in a report.
It forecast per capita income of $835 this year from $720 in 2006.
It said contribution from agriculture, fisheries and forestry to GDP next year would ease to 19 percent from 19.8 percent expected this year, while the industry and construction sectors would boost their part in GDP to 42.6 percent from 42.1 percent.
The service sector was also expected to increase its stake in GDP to 38.4 percent in 2008 from 38.1 percent in 2007.
This year GDP would grow 8.4 percent to 8.5 percent, above an initial target of 8.2-8.5 percent, thanks to faster growth in all sectors, the MPI report delivered to the cabinet said.
In April, the World Bank forecast Vietnam's GDP growth at 8 percent for both 2007 and 2008. The Asian Development Bank said in March the Southeast Asian economy would grow 8.5 percent next year after an 8.3 percent expansion this year.
Vietnam joined the World Trade Organisation in January but foreign investors say infrastructure in key sectors such as transport, energy, telecoms, banking and financial needs huge investment.
The government would pursue a stable exchange rate policy and keep inflation lower than GDP growth next year, the report said without elaborating.
Vietnam has been struggling to control inflation as foreign investment pour into one of the world's fastest-growing economies, with the central bank buying dollars to keep the dong from appreciating.
Source: Reuters
Prime Minister Nguyen Tan Dung told a cabinet meeting on Wednesday that GDP growth of 9 percent or more was attainable, the government said in a report on its Web site (www.chinhphu.gov.vn).
Dung told the cabinet that Vietnam should strive for an investment rate of 41-42 percent of GDP next year in development projects with priority given to attracting foreign investment, speeding privatisation, building highways, airports and ports.
"This is a breakthrough step to achieve industrialisation and modernisation," Dung said in the government report.
Vietnam has one of the fastest-growing economies after China, but needs big improvements in infrastructure to achieve its goal of becoming an industrialised country to compete in the regional and global economy.
The higher GDP growth target was aimed at raising Vietnam's per capita income to $1,000 in 2008 and cutting the number of poor families to 11 percent from 14.75 percent forecast for this year, Dung said.
Previously, the government had a per capita income target of $1,000 by 2010.
Government projections for 2008 are all above the targets set by the Planning and Investment Ministry (MPI), which aimed for GDP growth in 2008 of 8.6-8.9 percent and per capita income reaching $956 to $960, the ministry said in a report.
It forecast per capita income of $835 this year from $720 in 2006.
It said contribution from agriculture, fisheries and forestry to GDP next year would ease to 19 percent from 19.8 percent expected this year, while the industry and construction sectors would boost their part in GDP to 42.6 percent from 42.1 percent.
The service sector was also expected to increase its stake in GDP to 38.4 percent in 2008 from 38.1 percent in 2007.
This year GDP would grow 8.4 percent to 8.5 percent, above an initial target of 8.2-8.5 percent, thanks to faster growth in all sectors, the MPI report delivered to the cabinet said.
In April, the World Bank forecast Vietnam's GDP growth at 8 percent for both 2007 and 2008. The Asian Development Bank said in March the Southeast Asian economy would grow 8.5 percent next year after an 8.3 percent expansion this year.
Vietnam joined the World Trade Organisation in January but foreign investors say infrastructure in key sectors such as transport, energy, telecoms, banking and financial needs huge investment.
The government would pursue a stable exchange rate policy and keep inflation lower than GDP growth next year, the report said without elaborating.
Vietnam has been struggling to control inflation as foreign investment pour into one of the world's fastest-growing economies, with the central bank buying dollars to keep the dong from appreciating.
Source: Reuters
Wednesday, August 15, 2007
Domestic-made market surveys booming
A lot of market surveys conducted by domestic financial institutions have been released in the last one month.
Investors now have a lot of choices when they want reliable reports and market surveys to refer to before making investment decisions. Besides the reports released by foreign HSBC or Merrill Lynch, they can also seek information and advice in domestic-made reports by SSI, VDSC or BVSC.
SSI’s report hit the market first, called “Vietnam’s stock market: the story about development”. After that, a lot of other reports conducted by other securities firms appeared on the market with different styles and diversified analyses.
In its report, Rong Viet (Viet Dragon VDSC) provides figures showing the overall picture of the economy: GDP growth rate 7.87% in first half of 2007, FDI $5.2bil, up by 8% over the same period of the last year, committed ODA $4.4bil, and export turnover $22.4bil.
The report mentions challenges Vietnam’s economy is facing such as high inflation, low disbursement of ODA, export growth slowdown. In the report, investors can also find general analyses about the financial situations of enterprises, both listed and unlisted, which are classified by business fields.
Bao Viet Securities (BVSC) on August 8 released a report with the prediction that the VN Index will hover at the 1,000 point level at the year’s end. The report also gives reasons for the fall of the market in the second quarter of the year 1. the market did not have strong impetuses, the P/E index was high 2. the ‘room’ for foreign investors had run out in many local companies 3. the central bank issued the decision to limit loans for securities investments.
Moreover, the report also identifies another reason, which is that 90% of companies listing on HOSE issued more shares in order to raise funds to inject in real estate projects, while real estate is not their main business field.
BVSC gives an optimistic view about the business operations of several big companies and big business fields. “The VN Index is believed to be on the upturn, and possibly will return to around the 1,000 point level; by that time, the P/E will be 26-27,” the report reads.
Meanwhile, Thang Long Securities Company writes in its report that the market’s performance will be very satisfactory in the future, but will not boom.
CBV’s (Bien Viet Securities Company) report provides a review of the market in the first seven months of the year based on CBV set of indexes: CBV Index (based on the 50 listing companies which have the biggest transaction volumes and market values) reached 133.04 points in the time period, and the market capitalisation volume had reached VND315,272bil ($19,704mil) by the end of July. The profitability level of the companies in these fields, according to CBV’s method of calculation, is very satisfactory, and even though the market fell down in July, the companies still maintained profitability.
CBV advises investors to make investment in MidCap group (companies with medium scale) instead of LargeCap (big-size companies) or SmallCap. The suggested investment addresses are companies in the fields of oil and gas, consumer goods and health care.
Big companies have good positions in the market, good trademarks, but now they are absorbed in expanding their businesses into other fields, which is not necessarily to their advantage. “This is a bad thing, which may lead to the price decrease of big groups and corporations,” the report concludes.
History shows that big groups and corporations can dominate smaller ones only when they focus on their main business fields.
Analysts have said that securities firms were trying to release market reports in the last time in order to polish their names, thus attracting more clients. In general, the reports bring more advice to investors, helping them make timely and suitable decisions.
Source: VNE
Investors now have a lot of choices when they want reliable reports and market surveys to refer to before making investment decisions. Besides the reports released by foreign HSBC or Merrill Lynch, they can also seek information and advice in domestic-made reports by SSI, VDSC or BVSC.
SSI’s report hit the market first, called “Vietnam’s stock market: the story about development”. After that, a lot of other reports conducted by other securities firms appeared on the market with different styles and diversified analyses.
In its report, Rong Viet (Viet Dragon VDSC) provides figures showing the overall picture of the economy: GDP growth rate 7.87% in first half of 2007, FDI $5.2bil, up by 8% over the same period of the last year, committed ODA $4.4bil, and export turnover $22.4bil.
The report mentions challenges Vietnam’s economy is facing such as high inflation, low disbursement of ODA, export growth slowdown. In the report, investors can also find general analyses about the financial situations of enterprises, both listed and unlisted, which are classified by business fields.
Bao Viet Securities (BVSC) on August 8 released a report with the prediction that the VN Index will hover at the 1,000 point level at the year’s end. The report also gives reasons for the fall of the market in the second quarter of the year 1. the market did not have strong impetuses, the P/E index was high 2. the ‘room’ for foreign investors had run out in many local companies 3. the central bank issued the decision to limit loans for securities investments.
Moreover, the report also identifies another reason, which is that 90% of companies listing on HOSE issued more shares in order to raise funds to inject in real estate projects, while real estate is not their main business field.
BVSC gives an optimistic view about the business operations of several big companies and big business fields. “The VN Index is believed to be on the upturn, and possibly will return to around the 1,000 point level; by that time, the P/E will be 26-27,” the report reads.
Meanwhile, Thang Long Securities Company writes in its report that the market’s performance will be very satisfactory in the future, but will not boom.
CBV’s (Bien Viet Securities Company) report provides a review of the market in the first seven months of the year based on CBV set of indexes: CBV Index (based on the 50 listing companies which have the biggest transaction volumes and market values) reached 133.04 points in the time period, and the market capitalisation volume had reached VND315,272bil ($19,704mil) by the end of July. The profitability level of the companies in these fields, according to CBV’s method of calculation, is very satisfactory, and even though the market fell down in July, the companies still maintained profitability.
CBV advises investors to make investment in MidCap group (companies with medium scale) instead of LargeCap (big-size companies) or SmallCap. The suggested investment addresses are companies in the fields of oil and gas, consumer goods and health care.
Big companies have good positions in the market, good trademarks, but now they are absorbed in expanding their businesses into other fields, which is not necessarily to their advantage. “This is a bad thing, which may lead to the price decrease of big groups and corporations,” the report concludes.
History shows that big groups and corporations can dominate smaller ones only when they focus on their main business fields.
Analysts have said that securities firms were trying to release market reports in the last time in order to polish their names, thus attracting more clients. In general, the reports bring more advice to investors, helping them make timely and suitable decisions.
Source: VNE
Tuesday, August 14, 2007
RIC may beat profit target
The Taiwan-backed operator of Vietnam's biggest casino, Royal International Corp (RIC), may beat its profit target this year as it taps into the country's booming tourist industry by opening a Sheraton hotel in Halong Bay.
The company, which was floated on the Ho Chi Minh Stock Exchange <.VNI> last month, said it expects to post a net profit of $10 million for the whole of 2007, more than triple last year's figure of $2.9 million.
RIC's plan to open a 200-room Sheraton hotel, the first five-star accommodation in UNESCO-recognised Halong Bay, in October, may help it beat this target, which was set late last year.
"When we set the profit and revenue target for 2007 we did not count the revenues from Sheraton hotel so it is possible that the actual revenues and profit for 2007 would be higher than the target," Royal International Corp's Equity Department head Tran Trong Nghia said.
The Southeast Asian country is encouraging investors to build high-end hotels, resorts, and golf courses to help sustain a boom in tourism, particularly from South Korea and China.
Recent government figures in the first seven months of this year soared 27.5 percent to 1.54 million people compared to the same period last year.
Casinos are only allowed to cater to foreign tourists as gambling is banned in Vietnam.
The company posted a net profit of $4.5 million in the first half, eight times higher than the same period last year, the company said on Tuesday.
Shares in RIC rose 1.44 percent to close at 141,000 dong ($8.7) each on Tuesday, valuing the firm at about $309 million.
RIC, 63-percent-owned by Taiwanese investors, is the only casino operator listed on communist-ruled Vietnam's stock market which now has more than 110 companies.
Source: Reuters
The company, which was floated on the Ho Chi Minh Stock Exchange <.VNI> last month, said it expects to post a net profit of $10 million for the whole of 2007, more than triple last year's figure of $2.9 million.
RIC's plan to open a 200-room Sheraton hotel, the first five-star accommodation in UNESCO-recognised Halong Bay, in October, may help it beat this target, which was set late last year.
"When we set the profit and revenue target for 2007 we did not count the revenues from Sheraton hotel so it is possible that the actual revenues and profit for 2007 would be higher than the target," Royal International Corp's Equity Department head Tran Trong Nghia said.
The Southeast Asian country is encouraging investors to build high-end hotels, resorts, and golf courses to help sustain a boom in tourism, particularly from South Korea and China.
Recent government figures in the first seven months of this year soared 27.5 percent to 1.54 million people compared to the same period last year.
Casinos are only allowed to cater to foreign tourists as gambling is banned in Vietnam.
The company posted a net profit of $4.5 million in the first half, eight times higher than the same period last year, the company said on Tuesday.
Shares in RIC rose 1.44 percent to close at 141,000 dong ($8.7) each on Tuesday, valuing the firm at about $309 million.
RIC, 63-percent-owned by Taiwanese investors, is the only casino operator listed on communist-ruled Vietnam's stock market which now has more than 110 companies.
Source: Reuters
Two-digit inflation rate won’t occur
The government will instruct ministries to take necessary action to curb inflation; two-digit inflation rate will not occur, government officials said yesterday at a press conference to announce the Prime Minister’s conclusions about measures to curb the price increases.
When asked if the government would ask the National Assembly to adjust the approved plan for CPI growth rate as the prices increased sharply in the last time, Tran Quoc Toan, Deputy Chairman of the Government’s Office said that the government was determined to curb inflation, and the approved plan for CPI growth rate would still be followed.
Nguyen Xuan Phuc, Chairman of the Government’s Office, stressed that the economic potential Vietnam had now (foreign currency reserves, food and materials) was strong enough to prevent overly high price increases. Moreover, as a result of the policy on encouraging investment, the GDP growth rate would be higher than CPI in 2007.
“The scenario for two-digit inflation rate will never occur,” Mr Phuc said, denying the opinions by some experts that the inflation rate in 2007 would reach 10% or 11%.
Meanwhile, Nguyen Dong Tien, Deputy Governor of the State Bank of Vietnam, said that he did not believe those who said that the inflation rate would be two digits. “I would bet money that the inflation rate will not reach the two-digit level. I have confidence in the measures the ministries are taking to curb the price increases,” Mr Tien said.
At the press conference, the State Bank of Vietnam officially announced monetary policy solutions aiming to settle the monetary problems which people think were the main reason behind the high inflation rate in the first seven months of the year.
According to Mr Tien, in the first half of 2007, the balance of payments saw the surplus of $6bil, which has helped double the national foreign currency reserves in the last seven months compared to the end of 2006. Vietnam now has the foreign currency reserves equivalent to the payment for seven weeks of imports, the figure which was previously set for 2010.
“We are facing a problem, which has never been seen in history: the foreign investment capital flows in big quantity. We have sometimes bought $500-600mil a day, while we bought $4bil only in a whole year of 2006,” Mr Tien said, adding that this had put big pressure on the economy and needed suitable solutions.
The central bank had to spend VND to buy foreign currencies, and then issue bonds to withdraw VND from circulation. It is estimated that 82% of the cash spent on buying foreign currencies has been taken back by the bond issuances. Moreover, the decision on requiring higher compulsory reserve ratio on bank deposits has helped withdraw VND30tril from circulation, thus reducing the total payment instruments and curbing the price increases.
On August 13, the Ministry of Finance also announced it would issue VND18tril worth of bonds in the third quarter of the year. The bond issuance in July helped raise VND5tril, and it is expected that another VND13tril will be raised in August and September to withdraw cash from circulation.
Deputy Minister of Finance Tran Xuan Ha said at the press conference that his ministry would consider lowering taxes further by 50-70% on goods items which had the tax rates of 20-50% in order to ensure stable supplies, thus stabilising the market.
The goods items which may see further tax decreases include fish, materials to make food (cereal, wheat flour, canned food, sausage, fruit juice) and products belonging to the construction material group, like construction glass.
Mr Ha said that the government would keep strict control over rice exports in order to ensure food security. Vietnam has exported 2.8mil tonnes of rice so far this year, and if counting the signed contracts, the exports have reached 4.5mil tonnes, equal to the volume the government set for the whole of 2007. No more contracts will be allowed to be signed until the fourth quarter of the year.
On the decision to lower taxes on 18 categories of products effective as of August 8, Mr Ha said that if the imports could be kept at the level in the first months of the year, the state budget would lose VND1tril in the last five months of the year. However, it is necessary to sacrifice the state budget collection for the supply and demand balance of goods.
The Ministry of Trade and Industry has forecast that the drastic measures taken by ministries and branches will help curb the inflation rate at 0.5% in August 2007.
Source: VNE
When asked if the government would ask the National Assembly to adjust the approved plan for CPI growth rate as the prices increased sharply in the last time, Tran Quoc Toan, Deputy Chairman of the Government’s Office said that the government was determined to curb inflation, and the approved plan for CPI growth rate would still be followed.
Nguyen Xuan Phuc, Chairman of the Government’s Office, stressed that the economic potential Vietnam had now (foreign currency reserves, food and materials) was strong enough to prevent overly high price increases. Moreover, as a result of the policy on encouraging investment, the GDP growth rate would be higher than CPI in 2007.
“The scenario for two-digit inflation rate will never occur,” Mr Phuc said, denying the opinions by some experts that the inflation rate in 2007 would reach 10% or 11%.
Meanwhile, Nguyen Dong Tien, Deputy Governor of the State Bank of Vietnam, said that he did not believe those who said that the inflation rate would be two digits. “I would bet money that the inflation rate will not reach the two-digit level. I have confidence in the measures the ministries are taking to curb the price increases,” Mr Tien said.
At the press conference, the State Bank of Vietnam officially announced monetary policy solutions aiming to settle the monetary problems which people think were the main reason behind the high inflation rate in the first seven months of the year.
According to Mr Tien, in the first half of 2007, the balance of payments saw the surplus of $6bil, which has helped double the national foreign currency reserves in the last seven months compared to the end of 2006. Vietnam now has the foreign currency reserves equivalent to the payment for seven weeks of imports, the figure which was previously set for 2010.
“We are facing a problem, which has never been seen in history: the foreign investment capital flows in big quantity. We have sometimes bought $500-600mil a day, while we bought $4bil only in a whole year of 2006,” Mr Tien said, adding that this had put big pressure on the economy and needed suitable solutions.
The central bank had to spend VND to buy foreign currencies, and then issue bonds to withdraw VND from circulation. It is estimated that 82% of the cash spent on buying foreign currencies has been taken back by the bond issuances. Moreover, the decision on requiring higher compulsory reserve ratio on bank deposits has helped withdraw VND30tril from circulation, thus reducing the total payment instruments and curbing the price increases.
On August 13, the Ministry of Finance also announced it would issue VND18tril worth of bonds in the third quarter of the year. The bond issuance in July helped raise VND5tril, and it is expected that another VND13tril will be raised in August and September to withdraw cash from circulation.
Deputy Minister of Finance Tran Xuan Ha said at the press conference that his ministry would consider lowering taxes further by 50-70% on goods items which had the tax rates of 20-50% in order to ensure stable supplies, thus stabilising the market.
The goods items which may see further tax decreases include fish, materials to make food (cereal, wheat flour, canned food, sausage, fruit juice) and products belonging to the construction material group, like construction glass.
Mr Ha said that the government would keep strict control over rice exports in order to ensure food security. Vietnam has exported 2.8mil tonnes of rice so far this year, and if counting the signed contracts, the exports have reached 4.5mil tonnes, equal to the volume the government set for the whole of 2007. No more contracts will be allowed to be signed until the fourth quarter of the year.
On the decision to lower taxes on 18 categories of products effective as of August 8, Mr Ha said that if the imports could be kept at the level in the first months of the year, the state budget would lose VND1tril in the last five months of the year. However, it is necessary to sacrifice the state budget collection for the supply and demand balance of goods.
The Ministry of Trade and Industry has forecast that the drastic measures taken by ministries and branches will help curb the inflation rate at 0.5% in August 2007.
Source: VNE
Monday, August 13, 2007
Life insurers becoming optimistic again
The life insurance market, which has experienced two years of falling down, now is showing signs of recovery, according to the Vietnam Insurance Association (VIA).
The last two years witnessed the decline of the life insurance market with the APE (Annual Premium Equivalent) decreasing by 3-3.5% in 2005 and 2006. Big names like Prudential, AIA and Manulife all saw premiums down and lost their market shares. In 2006, the total insurance premiums of many companies saw minus growth rates, while the network of agents was narrowed by 30% compared to 2005.
However, VIA said that the market would bounce back and regain the hot development seen in 2000-2003.
The recovery of the market has been seen in the first half of the year, when most life insurers reported encouraging business results.
The total premiums gained by Bao Viet Life in the first six months of the year reached VND1,600bil, an increase of 5% compared to the same period last year, while the turnover from new policies increased by 35%. Moreover, turnover from financial investment of Bao Viet Life also increased by 20% over 2006, reaching VND600bil ($37.5mil).
AIA Vietnam has also reported satisfactory business results: the total premiums increased by 5% in the first quarter of the year over the same period last year. The business performance was even better in the second quarter with the total premiums up by 25%.
ACE Life’s business results proved to be very impressive: the total premiums increased by 300% in the first half of 2007 compared to the same period of 2006. This was a very satisfactory result if noting that the market was in the gloomy period.
Other insurers also reported increases in the real collected premiums from new policies. Prevoir, for example, saw the increase of 250%, Manulife 40% and Dai-ichi Life 22%. Total life insurance premiums grew by 9%.
Experts said that the recovery of the life insurance market was inevitable. WTO membership brings more opportunities to insurers: living standards and incomes have improved, which encourage people to take out more insurance policies.
In fact, insurers have also been trying to attract more clients. In June 2007, Prudential Vietnam announced it would give more insurance dividends worth VND521bil ($32.56mil) to eligible policyholders. The company said that this was the profit from the financial investment deals in 2006 and early months of 2007. Meanwhile, Nguyen Duc Tuan, Director General of Bao Viet Life, said that the launching of new products, which have brought new choices to clients, has helped raise the turnover of the company.
Source: VNE
The last two years witnessed the decline of the life insurance market with the APE (Annual Premium Equivalent) decreasing by 3-3.5% in 2005 and 2006. Big names like Prudential, AIA and Manulife all saw premiums down and lost their market shares. In 2006, the total insurance premiums of many companies saw minus growth rates, while the network of agents was narrowed by 30% compared to 2005.
However, VIA said that the market would bounce back and regain the hot development seen in 2000-2003.
The recovery of the market has been seen in the first half of the year, when most life insurers reported encouraging business results.
The total premiums gained by Bao Viet Life in the first six months of the year reached VND1,600bil, an increase of 5% compared to the same period last year, while the turnover from new policies increased by 35%. Moreover, turnover from financial investment of Bao Viet Life also increased by 20% over 2006, reaching VND600bil ($37.5mil).
AIA Vietnam has also reported satisfactory business results: the total premiums increased by 5% in the first quarter of the year over the same period last year. The business performance was even better in the second quarter with the total premiums up by 25%.
ACE Life’s business results proved to be very impressive: the total premiums increased by 300% in the first half of 2007 compared to the same period of 2006. This was a very satisfactory result if noting that the market was in the gloomy period.
Other insurers also reported increases in the real collected premiums from new policies. Prevoir, for example, saw the increase of 250%, Manulife 40% and Dai-ichi Life 22%. Total life insurance premiums grew by 9%.
Experts said that the recovery of the life insurance market was inevitable. WTO membership brings more opportunities to insurers: living standards and incomes have improved, which encourage people to take out more insurance policies.
In fact, insurers have also been trying to attract more clients. In June 2007, Prudential Vietnam announced it would give more insurance dividends worth VND521bil ($32.56mil) to eligible policyholders. The company said that this was the profit from the financial investment deals in 2006 and early months of 2007. Meanwhile, Nguyen Duc Tuan, Director General of Bao Viet Life, said that the launching of new products, which have brought new choices to clients, has helped raise the turnover of the company.
Source: VNE
Friday, August 10, 2007
Footwear sector sets 2010 target of 6.2 billion USD
Viet Nam’s footwear sector is striving to attain an export turnover of 6.2 billion USD and produce 720 million pairs of shoes and sandals by 2010.
The targets were set in an overall plan for the sector’s development through 2010, approved by the Ministry of Industry and Trade.
The plan estimates total investment for the sector to achieve these target at over 9.1 trillion VND (572 million USD).
Ha Noi, Da Nang and Ho Chi Minh City will dominate the sector, with emphasis on developing the local leather industry and finding more capital sources.
Source: VNA
The targets were set in an overall plan for the sector’s development through 2010, approved by the Ministry of Industry and Trade.
The plan estimates total investment for the sector to achieve these target at over 9.1 trillion VND (572 million USD).
Ha Noi, Da Nang and Ho Chi Minh City will dominate the sector, with emphasis on developing the local leather industry and finding more capital sources.
Source: VNA
Friday, August 03, 2007
Five factors in the fall of Vietnam’s stocks
The Hong Kong and Shanghai Banking Corporation (HSBC) has released the latest report in its series of reports about Vietnam’s stock market.
According to HSBC, there are five factors that contributed to the fall of the market in the last few months with the VN index down by 8% in May and 20% from its peak gained in March.
First, it was because of the overly high prices of shares. Despite the adjustments, the PE (price/earning) index of the listing shares remains relatively high at 31 (the highest level was 37), which means the PE would be 21 for 12 months (supposing that the EPS – earning per share – would be 25% for this year and 15% for the next year).
As such, the stock prices prove to be too high for an emerging market like Vietnam, though the market proves to have high growth potentials.
Based on the PE forecast for the year’s end at 18, HSBC’s experts have confirmed the prediction that the VN Index would be at 900 points by the end of the year.
Second, it was because of the possibility of the tightening of the monetary policy. With the CPI rising by 8.4% in July compared to the same period of last year, and exceeding the GDP growth rate of 8.1% in the first quarter, HSBC predicted that the central bank would require higher compulsory reserve ratio in order to control inflation. The possible move has been worrying many investors.
At the end of June, the central bank released a decision, asking commercial banks to lower the amount of loans for securities investments from the current level of 7% of total outstanding loans to 3% by the year’s end. The decision means that small investors will have to sell shares to pay debts to banks.
Third, the possible delays in equitisation process. BIDV, one of the biggest state owned banks, has asked for permission to delay its IPO. The Prime Minister has asked for a rescheduling of IPOs from now until the year’s end in order to avoid the oversupply of stocks on the market. The equitisation of four state owned banks may be delayed until strategic partners of the banks are selected.
HSBC does not think that the IPO delays would be good for the market. The IPOs themselves would help generate demand on the market as they would attract new investors, while they would help restore the confidence of investors. The delays may cause concerns that the government has become less engaged in the reform process.
According to HSBC, it is very likely that there will be no big IPOs from now to the end of the year, even in the next year.
Fourth, the unsatisfactory IPOs in the last time. Bao Viet’s share prices declined sharply after its IPO in May 2007. The prices of Thuan An Wooden Furniture and Tay Ninh Rubber Companies decreased by 17% and 13%, respectively, one week after their IPOs. These unsuccessful IPOs may foretell the lack of success of the coming IPOs.
Fifth, the disappointment of individual investors. The boom of the stock market earlier this year once made them believe that they could earn big money with stock investment. Meanwhile, the gloomy market in the last four months has disappointed them.
Foreign investors keep buying shares, but just in small quantities: they bought $54mil worth of shares in July, while the figure was $345mil in January. The daily trading volume declined sharply to $33mil in July, a half of the highest peak seen earlier this year.
However, according to HSBC, the stock market is still in good condition. Nearly all listing companies have satisfactory business results. Vinamilk, for example, has net income rising by 36% over the same period last year. Vietnam is still successfully attracting foreign investors and the national economy is growing well, though there is concern about the high inflation rate.
HSBC retains its viewpoint about Vietnam’s stock market, and it wants to accumulate Vietnamese stocks for long-term investment in the context of the VN Index coming closer to the 900 point threshold.
Source: VNE
According to HSBC, there are five factors that contributed to the fall of the market in the last few months with the VN index down by 8% in May and 20% from its peak gained in March.
First, it was because of the overly high prices of shares. Despite the adjustments, the PE (price/earning) index of the listing shares remains relatively high at 31 (the highest level was 37), which means the PE would be 21 for 12 months (supposing that the EPS – earning per share – would be 25% for this year and 15% for the next year).
As such, the stock prices prove to be too high for an emerging market like Vietnam, though the market proves to have high growth potentials.
Based on the PE forecast for the year’s end at 18, HSBC’s experts have confirmed the prediction that the VN Index would be at 900 points by the end of the year.
Second, it was because of the possibility of the tightening of the monetary policy. With the CPI rising by 8.4% in July compared to the same period of last year, and exceeding the GDP growth rate of 8.1% in the first quarter, HSBC predicted that the central bank would require higher compulsory reserve ratio in order to control inflation. The possible move has been worrying many investors.
At the end of June, the central bank released a decision, asking commercial banks to lower the amount of loans for securities investments from the current level of 7% of total outstanding loans to 3% by the year’s end. The decision means that small investors will have to sell shares to pay debts to banks.
Third, the possible delays in equitisation process. BIDV, one of the biggest state owned banks, has asked for permission to delay its IPO. The Prime Minister has asked for a rescheduling of IPOs from now until the year’s end in order to avoid the oversupply of stocks on the market. The equitisation of four state owned banks may be delayed until strategic partners of the banks are selected.
HSBC does not think that the IPO delays would be good for the market. The IPOs themselves would help generate demand on the market as they would attract new investors, while they would help restore the confidence of investors. The delays may cause concerns that the government has become less engaged in the reform process.
According to HSBC, it is very likely that there will be no big IPOs from now to the end of the year, even in the next year.
Fourth, the unsatisfactory IPOs in the last time. Bao Viet’s share prices declined sharply after its IPO in May 2007. The prices of Thuan An Wooden Furniture and Tay Ninh Rubber Companies decreased by 17% and 13%, respectively, one week after their IPOs. These unsuccessful IPOs may foretell the lack of success of the coming IPOs.
Fifth, the disappointment of individual investors. The boom of the stock market earlier this year once made them believe that they could earn big money with stock investment. Meanwhile, the gloomy market in the last four months has disappointed them.
Foreign investors keep buying shares, but just in small quantities: they bought $54mil worth of shares in July, while the figure was $345mil in January. The daily trading volume declined sharply to $33mil in July, a half of the highest peak seen earlier this year.
However, according to HSBC, the stock market is still in good condition. Nearly all listing companies have satisfactory business results. Vinamilk, for example, has net income rising by 36% over the same period last year. Vietnam is still successfully attracting foreign investors and the national economy is growing well, though there is concern about the high inflation rate.
HSBC retains its viewpoint about Vietnam’s stock market, and it wants to accumulate Vietnamese stocks for long-term investment in the context of the VN Index coming closer to the 900 point threshold.
Source: VNE
Friday, July 27, 2007
Vietnam expects rise in Jan-July industrial output
Vietnam's January-to-July industrial output is expected to jump 17 percent from a year earlier to 325.94 trillion dong ($20 billion), the government said on Friday.
The industrial sector, making up a third of Vietnam's economy, lifted gross domestic product by 7.87 percent in the first half of the year from the same period a year earlier.
Production of cars, machinery and air-conditioners during the first seven months would expand between 48.7 percent and 67.2 percent from a year ago, helping drive overall expansion, the General Statistics Office said in its monthly report.
The state sector grew 9.7 percent during the seven-month period, compared with 8.5 percent in the first half and above the 9.6 percent rate posted in the same period last year from a year earlier.
Meanwhile, enterprises outside state control and companies with foreign investment showed declines, with the non-state sector's growth easing slightly to 20.4 percent during the first seven months from 20.5 percent in the first half.
The foreign investment sector also slowed to 18.9 percent from 19.3 percent recorded in the first six months from a year earlier.
Industry accounts for 34.9 percent of gross domestic product, ranking only after the service sector which contributed 38.8 percent to Vietnam's GDP during the first six months, government figures showed.
The government aims for a GDP expansion of 9 percent in the second half of this year, saying it would help meet the annual growth target of 8.5 percent.
Source: Reuters
The industrial sector, making up a third of Vietnam's economy, lifted gross domestic product by 7.87 percent in the first half of the year from the same period a year earlier.
Production of cars, machinery and air-conditioners during the first seven months would expand between 48.7 percent and 67.2 percent from a year ago, helping drive overall expansion, the General Statistics Office said in its monthly report.
The state sector grew 9.7 percent during the seven-month period, compared with 8.5 percent in the first half and above the 9.6 percent rate posted in the same period last year from a year earlier.
Meanwhile, enterprises outside state control and companies with foreign investment showed declines, with the non-state sector's growth easing slightly to 20.4 percent during the first seven months from 20.5 percent in the first half.
The foreign investment sector also slowed to 18.9 percent from 19.3 percent recorded in the first six months from a year earlier.
Industry accounts for 34.9 percent of gross domestic product, ranking only after the service sector which contributed 38.8 percent to Vietnam's GDP during the first six months, government figures showed.
The government aims for a GDP expansion of 9 percent in the second half of this year, saying it would help meet the annual growth target of 8.5 percent.
Source: Reuters
Thursday, July 26, 2007
Viet Nam’s economic development acclaimed
Economic growth in Viet Nam is set to rank among the top rates in the region in the next few years, Germany ’s Deutsche Bank and Frankfurt Times have said.
According to German economic analysts, the steady flow of foreign investment into the country has contributed to its success, with the prospect of accelerating Viet Nam up the ladder to join China and India by 2020.
Another plus factor is Viet Nam ’s entry into the World Trade Organisation, helping accelerate the nation’s on-going reform process and opening the country up to the outside world, the economists said.
According to the Pricewaterhouse Coopers group, Viet Nam is regarded as the most attractive investment destination among 20 countries selected by the group.
Meanwhile, Chile ’s Estrategia online has run an article praising Viet Nam ’s great socio-economic achievements during its renewal process.
The paper said that Viet Nam ’s economic development as well as its increasing role in the international arena have been admired worldwide as the country has faced many hurdles following the war.
A bevy of world economic powers such as the US , Japan , Germany and the Republic of Korea have shifted their investment to Viet Nam . Foreign investment in Viet Nam was valued at close to 10 billion USD in 2006 and is expected to reach up to 12 billion USD in 2006.
However, obstacles remain as Viet Nam still struggles with poor infrastructure and financial systems.
Source: VNA
According to German economic analysts, the steady flow of foreign investment into the country has contributed to its success, with the prospect of accelerating Viet Nam up the ladder to join China and India by 2020.
Another plus factor is Viet Nam ’s entry into the World Trade Organisation, helping accelerate the nation’s on-going reform process and opening the country up to the outside world, the economists said.
According to the Pricewaterhouse Coopers group, Viet Nam is regarded as the most attractive investment destination among 20 countries selected by the group.
Meanwhile, Chile ’s Estrategia online has run an article praising Viet Nam ’s great socio-economic achievements during its renewal process.
The paper said that Viet Nam ’s economic development as well as its increasing role in the international arena have been admired worldwide as the country has faced many hurdles following the war.
A bevy of world economic powers such as the US , Japan , Germany and the Republic of Korea have shifted their investment to Viet Nam . Foreign investment in Viet Nam was valued at close to 10 billion USD in 2006 and is expected to reach up to 12 billion USD in 2006.
However, obstacles remain as Viet Nam still struggles with poor infrastructure and financial systems.
Source: VNA
Wednesday, July 25, 2007
ACB bank H1 profit exceeds all of 2006
Asia Commercial Bank (ACB), Vietnam's fifth-largest lender by assets, said on Wednesday its gross profit in the first half alone jumped nearly 30 percent from the whole of last year to 880 billion dong ($54.5 million).
The bank, which posted a gross profit of 682.4 billion dong in 2006, did not provide comparative figures for its net earnings and revenues in the same period last year.
The bank told the Hanoi stock exchange that its assets at the end of June also rose about 30 percent from the end of last year to 58.4 trillion dong ($3.6 billion).
ACB said in a statement posted on its Web site (www.acb.com.vn) that good results in the January-June period came partly from new lines of business including gold trading and new mortgage products that attracted more home buyers.
The Ho Chi Minh City-based bank, whose shares are listed on the Hanoi over-the-counter stock market, said January to June revenues totalled 2.62 trillion dong ($162 million).
ACB has said it aimed to grow at about 45 to 50 percent in the 2006-2010 period to have total assets of about $12 billion by 2010.
Demand for loans and other banking services is booming as Vietnam's economy rapidly expands. Gross domestic product (GDP) in the first half grew by an estimated 7.87 percent from a year earlier, led by the industrial and construction sectors.
Foreign investors hold a combined 30 percent in ACB. Standard Chartered Plc. owns 8.56 percent of ACB, the biggest stake of ACB's four foreign shareholders.
Shares in ACB fell 1.08 percent on Wednesday to close at 119,200 dong ($7.4) each.
Source: Reuters
The bank, which posted a gross profit of 682.4 billion dong in 2006, did not provide comparative figures for its net earnings and revenues in the same period last year.
The bank told the Hanoi stock exchange that its assets at the end of June also rose about 30 percent from the end of last year to 58.4 trillion dong ($3.6 billion).
ACB said in a statement posted on its Web site (www.acb.com.vn) that good results in the January-June period came partly from new lines of business including gold trading and new mortgage products that attracted more home buyers.
The Ho Chi Minh City-based bank, whose shares are listed on the Hanoi over-the-counter stock market, said January to June revenues totalled 2.62 trillion dong ($162 million).
ACB has said it aimed to grow at about 45 to 50 percent in the 2006-2010 period to have total assets of about $12 billion by 2010.
Demand for loans and other banking services is booming as Vietnam's economy rapidly expands. Gross domestic product (GDP) in the first half grew by an estimated 7.87 percent from a year earlier, led by the industrial and construction sectors.
Foreign investors hold a combined 30 percent in ACB. Standard Chartered Plc. owns 8.56 percent of ACB, the biggest stake of ACB's four foreign shareholders.
Shares in ACB fell 1.08 percent on Wednesday to close at 119,200 dong ($7.4) each.
Source: Reuters
Tuesday, July 24, 2007
Vietnam forecasts July CPI up 8.39 pct year on year
Vietnam forecast Tuesday that annual consumer price inflation in July would accelerate to 8.39 percent due to higher costs of food, housing and medicine, up from 7.8 percent in June. Consumers expect outbreaks of pig diseases and bird flu will lead to a surge in food prices in the coming months.
The rise in the consumer price index (CPI) this month is way above the government's initial target to keep annual inflation this year at less than 7 percent.
The Finance Ministry recently revised up the country's 2007 inflation forecast to 7.5 percent to 8.2 percent, after prices in May and June rose beyond the annual target level.
The General Statistics Office released preliminary inflation figures showing food prices in July would be 15.03 percent higher than last July, up from a rise last month of 14.86 percent.
Food prices account for 42.8 percent of the price basket Vietnam uses to calculate inflation. Vietnam's inflation data is not seasonally adjusted.
Vietnam has been confronting a pig disease involving a bacteria that has infected 22 people in northern provinces. Two died during the first half of this year, doctors said.
People infected by the bacteria suffer from rapid internal haemorrhage and high fever after they eat pork from a sick pig or inhale the air near the sick swine.
The Agriculture Ministry said thousands of pigs have been infected by a virus in two central provinces and Da Nang city, and bird flu returned to ducks in a third central province.
The statistics office forecast prices of medicine and health care this month would rise 5.04 percent from last July, higher than the price growth last month of 4.64 percent.
The accumulated CPI growth this month is estimated at 6.19 percent since last December, the statistics office said.
The World Bank earlier this year forecast Vietnam's consumer prices for 2007 would be 6.5 percent higher than 2006 while the International Monetary Fund estimated a year-end inflation rate of 7.1 percent.
Source: Thanh Nien
The rise in the consumer price index (CPI) this month is way above the government's initial target to keep annual inflation this year at less than 7 percent.
The Finance Ministry recently revised up the country's 2007 inflation forecast to 7.5 percent to 8.2 percent, after prices in May and June rose beyond the annual target level.
The General Statistics Office released preliminary inflation figures showing food prices in July would be 15.03 percent higher than last July, up from a rise last month of 14.86 percent.
Food prices account for 42.8 percent of the price basket Vietnam uses to calculate inflation. Vietnam's inflation data is not seasonally adjusted.
Vietnam has been confronting a pig disease involving a bacteria that has infected 22 people in northern provinces. Two died during the first half of this year, doctors said.
People infected by the bacteria suffer from rapid internal haemorrhage and high fever after they eat pork from a sick pig or inhale the air near the sick swine.
The Agriculture Ministry said thousands of pigs have been infected by a virus in two central provinces and Da Nang city, and bird flu returned to ducks in a third central province.
The statistics office forecast prices of medicine and health care this month would rise 5.04 percent from last July, higher than the price growth last month of 4.64 percent.
The accumulated CPI growth this month is estimated at 6.19 percent since last December, the statistics office said.
The World Bank earlier this year forecast Vietnam's consumer prices for 2007 would be 6.5 percent higher than 2006 while the International Monetary Fund estimated a year-end inflation rate of 7.1 percent.
Source: Thanh Nien
Monday, July 23, 2007
Merrill Lynch report sets party table for speculators
While experts and mass media are busy arguing how trustworthy Merrill Lynch’s report is, speculators have time and opportunities to buy shares at low prices as investors try to sell shares for fear of the forecast gloomy prospects for the stock market.
Thoi bao kinh te Vietnam has posted the analysis of Nguyen Duc Thanh, an expert, who has tried to explain why Merrill Lynch’s conclusions about Vietnam were so contradictory.
“The fact that Merrill Lynch withdraws from Vietnam, in case the recommendation of the research team is accepted, does not say much about Vietnam’s market. It says more about Merrill Lynch itself,” the author writes.
If considering the investment portfolio of Merrill Lynch in Asia, one can note that the group has more investments in well-developed markets, including the four Asian tigers (ROK, Taiwan, Hong Kong and Singapore) and Australia, which account for 70% of total investment. Meanwhile, smaller and emerging markets in Southeast Asia (Thailand, Indonesia, the Philippines and Vietnam) are clearly not its priority destinations – 8.5% of total investment only.
The remaining investment proportion has been allocated to China (14%), and South Asia (India 2.5% and Pakistan 2.5%), big markets with big opportunities. Therefore, it is quite understandable why the research team has suggested pushing up investment in India and China.
Mr Thanh has pointed out that the changes in the conclusions of Merrill Lynch about Vietnam’s stock market coincide with changes in the group’s staffs.
The first report about Vietnam’s market was released on February 2, 2006. It was written by Spencer White, Stephane Corry and Willie Chan (all were staffs of Merrill Lynch Hong Kong). As the names of the authors were not listed in alphabetical order, it could be surmised that the head of the research team was Mr Spencer. The report, forecasting a bright future, urged Merrill Lynch to enter Vietnam as soon as possible.
The second report, dated June 29, 2006, was made by the same research team. Though the market went down sharply at this time, the research team was still optimistic about Vietnam.
The third report was launched on October 5, 2006, with the note, ‘corrected’. On the list of the report’s authors, the name ‘Mark Mathews’ appeared just after Spencer, and it is interesting to note that Mark is a staff of Merrill Lynch Singapore, not Hong Kong as the other three members. It was a time when the market began recovering (and increased considerably in the next months as people witnessed). However, the report consisted of some pessimistic conclusions about Vietnam.
More pessimistic conclusions were seen in the latest report, dated July 5, 2007. In this report, the name ‘Spencer’ disappeared, and ‘Mark’ appeared as the head of the research team. The report, as said before, recommends that Merrill Lynch direct its sources of strength into China.
The viewpoint of Merrill Lynch about Vietnam seems to change in accordance with the changes of the viewpoints of the consultants to Merrill Lynch.
As such, Vietnam’s stock market and Vietnamese investors seem to be victims of some kind of ideological conflict, taking place several thousands of kilometers from Vietnam in some small office.
The report has shocked many investors and raised arguments among analysts and experts, but has brought big opportunities to many other investors and speculators.
60-year-old investor Tran Van Minh on SSI trading floor said, “Why should I follow other investors to sell shares at low prices and then have to buy shares later at high prices?” he said, adding that the VN Index would rebound to the 1,000 point level soon.
Other investors also said that it was quite normal to see the VN Index go up and down. Some of them said that they would buy shares in when the prices further dropped, adding that the report would only frighten cowardly investors.
Don Lam, Director General of Vina Capital, has advised investors to keep calm and be rational when making investment decisions. Financial institutions have the right to make their own assessments, and the assessments should be considered thoroughly.
Source: VNE
Thoi bao kinh te Vietnam has posted the analysis of Nguyen Duc Thanh, an expert, who has tried to explain why Merrill Lynch’s conclusions about Vietnam were so contradictory.
“The fact that Merrill Lynch withdraws from Vietnam, in case the recommendation of the research team is accepted, does not say much about Vietnam’s market. It says more about Merrill Lynch itself,” the author writes.
If considering the investment portfolio of Merrill Lynch in Asia, one can note that the group has more investments in well-developed markets, including the four Asian tigers (ROK, Taiwan, Hong Kong and Singapore) and Australia, which account for 70% of total investment. Meanwhile, smaller and emerging markets in Southeast Asia (Thailand, Indonesia, the Philippines and Vietnam) are clearly not its priority destinations – 8.5% of total investment only.
The remaining investment proportion has been allocated to China (14%), and South Asia (India 2.5% and Pakistan 2.5%), big markets with big opportunities. Therefore, it is quite understandable why the research team has suggested pushing up investment in India and China.
Mr Thanh has pointed out that the changes in the conclusions of Merrill Lynch about Vietnam’s stock market coincide with changes in the group’s staffs.
The first report about Vietnam’s market was released on February 2, 2006. It was written by Spencer White, Stephane Corry and Willie Chan (all were staffs of Merrill Lynch Hong Kong). As the names of the authors were not listed in alphabetical order, it could be surmised that the head of the research team was Mr Spencer. The report, forecasting a bright future, urged Merrill Lynch to enter Vietnam as soon as possible.
The second report, dated June 29, 2006, was made by the same research team. Though the market went down sharply at this time, the research team was still optimistic about Vietnam.
The third report was launched on October 5, 2006, with the note, ‘corrected’. On the list of the report’s authors, the name ‘Mark Mathews’ appeared just after Spencer, and it is interesting to note that Mark is a staff of Merrill Lynch Singapore, not Hong Kong as the other three members. It was a time when the market began recovering (and increased considerably in the next months as people witnessed). However, the report consisted of some pessimistic conclusions about Vietnam.
More pessimistic conclusions were seen in the latest report, dated July 5, 2007. In this report, the name ‘Spencer’ disappeared, and ‘Mark’ appeared as the head of the research team. The report, as said before, recommends that Merrill Lynch direct its sources of strength into China.
The viewpoint of Merrill Lynch about Vietnam seems to change in accordance with the changes of the viewpoints of the consultants to Merrill Lynch.
As such, Vietnam’s stock market and Vietnamese investors seem to be victims of some kind of ideological conflict, taking place several thousands of kilometers from Vietnam in some small office.
The report has shocked many investors and raised arguments among analysts and experts, but has brought big opportunities to many other investors and speculators.
60-year-old investor Tran Van Minh on SSI trading floor said, “Why should I follow other investors to sell shares at low prices and then have to buy shares later at high prices?” he said, adding that the VN Index would rebound to the 1,000 point level soon.
Other investors also said that it was quite normal to see the VN Index go up and down. Some of them said that they would buy shares in when the prices further dropped, adding that the report would only frighten cowardly investors.
Don Lam, Director General of Vina Capital, has advised investors to keep calm and be rational when making investment decisions. Financial institutions have the right to make their own assessments, and the assessments should be considered thoroughly.
Source: VNE
Merrill Lynch will not leave Vietnam
The recent report by Merrill Lynch did not reflect its long-term investment viewpoint, just its short-term investment outlook given the relationship between Vietnam’s market and other capital markets in the region, said Spencer White, an expert who once worked for Merrill Lynch.
Now the advisor to the Thien Viet Securities Company, Spencer White was once the head of the research team which wrote one of Merrill Lynch’s reports on Vietnam’s stock market, the one which was published in February 2006 that said Vietnam deserved to be a good investment address.
Mr Spencer talked with a Dau tu chung khoan reporter about the controversial latest report by Merrill Lynch, made by another research team of Merrill Lynch, which suggested reducing the investment level in Vietnam to zero. VietNamNet Bridge briefs the conversation.
Vietnamese investors are puzzled by the latest report by Merrill Lynch, which said that Vietnam is not a good investment address. What do you think about this?
My basic viewpoint on Vietnam’s stock market in terms of long-term investment has not changed since I wrote the report in February 2006. I believe that Vietnam is the top buy market for the next 10 years; it deserves to be one of the most attractive markets in Asia. Since I wrote the report, the VN Index has increased three fold, and the value of shares has also increased considerably.
The latest report by Merrill Lynch did not reflect its long-term investment viewpoint, just the short-term investment on the basis of the relationship between Vietnam and other capital markets in the region. Merrill Lynch’s experts think that in a couple of months, other capital markets, especially China, will see higher growth rates. However, the tendency may change as markets will change in the coming months.
Inexperienced individual investors have rushed to sell shares while foreign investors have been able to buy securities at low prices since the report was released. What would you say about the opinion that the report targeted inexperienced investors?
I can say that no Merrill Lynch report so far has been released to trick individual investors in any market, and Vietnam is not an exception. It would be a big mistake to think that Merrill Lynch’s experts have deliberately done something to influence individual Vietnamese investors. Though the share price has decreased since the report was released, I still have to say that the VN Index began falling down even before the release of the report, because Vietnam’s stock market is in its ‘correction’ period’.
After a long time of overheating, it is quite normal to see the market enter a correction period. The market will remain weak for some more time, but when positive signs of the market appear and listing companies announce their high growth rates, investors will come back to buy more shares.
Merrill Lynch said that it would move its investment capital in Vietnam to China. What do you think the possibility is that the company will leave Vietnam to head for China?
I’m not in the right position to answer the question on behalf of Merrill Lynch, but I think that Merrill Lynch will not leave Vietnam. Merrill Lynch has a long-term, serious investment strategy. I think you will see this in one or two years.
Merrill Lynch simply thinks that the Chinese market will be better than Vietnam in the coming months. The viewpoint will not affect big investment plans or the investment commitments in Vietnam Merrill Lynch has made.
The report has pointed out that the EPS in Vietnam is low, just 10% in 2007, the lowest level in the region, due to Vietnamese companies’ habit of issuing additional shares. What do you think about this?
It is understandable why companies like issuing more shares. By doing so, the companies can avoid paying interest on the capital they can get. However, the companies will have to pay a lot to use the capital, the EPS will be diluted, and the ROE will decrease. Most Vietnamese companies contact banks when they want capital, while there are many other tools they can use to get capital.
Source: VNE
Now the advisor to the Thien Viet Securities Company, Spencer White was once the head of the research team which wrote one of Merrill Lynch’s reports on Vietnam’s stock market, the one which was published in February 2006 that said Vietnam deserved to be a good investment address.
Mr Spencer talked with a Dau tu chung khoan reporter about the controversial latest report by Merrill Lynch, made by another research team of Merrill Lynch, which suggested reducing the investment level in Vietnam to zero. VietNamNet Bridge briefs the conversation.
Vietnamese investors are puzzled by the latest report by Merrill Lynch, which said that Vietnam is not a good investment address. What do you think about this?
My basic viewpoint on Vietnam’s stock market in terms of long-term investment has not changed since I wrote the report in February 2006. I believe that Vietnam is the top buy market for the next 10 years; it deserves to be one of the most attractive markets in Asia. Since I wrote the report, the VN Index has increased three fold, and the value of shares has also increased considerably.
The latest report by Merrill Lynch did not reflect its long-term investment viewpoint, just the short-term investment on the basis of the relationship between Vietnam and other capital markets in the region. Merrill Lynch’s experts think that in a couple of months, other capital markets, especially China, will see higher growth rates. However, the tendency may change as markets will change in the coming months.
Inexperienced individual investors have rushed to sell shares while foreign investors have been able to buy securities at low prices since the report was released. What would you say about the opinion that the report targeted inexperienced investors?
I can say that no Merrill Lynch report so far has been released to trick individual investors in any market, and Vietnam is not an exception. It would be a big mistake to think that Merrill Lynch’s experts have deliberately done something to influence individual Vietnamese investors. Though the share price has decreased since the report was released, I still have to say that the VN Index began falling down even before the release of the report, because Vietnam’s stock market is in its ‘correction’ period’.
After a long time of overheating, it is quite normal to see the market enter a correction period. The market will remain weak for some more time, but when positive signs of the market appear and listing companies announce their high growth rates, investors will come back to buy more shares.
Merrill Lynch said that it would move its investment capital in Vietnam to China. What do you think the possibility is that the company will leave Vietnam to head for China?
I’m not in the right position to answer the question on behalf of Merrill Lynch, but I think that Merrill Lynch will not leave Vietnam. Merrill Lynch has a long-term, serious investment strategy. I think you will see this in one or two years.
Merrill Lynch simply thinks that the Chinese market will be better than Vietnam in the coming months. The viewpoint will not affect big investment plans or the investment commitments in Vietnam Merrill Lynch has made.
The report has pointed out that the EPS in Vietnam is low, just 10% in 2007, the lowest level in the region, due to Vietnamese companies’ habit of issuing additional shares. What do you think about this?
It is understandable why companies like issuing more shares. By doing so, the companies can avoid paying interest on the capital they can get. However, the companies will have to pay a lot to use the capital, the EPS will be diluted, and the ROE will decrease. Most Vietnamese companies contact banks when they want capital, while there are many other tools they can use to get capital.
Source: VNE
Vietnam to have new banks by year end
It is expected that operation licenses will be given to one or two banks by the end of the year, which will be established in accordance with the new laws.
From July 20, 2007, the institutions and individuals that can meet the requirements of financial situation and corporate governance will be able to apply to the State Bank of Vietnam for setting up new banks.
The regulation on licensing banks and stipulating the operation of joint stock banks was published on the official gazette on July 5, thus making the regulation effective as of July 20, 2007, or 15 days after it was available on the official gazette. The regulation sets new strict requirements on financial capability, sources of capital contribution, governance and management skills.
In order to be licensed right in 2007, investors must have at least VND1tril ($62.5mil), which must be sourced from shareholders’ contributions, not from loans.
According to Kieu Huu Dung, Director of the Department for Banks and Non-bank Credit Institutions under the State Bank of Vietnam, nearly 30 applications have been made to the central banks prior to the date the new regulation came into effect, and 20 of them have applied again after the new regulation became valid and the central banks announced that they were receiving new applications.
“Our preliminary consideration shows that several investors can meet the new requirements, and it is expected that one or two banks will get the license by year’s end,” said Mr Dung.
Besides the applications for setting up new joint stock banks, the central bank is now also considering the shifting of the Postal Savings Service Company into a bank. It remains unclear whether the company will shift to operate as joint stock bank or under the mode of a state owned bank.
Mr Dung said that the central bank has received the applications for setting up three 100% foreign owned banks from the Hong Kong Shanghai and Banking Corporation HSBC, ANZ and Standard Chartered Bank. Four other banks in Asia have made the same request, but they have not fulfilled the necessary documents for submission. If meeting the set requirements, 100% foreign owned banks will be licensed five or six months after the day of document submission.
Source: VNE
From July 20, 2007, the institutions and individuals that can meet the requirements of financial situation and corporate governance will be able to apply to the State Bank of Vietnam for setting up new banks.
The regulation on licensing banks and stipulating the operation of joint stock banks was published on the official gazette on July 5, thus making the regulation effective as of July 20, 2007, or 15 days after it was available on the official gazette. The regulation sets new strict requirements on financial capability, sources of capital contribution, governance and management skills.
In order to be licensed right in 2007, investors must have at least VND1tril ($62.5mil), which must be sourced from shareholders’ contributions, not from loans.
According to Kieu Huu Dung, Director of the Department for Banks and Non-bank Credit Institutions under the State Bank of Vietnam, nearly 30 applications have been made to the central banks prior to the date the new regulation came into effect, and 20 of them have applied again after the new regulation became valid and the central banks announced that they were receiving new applications.
“Our preliminary consideration shows that several investors can meet the new requirements, and it is expected that one or two banks will get the license by year’s end,” said Mr Dung.
Besides the applications for setting up new joint stock banks, the central bank is now also considering the shifting of the Postal Savings Service Company into a bank. It remains unclear whether the company will shift to operate as joint stock bank or under the mode of a state owned bank.
Mr Dung said that the central bank has received the applications for setting up three 100% foreign owned banks from the Hong Kong Shanghai and Banking Corporation HSBC, ANZ and Standard Chartered Bank. Four other banks in Asia have made the same request, but they have not fulfilled the necessary documents for submission. If meeting the set requirements, 100% foreign owned banks will be licensed five or six months after the day of document submission.
Source: VNE
Friday, July 20, 2007
Casino delays IPO to August
The Taiwan-backed operator of Vietnam's biggest casino said on Thursday it had delayed its initial public offering to next month due to procedural problems in its application to list on the Ho Chi Minh Stock Exchange.
Royal International Corp, which runs the casino in Halong Bay, had applied to sell 8 million shares, or about 23 percent of the company, on the exchange on July 20 to raise about $100 million for expansion.
"We had some problems with the listing paperwork, but that has been resolved now and we should receive our IPO and listing licence early next week," Tran Trong Nghia, head of the equity department, told Reuters.
The new schedule for the IPO and listing should be the first week of August," Nghia added.
The firm has said it expected the shares to sell for about 200,000 dong ($12.4) each in the IPO, or 20 times their face value of 10,000 dong.
The company, which also operates 130 luxury villas in the UNESCO-Heritage Halong Bay, has contracts with U.S. hotel operator Starwood Hotels & Resorts to manage two newly built hotels in Halong City.
Vietnam is encouraging investors to build high-end hotels, resorts and golf courses to help sustain a boom in tourism, particularly from South Korea and China.
Foreign investment in the tourism sector has reached around $700 million so far this year, mostly in hotels and golf courses.
Casinos in Vietnam are allowed to cater only to foreign tourists as gambling is banned.
Source: Reuters
Royal International Corp, which runs the casino in Halong Bay, had applied to sell 8 million shares, or about 23 percent of the company, on the exchange on July 20 to raise about $100 million for expansion.
"We had some problems with the listing paperwork, but that has been resolved now and we should receive our IPO and listing licence early next week," Tran Trong Nghia, head of the equity department, told Reuters.
The new schedule for the IPO and listing should be the first week of August," Nghia added.
The firm has said it expected the shares to sell for about 200,000 dong ($12.4) each in the IPO, or 20 times their face value of 10,000 dong.
The company, which also operates 130 luxury villas in the UNESCO-Heritage Halong Bay, has contracts with U.S. hotel operator Starwood Hotels & Resorts to manage two newly built hotels in Halong City.
Vietnam is encouraging investors to build high-end hotels, resorts and golf courses to help sustain a boom in tourism, particularly from South Korea and China.
Foreign investment in the tourism sector has reached around $700 million so far this year, mostly in hotels and golf courses.
Casinos in Vietnam are allowed to cater only to foreign tourists as gambling is banned.
Source: Reuters
Tuesday, July 17, 2007
VN Index likely to remain flat in the months ahead
The VN Index went through a phase of growth and then consolidation in the first half of the year, but will likely level out in the months ahead if conditions remain unchanged.
In the first phase, which began during the closing months of 2006, the VN-Index crossed the 1,000 point threshold to peak at 1,170 on March 12, 2007 with overall market value topping VND1.64 trillion (US$102.5 million).
Then in the second phase a correction took hold, during which the VN-Index fell below the crucial 1,000-point psychological barrier on April 22. The exchange rebounded in May, but performance remained weak. Now the index fluctuates around the 1,000 level, which is still 38 per cent higher than where it was six months ago.
Despite the impressive growth on the Vietnamese stock market - total market capitalisation is currently about 31 per cent of GDP (VND304 trillion or $20 billion), surpassing the State Securities Commission’s (SSC’s) 2010 target - and the strong 7.9 per cent economic growth rate in the first half of 2007, we do not see any evidence the exchange will again aggressively climb higher for the following reasons:
First, supply will likely exceed demand. During the first six months, the 40 companies that listed added almost 451 million shares to the market, while a stream of larger companies plan to host IPOs from now until the end of the year, including the country’s four largest banks.
News has also recently hit the market of other State-owned giants in telecommunications and brewing planning to go public in the coming months.
As a result, there are questions whether the market will be able to absorb this huge influx of shares, especially given demand currently seems to be limited.
Limited demand can be attributed to several factors, including Directive 03/2007 issued by the State Bank of VN (SBV) that caps a bank’s loans on securities trading to 3 per cent of their total outstanding debt. Although the SBV has extended the deadline for credit institutions to meet the 3 per cent cap until December 31, 2007, the directive limits investors’ ability to borrow money to fund securities purchases.
Demand levels have also fallen due to the huge sum of capital frozen in the over-the-counter (OTC) market where buyers are scarce. Investors are unable to liquidate their OTC holdings and seek opportunities on the official stock market.
Second, capital disbursement of foreign investment funds has slowed.
The stock market has become increasingly attractive to foreign players with companies such as VinaCapital and Dragon Capital creating additional foreign funds. In addition many fund managers are awaiting licenses to enter the Vietnamese market.
Unfortunately, there is still no time frame for when this foreign capital will be injected into the market, especially now there is little to no investment room in blue chips and other strong-performing stocks.
In addition, most foreign funds do not want to invest in the OTC market.
A foreign fund manager recently said he was unsure when his company would spend the $200 million it has in reserve because there was nowhere to spend the cash - a case of too much money chasing too few good deals. However, the fund still plans to buy into real estate and tourism projects.
In fact, many large funds - including VinaCapital, Dragon Capital, Indochina Capital and BankInvest - are investing in resorts, real estate projects and emerging companies, taking a temporary break from securities.
Based on the above assessment, stocks prices may not increase sharply in the second half of 2007 as seen during the second half of 2006. The VN Index will likely fluctuate in the 1,000–1,100 point range with hopes it will not sink as low as 900 points. Though, falling to the dreaded 900 level is a possible scenario, particularly during the third quarter.
SME Securities predicts that if Government agencies such as the State Bank (SBV) and SSC intervene in the market - for example by postponing a few of the large IPOs in the second half of the year or ratifying new regulations during the 12th Viet Nam National Assembly that begins this month - then the index could see another bull run towards the end of 2007.
Other positive changes would include the central bank abandoning the 3 per cent cap on securities loans, or the SSC increasing foreign ownership limits.
In conclusion, market volatility is unavoidable. Smart investors should be well informed and ready for anything on the bourse. Nothing will last forever. Optimism intermixes with pessimism. But, we all agree the Vietnamese stock market is still young and has more room to grow.
Source: VNS
In the first phase, which began during the closing months of 2006, the VN-Index crossed the 1,000 point threshold to peak at 1,170 on March 12, 2007 with overall market value topping VND1.64 trillion (US$102.5 million).
Then in the second phase a correction took hold, during which the VN-Index fell below the crucial 1,000-point psychological barrier on April 22. The exchange rebounded in May, but performance remained weak. Now the index fluctuates around the 1,000 level, which is still 38 per cent higher than where it was six months ago.
Despite the impressive growth on the Vietnamese stock market - total market capitalisation is currently about 31 per cent of GDP (VND304 trillion or $20 billion), surpassing the State Securities Commission’s (SSC’s) 2010 target - and the strong 7.9 per cent economic growth rate in the first half of 2007, we do not see any evidence the exchange will again aggressively climb higher for the following reasons:
First, supply will likely exceed demand. During the first six months, the 40 companies that listed added almost 451 million shares to the market, while a stream of larger companies plan to host IPOs from now until the end of the year, including the country’s four largest banks.
News has also recently hit the market of other State-owned giants in telecommunications and brewing planning to go public in the coming months.
As a result, there are questions whether the market will be able to absorb this huge influx of shares, especially given demand currently seems to be limited.
Limited demand can be attributed to several factors, including Directive 03/2007 issued by the State Bank of VN (SBV) that caps a bank’s loans on securities trading to 3 per cent of their total outstanding debt. Although the SBV has extended the deadline for credit institutions to meet the 3 per cent cap until December 31, 2007, the directive limits investors’ ability to borrow money to fund securities purchases.
Demand levels have also fallen due to the huge sum of capital frozen in the over-the-counter (OTC) market where buyers are scarce. Investors are unable to liquidate their OTC holdings and seek opportunities on the official stock market.
Second, capital disbursement of foreign investment funds has slowed.
The stock market has become increasingly attractive to foreign players with companies such as VinaCapital and Dragon Capital creating additional foreign funds. In addition many fund managers are awaiting licenses to enter the Vietnamese market.
Unfortunately, there is still no time frame for when this foreign capital will be injected into the market, especially now there is little to no investment room in blue chips and other strong-performing stocks.
In addition, most foreign funds do not want to invest in the OTC market.
A foreign fund manager recently said he was unsure when his company would spend the $200 million it has in reserve because there was nowhere to spend the cash - a case of too much money chasing too few good deals. However, the fund still plans to buy into real estate and tourism projects.
In fact, many large funds - including VinaCapital, Dragon Capital, Indochina Capital and BankInvest - are investing in resorts, real estate projects and emerging companies, taking a temporary break from securities.
Based on the above assessment, stocks prices may not increase sharply in the second half of 2007 as seen during the second half of 2006. The VN Index will likely fluctuate in the 1,000–1,100 point range with hopes it will not sink as low as 900 points. Though, falling to the dreaded 900 level is a possible scenario, particularly during the third quarter.
SME Securities predicts that if Government agencies such as the State Bank (SBV) and SSC intervene in the market - for example by postponing a few of the large IPOs in the second half of the year or ratifying new regulations during the 12th Viet Nam National Assembly that begins this month - then the index could see another bull run towards the end of 2007.
Other positive changes would include the central bank abandoning the 3 per cent cap on securities loans, or the SSC increasing foreign ownership limits.
In conclusion, market volatility is unavoidable. Smart investors should be well informed and ready for anything on the bourse. Nothing will last forever. Optimism intermixes with pessimism. But, we all agree the Vietnamese stock market is still young and has more room to grow.
Source: VNS
Monday, July 16, 2007
Merrill Lynch pessimistic about Vietnam’s stocks
The world’s leading financial group, Merrill Lynch, which once highly praised Vietnam as a pioneer market and advised investors to inject money in Vietnam’s stocks, now says that Vietnam’s market is not attractive.
It was a big surprise to everyone when Merrill Lynch on July 5 released a report saying that Vietnam’s stock market was eroding and suggested reducing the level of securities investment in Vietnam to zero.
The report on investment strategy in Asia-Pacific in 2007 was conducted by a group of researchers belonging to Merrill Lynch.
Merrill Lynch’s recommendation to withdraw capital from Vietnam was made based on four factors: 1. transaction value on the official bourse, 2. VN Index fluctuation, 3. EPS (earning per share) index and 4. P/E (price/earning).
The average transaction value of the HCM City bourse has declined to $30mil a day, and that of the Hanoi bourse, to $7mil, down from the $60mil/day level seen in the first days of the year, the report said.
According to Merrill Lynch, Vietnam’s stock market will see things similar to what happened in Pakistan last year. Karachi Stock Exchange 100, the barometer of Pakistan’s stock market, increased by 250% from 2001-2005, while it rose by 5% o nly in 2006. In Vietnam, the VN Index increased by 145% last year after increasing by 85% two years before. The index has risen by 35% so far this year – it was 55% in the first three months of the year.
The report says that there are a few factors that can help raise the VN Index at this moment. Vietnam obtained a very impressive high growth rate of GDP in the first months of the year. However, the problem lies in the fact that domestic companies all want to issue more shares, which makes the average EPS low, at 10%.
The P/E index, according to Merrill Lynch’s researchers, has reached 39.5%, while the figure is 20% only in other regional markets. In order to show that the stock prices in Vietnam are not attractive, the researchers have quoted the figure released by Bao Viet Securities Company as saying that the P/E of Vietnam is 32.
The report has also quoted Dragon Capital’s viewpoint, an investment fund management company, on the unsatisfactory share auctions of Phu My Fertiliser and Bao Viet Insurance: the final prices of the share auctions were much lower than the levels expected by securities issuers.
Merrill Lynch said that the catalyst that could improve the situation remains very weak. Investors have been anticipating the IPO by Vietcombank scheduled for this year’s end, but many IPOs may be delayed if the market remains lackluster as nowadays. Meanwhile, the high inflation rate will put a lot of pressure on the interest rate policy, while causing the overly hot credit growth rate of joint stock banks.
Since Merrill Lynch added Vietnam onto the list of investment-worthy countries, the stock market has grown by 212%, far exceeding the average growth rate in the region at 167%.
Investors have been advised to use the capital they have to invest in China’s stocks.
US-based Merrill Lynch is the world’s leading financial group with the total assets of $1,800bil. In October 2006, Merrill Lynch itself released a very optimistic report about Vietnam’s stock market, calling Vietnam ‘our top buy’ in Asia. The report was thought to create the investment fever in Vietnam’s stock market at the end of 2006 and early 2007.
Source: VNE
It was a big surprise to everyone when Merrill Lynch on July 5 released a report saying that Vietnam’s stock market was eroding and suggested reducing the level of securities investment in Vietnam to zero.
The report on investment strategy in Asia-Pacific in 2007 was conducted by a group of researchers belonging to Merrill Lynch.
Merrill Lynch’s recommendation to withdraw capital from Vietnam was made based on four factors: 1. transaction value on the official bourse, 2. VN Index fluctuation, 3. EPS (earning per share) index and 4. P/E (price/earning).
The average transaction value of the HCM City bourse has declined to $30mil a day, and that of the Hanoi bourse, to $7mil, down from the $60mil/day level seen in the first days of the year, the report said.
According to Merrill Lynch, Vietnam’s stock market will see things similar to what happened in Pakistan last year. Karachi Stock Exchange 100, the barometer of Pakistan’s stock market, increased by 250% from 2001-2005, while it rose by 5% o nly in 2006. In Vietnam, the VN Index increased by 145% last year after increasing by 85% two years before. The index has risen by 35% so far this year – it was 55% in the first three months of the year.
The report says that there are a few factors that can help raise the VN Index at this moment. Vietnam obtained a very impressive high growth rate of GDP in the first months of the year. However, the problem lies in the fact that domestic companies all want to issue more shares, which makes the average EPS low, at 10%.
The P/E index, according to Merrill Lynch’s researchers, has reached 39.5%, while the figure is 20% only in other regional markets. In order to show that the stock prices in Vietnam are not attractive, the researchers have quoted the figure released by Bao Viet Securities Company as saying that the P/E of Vietnam is 32.
The report has also quoted Dragon Capital’s viewpoint, an investment fund management company, on the unsatisfactory share auctions of Phu My Fertiliser and Bao Viet Insurance: the final prices of the share auctions were much lower than the levels expected by securities issuers.
Merrill Lynch said that the catalyst that could improve the situation remains very weak. Investors have been anticipating the IPO by Vietcombank scheduled for this year’s end, but many IPOs may be delayed if the market remains lackluster as nowadays. Meanwhile, the high inflation rate will put a lot of pressure on the interest rate policy, while causing the overly hot credit growth rate of joint stock banks.
Since Merrill Lynch added Vietnam onto the list of investment-worthy countries, the stock market has grown by 212%, far exceeding the average growth rate in the region at 167%.
Investors have been advised to use the capital they have to invest in China’s stocks.
US-based Merrill Lynch is the world’s leading financial group with the total assets of $1,800bil. In October 2006, Merrill Lynch itself released a very optimistic report about Vietnam’s stock market, calling Vietnam ‘our top buy’ in Asia. The report was thought to create the investment fever in Vietnam’s stock market at the end of 2006 and early 2007.
Source: VNE
Sunday, July 15, 2007
GDP growth talked down
Vietnam is likely to hit its 8.5 per cent GDP growth target this year, but economists have warned that the government’s key emphasis should be on reform not growth figures.
Ayumi Konishi, country director of the Asian Development Bank in Vietnam, said the Vietnamese economy would continue to grow quickly and he was optimistic about prospects for 2007, particularly as Vietnam benefits from increased FDI and administrative and economic reforms.
Last year, the ADB forecasted Vietnam’s 2007 economic growth at around 8.0 per cent and later revised it upwards to 8.3 per cent. In the first six months of this year, GDP growth was measured at 7.87 per cent, the highest rate over the same period over the past five years, according to the General Statistics Office.
“Vietnam’s GDP will expand, thanks to continued robust export performance, investment growth and domestic demand,” said Il Houng Lee, senior resident representative of the International Monetary Fund in Vietnam.
However, Konishi said it would be a bad idea to focus too greatly on the GDP growth target and the figure should be treated as a ‘projection’ rather than a goal.
“We keep making this point because what is most important for Vietnam right now is to accelerate reforms, particularly in public administration and finances, control corruption, improve efficiency and equitise state-owned commercial banks and enterprises,” added Konishi.
Focusing on reforms was particularly important in the medium- to long-term for Vietnam’s sustainable development, he said.
Current limitations including weak governance, low labour productivity, a skilled worker shortage and inadequate infrastructure must also be tackled, he said. Despite the GDP growth optimism, Vietnam is faced with a number of risks including a potential soaring trade deficit and high inflation. Vietnam incurred a trade deficit of $4.78 billion in the first six months of this year, surpassing the 2007 forecast of $4.7 billion.
However, Konishi maintained it was incorrect to judge WTO impacts or benefits based on short-term changes in trade figures.
He said that it was essential to carefully analyse and understand trade flows. As FDI increases and domestic industries modernise, the country could see an increase in the import of equipment or capital goods.
“The true impact of the WTO accession will become clear through medium- to long-term changes in Vietnam’s economic structure, particularly as the new globalised economy requires Vietnam’s economic and administrative systems to become more efficient in order to remain competitive,” Konishi said.
Konishi said the Vietnamese Government should carefully monitor prices, particularly as Vietnam becomes more directly exposed to world market volatility.
“The risk of rising inflation could be heightened if a large positive fiscal impulse were to further add to the demand pressures in 2007. The risk of inflation, and the need to protect medium-term debt sustainability, calls for a more cautious fiscal stance,” added Lee of the IMF. Konishi, however, said that current levels of inflation were not yet at an alarming point, despite the fact that the consumer price index has risen 5.2 per cent since January.
Source: VNE
Ayumi Konishi, country director of the Asian Development Bank in Vietnam, said the Vietnamese economy would continue to grow quickly and he was optimistic about prospects for 2007, particularly as Vietnam benefits from increased FDI and administrative and economic reforms.
Last year, the ADB forecasted Vietnam’s 2007 economic growth at around 8.0 per cent and later revised it upwards to 8.3 per cent. In the first six months of this year, GDP growth was measured at 7.87 per cent, the highest rate over the same period over the past five years, according to the General Statistics Office.
“Vietnam’s GDP will expand, thanks to continued robust export performance, investment growth and domestic demand,” said Il Houng Lee, senior resident representative of the International Monetary Fund in Vietnam.
However, Konishi said it would be a bad idea to focus too greatly on the GDP growth target and the figure should be treated as a ‘projection’ rather than a goal.
“We keep making this point because what is most important for Vietnam right now is to accelerate reforms, particularly in public administration and finances, control corruption, improve efficiency and equitise state-owned commercial banks and enterprises,” added Konishi.
Focusing on reforms was particularly important in the medium- to long-term for Vietnam’s sustainable development, he said.
Current limitations including weak governance, low labour productivity, a skilled worker shortage and inadequate infrastructure must also be tackled, he said. Despite the GDP growth optimism, Vietnam is faced with a number of risks including a potential soaring trade deficit and high inflation. Vietnam incurred a trade deficit of $4.78 billion in the first six months of this year, surpassing the 2007 forecast of $4.7 billion.
However, Konishi maintained it was incorrect to judge WTO impacts or benefits based on short-term changes in trade figures.
He said that it was essential to carefully analyse and understand trade flows. As FDI increases and domestic industries modernise, the country could see an increase in the import of equipment or capital goods.
“The true impact of the WTO accession will become clear through medium- to long-term changes in Vietnam’s economic structure, particularly as the new globalised economy requires Vietnam’s economic and administrative systems to become more efficient in order to remain competitive,” Konishi said.
Konishi said the Vietnamese Government should carefully monitor prices, particularly as Vietnam becomes more directly exposed to world market volatility.
“The risk of rising inflation could be heightened if a large positive fiscal impulse were to further add to the demand pressures in 2007. The risk of inflation, and the need to protect medium-term debt sustainability, calls for a more cautious fiscal stance,” added Lee of the IMF. Konishi, however, said that current levels of inflation were not yet at an alarming point, despite the fact that the consumer price index has risen 5.2 per cent since January.
Source: VNE
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