The Hong Kong and Shanghai Banking Corporation (HSBC) has released a new report in a series of reports about Vietnam’s national economy and financial market.
In the report, HSBC’s experts advise investors to buy Vietnamese stocks at this moment.
At the end of January 2007, HSBC gave the forecast that the VN Index would stand at the 900 point level by the end of this year, and the forecast was repeated in its latest report. After declining by 25% after hitting its peak in March, the VN Index has come back to the forecast level, making share items on the bourse become attractive – once again.
Vietnam’s national economy maintains high growth rates, 8.1% in the second quarter of 2007, while the foreign direct investment (FDI) keeps flowing into Vietnam in big quantities ($6.7bil to date, much higher than last year’s level of $2.8bil). Vietnam’s export growth rate is at 19%.
Meanwhile, the growth rate of the profit of listing companies proves to be very satisfactory. The net profit of the 12 companies which own the 12 blue chips saw the impressive growth rate of 83% in the first half of the year. Some of them saw profit double or triple that of the same period last year.
However, the report reminded investors that the high profit of the listing companies came from financial investment deals. Vinamilk (the Vietnam Dairy Products Company), for example, would have gained the net profit of 23% instead of 36% if it had not made financial investments.
As many companies have issued additional shares, the EPS proves to be much lower than the net profit growth rate. Anyway, the EPS in the first half of the year still grew by 35% over the same period of last year.
Investment fund management companies in Vietnam share the same view that EPS growth rate will be between 22% and 25% this year, and 15-20% in 2008. Meanwhile, the EPS growth rate of Indian companies is expected to be 9% this year and 20% next year. The figures are 15% and 19% for Chinese companies, respectively, and 19% and 11% for Malaysian companies. Therefore, investors may see that the EPS growth rate for Vietnamese companies is relatively attractive.
The prices of the stocks on Vietnam’s bourse are believed to have returned to the actual values. In March, when the market was very hot, the P/E was 37, and now it has fallen to 31. If considering that the EPS growth rate is 25% this year and 15% the next year, the P/E of 2008 would be 20.
Though share prices prove to be not so cheap, HSBC still believes that the current price levels are close to the actual values. According to HSBC, the VN Index is likely to reach the 1,100 point level by the end of 2008.
Until now, Vietnam has not born impacts of the world’s stock market crisis. The majority of foreign currencies on Vietnam’s market come from domestic funds, which do not have plans to sell.
In fact, only a small part of the total capital of foreign investment funds has been injected in the market. Funds are still holding onto capital, waiting for the share issuances in the last six months of the year. HSBV thinks that some $3bil more remains undisbursed. Once the VN Index is around the 900 point level, which foreign investors think is close to the actual value, the capital will be pumped into the market.
This explains the recovery of Vietnam’s stock market in the context of the world’s gloomy market. While Asian markets have witnessed sharp falls of 18% between July 24 and August 17, Vietnam’s saw the slight decrease of 9.6%, the lowest decrease among Asian markets.
Nevertheless, HSBC has warned that Vietnam’s stock market will be influenced if the world’s market continues fluctuating.
HSBC does not share the same viewpoint as Vietnamese officials that massive IPOs, slated for the remaining months of the year, will cause indigestion in the market due to oversupply. HSBC thinks that demand will increase when there is supply, saying that the IPOs may serve as a catalyst for the recovery of the market.
Source: VNE
Showing posts with label HSBC. Show all posts
Showing posts with label HSBC. Show all posts
Friday, August 31, 2007
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
Monday, July 09, 2007
Foreign banks preparing new attack?
In the last 10 years, foreign banks have not threatened domestic banks in the monetary market. However, experts say they are preparing a new attack in an attempt to dominate the domestic market.
While domestic banks have been growing rapidly in terms of network and chartered capital, foreign banks in Vietnam have not made any recent advances.
According to the Department for Banks and Non-bank Credit Institutions under the State Bank of Vietnam, in 1997-2006, the chartered capital of credit institutions increased by 4.96 times on average, while the figure was only 2.35 for foreign banks.
The market share of foreign banks has narrowed: down from 16.6% to 9.7% in terms of total assets, from 15.9% to 9.7% in terms of mobilised capital, and from 19.8% to 8.9% in terms of outstanding loans.
Due to many reasons, including ones relating to legal framework, the level of economic development, income and Vietnamese people’s habits, products and services provided by foreign banks in Vietnam remain limited.
Most foreign banks have been focusing on several services, like lending (wholesale lending), commercial support (opening accounts in VND and foreign currencies, money remittance, letter of credit L/C, frame agreement on commercial support), funding export-import projects, or funding projects. The main clients of foreign banks are foreign-invested production and processing enterprises, and big Vietnamese companies which have good business results.
It has been very difficult for foreign banks to expand their targeted clients. While foreign banks only establish credit relations with companies with healthy financial capability, transparent information, many Vietnamese companies cannot meet the requirements. That explains why foreign banks just access domestic enterprises through contracts on syndicated loans with domestic banks.
Up to now, the income for foreign banks has come mainly from lending activities and capital trading on the inter-bank market.
Statistics show that the borrowing and lending sums of foreign banks to other credit institutions in Hanoi account for 44.5% of the total assets of the banks, while the proportion in state-owned banks is 1.2%. Foreign banks mainly lend in foreign currencies, and they borrow mainly in VND.
Experts have said that the profit of foreign banks will reduce as domestic banks want to lower the percentage of borrowing from other credit institutions. This will force foreign banks to apply other measures to restructure their income.
The experts have said that foreign banks plan to expand their services, offering services on the financial market, services on card and commercial support. Especially, foreign banks will pay more attention to retail services, as they begin eyeing the market with 85mil people.
The Hong Kong and Shanghai Banking Corporation (HSBC) and Standard Chartered have been leading in providing retail services with the initial services of asset and transaction management for small- and medium-size enterprises and individuals.
In the time to come, foreign banks will introduce other products, including lending to serve the consumption demand, lending to individual clients (foreigners living and working in Vietnam, and Vietnamese high income earners) and providing credit to small- and medium-size enterprises.
They will also provide modern products like helping Vietnamese enterprises access the international capital market, implementing swap transactions and other derivatives.
It is clear that foreign banks have outstanding advantages over domestic banks in providing such high-grade services. And it is clear that foreign banks do not intend to compete with domestic banks in terms of quantity of services, but try to provide better quality services.
Source: VNE
While domestic banks have been growing rapidly in terms of network and chartered capital, foreign banks in Vietnam have not made any recent advances.
According to the Department for Banks and Non-bank Credit Institutions under the State Bank of Vietnam, in 1997-2006, the chartered capital of credit institutions increased by 4.96 times on average, while the figure was only 2.35 for foreign banks.
The market share of foreign banks has narrowed: down from 16.6% to 9.7% in terms of total assets, from 15.9% to 9.7% in terms of mobilised capital, and from 19.8% to 8.9% in terms of outstanding loans.
Due to many reasons, including ones relating to legal framework, the level of economic development, income and Vietnamese people’s habits, products and services provided by foreign banks in Vietnam remain limited.
Most foreign banks have been focusing on several services, like lending (wholesale lending), commercial support (opening accounts in VND and foreign currencies, money remittance, letter of credit L/C, frame agreement on commercial support), funding export-import projects, or funding projects. The main clients of foreign banks are foreign-invested production and processing enterprises, and big Vietnamese companies which have good business results.
It has been very difficult for foreign banks to expand their targeted clients. While foreign banks only establish credit relations with companies with healthy financial capability, transparent information, many Vietnamese companies cannot meet the requirements. That explains why foreign banks just access domestic enterprises through contracts on syndicated loans with domestic banks.
Up to now, the income for foreign banks has come mainly from lending activities and capital trading on the inter-bank market.
Statistics show that the borrowing and lending sums of foreign banks to other credit institutions in Hanoi account for 44.5% of the total assets of the banks, while the proportion in state-owned banks is 1.2%. Foreign banks mainly lend in foreign currencies, and they borrow mainly in VND.
Experts have said that the profit of foreign banks will reduce as domestic banks want to lower the percentage of borrowing from other credit institutions. This will force foreign banks to apply other measures to restructure their income.
The experts have said that foreign banks plan to expand their services, offering services on the financial market, services on card and commercial support. Especially, foreign banks will pay more attention to retail services, as they begin eyeing the market with 85mil people.
The Hong Kong and Shanghai Banking Corporation (HSBC) and Standard Chartered have been leading in providing retail services with the initial services of asset and transaction management for small- and medium-size enterprises and individuals.
In the time to come, foreign banks will introduce other products, including lending to serve the consumption demand, lending to individual clients (foreigners living and working in Vietnam, and Vietnamese high income earners) and providing credit to small- and medium-size enterprises.
They will also provide modern products like helping Vietnamese enterprises access the international capital market, implementing swap transactions and other derivatives.
It is clear that foreign banks have outstanding advantages over domestic banks in providing such high-grade services. And it is clear that foreign banks do not intend to compete with domestic banks in terms of quantity of services, but try to provide better quality services.
Source: VNE
Investors should be realistic about information
Thomas Tobin, the newly appointed Director General of the Hong Kong and Shanghai Banking Corporation Vietnam (HSBC), stressed that HSBC’s report should not be seen as the only source of information about the stock market which investors should rely on when making investment decisions. He said that investors should refer to many sources of information.
Responding to the criticism from the public that HSBC’s report on Vietnam’s stock market was too pessimistic and did not reflect the real situation, Thomas Tobin, HSBC Vietnam Director General, said that investors should consider information from different sources rather than relying only on HSBC’s predictions.
In its latest report, HSBC forecast that the VN Index would drop to the 900 point level by the end of this year. Mr Tobin said that the report was made by a group of independent experts, who made the conclusion based on many criteria. He declined to give any comments personally on the report.
According to Mr Tobin, HSBC Vietnam did not give any information or figures about Vietnam’s stock market to the research team. The experts in charge of making the report got information themselves from several institutions in Vietnam. Mr Tobin’s words can be understood as meaning that HSBC Vietnam did not play any role in the market surveying and report making.
When the story reporter mentioned the errors in a previous report by HSBC, also about Vietnam’s stock market, Mr Tobin said that the mistakes occurred during information processing. However, he stressed that they were just errors in figures which did not affect the conclusion of the report.
He added that HSBC’s report was made to serve its clients. In fact, there always exist different viewpoints on the same issue. In fact, HSBC’s report has had big impacts on the feelings of investors, but Mr Tobin said that it would be better for investors to seek more information from various sources.
When asked to make comments about Vietnam’s stock market, Mr Tobin said that Vietnam was a dynamic economy which had a good foundation for development. Foreign investors are paying more and more attention to Vietnam as a potential market. They have also been impressed by the high GDP growth rate of Vietnam. All of these factors have lured them to Vietnam.
Source: VNE
Responding to the criticism from the public that HSBC’s report on Vietnam’s stock market was too pessimistic and did not reflect the real situation, Thomas Tobin, HSBC Vietnam Director General, said that investors should consider information from different sources rather than relying only on HSBC’s predictions.
In its latest report, HSBC forecast that the VN Index would drop to the 900 point level by the end of this year. Mr Tobin said that the report was made by a group of independent experts, who made the conclusion based on many criteria. He declined to give any comments personally on the report.
According to Mr Tobin, HSBC Vietnam did not give any information or figures about Vietnam’s stock market to the research team. The experts in charge of making the report got information themselves from several institutions in Vietnam. Mr Tobin’s words can be understood as meaning that HSBC Vietnam did not play any role in the market surveying and report making.
When the story reporter mentioned the errors in a previous report by HSBC, also about Vietnam’s stock market, Mr Tobin said that the mistakes occurred during information processing. However, he stressed that they were just errors in figures which did not affect the conclusion of the report.
He added that HSBC’s report was made to serve its clients. In fact, there always exist different viewpoints on the same issue. In fact, HSBC’s report has had big impacts on the feelings of investors, but Mr Tobin said that it would be better for investors to seek more information from various sources.
When asked to make comments about Vietnam’s stock market, Mr Tobin said that Vietnam was a dynamic economy which had a good foundation for development. Foreign investors are paying more and more attention to Vietnam as a potential market. They have also been impressed by the high GDP growth rate of Vietnam. All of these factors have lured them to Vietnam.
Source: VNE
Saturday, July 07, 2007
HSBC raises stake in Techcombank
The Hong Kong Shanghai Bank Corporation (HSBC) has received the nod from the State Bank of Viet Nam (SBV) to raise its stake in the Viet Nam Technical and Commercial Joint Stock Bank (Techcombank) from 10 percent to 15 percent, worth 33.7 million USD.
The approval made HSBC the first foreign bank allowed to own 15 percent of capital in a local joint stock bank.
The government in April issued a document allowing foreign banks to own 15 percent of stake in a domestic bank. The rate can be raised to 20 percent with government approval.
The HSBC plans to seek to increase its stake in Techcombank to 20 percent.
Source: VNA
The approval made HSBC the first foreign bank allowed to own 15 percent of capital in a local joint stock bank.
The government in April issued a document allowing foreign banks to own 15 percent of stake in a domestic bank. The rate can be raised to 20 percent with government approval.
The HSBC plans to seek to increase its stake in Techcombank to 20 percent.
Source: VNA
Thursday, July 05, 2007
Misleading and conflicting information confusing investors
The biggest problem with the stock market now is the lack of information. Investors still have to make investment decisions when they do not have necessary information, and in many cases, they incur losses.
Investors who did not sell shares on July 3 breathed a sigh of relief as both the VN Index and HASTC Index recovered the next day, July 4. Meanwhile, a lot of investors who tried to sell shares on that day following the warning by HSBC and other analysts that the VN Index would fall to below the 900 point level felt unhappy as the warnings turned out to have been unfounded.
Dang Vu Hai, an investor in HCM City, said that investors had to pay a high price for the confusing information.
According to Nguyen Diem Thuy Nga, an investor on ACBS trading floor, in fact, investors can get information from official channels, including the websites of listing companies, Hanoi and HCM City Securities Trading Centres, and from the State Securities Commission (SSC). However, the official information always comes late, so investors cannot rely on it to make investment decisions.
Mrs Nga said that investors always had to get information through their own channels, and false information, like the warning released by HSBC, has made investors suffer.
Tran Hoang Thang, a securities analyst, said that SSC should take action to prevent the release of false information and investigate to see what stands behind the false information.
Phan Vu Tuan, Deputy Director General of International Securities Company, said that many investors had complained about the scheme on information providing. They have been shocked by the information, sometimes too optimistic, and sometimes too pessimistic. “If believing the information, one would think the stock market would either triumph or collapse immediately.”
Dominic Scriven, Director of Dragon Capital, frankly said that information about Vietnam’s stock market was seriously lacking, while there was no in-depth analysis from learned experts.
Le Nhi Nang, Deputy Director of the HCM City Securities Trading Centre, has also acknowledged that the information provided by the stock market watchdog remains insufficient to meet the demand of investors.
Meanwhile, the director of a big securities company said he felt that false information was being released on purpose. Since last year, foreign institutions have five times at least been warned that the market would fall sharply, but foreign investors still kept buying shares, indicating they did not believe the reports.
Source: VNE
Investors who did not sell shares on July 3 breathed a sigh of relief as both the VN Index and HASTC Index recovered the next day, July 4. Meanwhile, a lot of investors who tried to sell shares on that day following the warning by HSBC and other analysts that the VN Index would fall to below the 900 point level felt unhappy as the warnings turned out to have been unfounded.
Dang Vu Hai, an investor in HCM City, said that investors had to pay a high price for the confusing information.
According to Nguyen Diem Thuy Nga, an investor on ACBS trading floor, in fact, investors can get information from official channels, including the websites of listing companies, Hanoi and HCM City Securities Trading Centres, and from the State Securities Commission (SSC). However, the official information always comes late, so investors cannot rely on it to make investment decisions.
Mrs Nga said that investors always had to get information through their own channels, and false information, like the warning released by HSBC, has made investors suffer.
Tran Hoang Thang, a securities analyst, said that SSC should take action to prevent the release of false information and investigate to see what stands behind the false information.
Phan Vu Tuan, Deputy Director General of International Securities Company, said that many investors had complained about the scheme on information providing. They have been shocked by the information, sometimes too optimistic, and sometimes too pessimistic. “If believing the information, one would think the stock market would either triumph or collapse immediately.”
Dominic Scriven, Director of Dragon Capital, frankly said that information about Vietnam’s stock market was seriously lacking, while there was no in-depth analysis from learned experts.
Le Nhi Nang, Deputy Director of the HCM City Securities Trading Centre, has also acknowledged that the information provided by the stock market watchdog remains insufficient to meet the demand of investors.
Meanwhile, the director of a big securities company said he felt that false information was being released on purpose. Since last year, foreign institutions have five times at least been warned that the market would fall sharply, but foreign investors still kept buying shares, indicating they did not believe the reports.
Source: VNE
HSBC to issue Vietnam bonds worth $496 mln
HSBC has become the first foreign bank in Vietnam to receive permission to issue long-term bonds this year.
The bond issue will be equivalent to 8 trillion dong ($496 million).
"The coupon on the long-term paper issued in 2007 by HSBC in Vietnam should match market interest rates," the central bank said in a directive seen on Thursday.
HSBC officials in Hanoi said details of the bond issue had not been finalised.
The bank, which has two retail branches in the capital Hanoi and trade hub Ho Chi Minh City, was also the first foreign bank in the country to offer dollar-denominated certificates of deposit two years ago, with interest now ranging from 4.1 to 4.85 percent.
Bankers in Hanoi said dong-denominated corporate bonds are much sought after by foreign investors for their attractive annual yields of 9 percent to 10 percent.
Source: Reuters
The bond issue will be equivalent to 8 trillion dong ($496 million).
"The coupon on the long-term paper issued in 2007 by HSBC in Vietnam should match market interest rates," the central bank said in a directive seen on Thursday.
HSBC officials in Hanoi said details of the bond issue had not been finalised.
The bank, which has two retail branches in the capital Hanoi and trade hub Ho Chi Minh City, was also the first foreign bank in the country to offer dollar-denominated certificates of deposit two years ago, with interest now ranging from 4.1 to 4.85 percent.
Bankers in Hanoi said dong-denominated corporate bonds are much sought after by foreign investors for their attractive annual yields of 9 percent to 10 percent.
Source: Reuters
Wednesday, July 04, 2007
Is HSBC’s warning trustworthy?
The stock market has been stirred up by the prediction of HSBC’s securities expert Garry Evans who said that the VN Index would fall to the 900 point level by the end of this year. However, analysts have said that the warning is not reliable.
The Hong Kong and Shanghai Banking Corporation (HSBC) has relied on the P/E indexes of listing companies as the main basis for the warning.
HSBC concluded that the P/E indexes of many share items were too high though they had been adjusted recently.
It is not understandable why HSBC just refers to the P/E indexes to give such a conclusion. Both foreign and domestic securities experts think that it is a correct method, but ultimately insufficient.
Huy Nam, a securities expert, said: “If only looking at the P/E Index, no one would dare inject money in blue chips like FPT, VNM, STB, ITA, TDH, and VHS. I think it is necessary to consider other indexes as well, including profit, prospects and demand and supply basis.”
The director of a securities company said that HSBC was presumptuous to give such a conclusion. Investors should still buy share items which have a high P/E index as long as they have good prospects and profitability. If the profit is big next year, the P/E will decrease, he said.
Securities expert Tran Ngoc Nam also questioned if HSBC wasn’t too hasty giving the warning at a very sensitive moment. He recalled that in May 2007, HSBC cited false information about the P/E indexes of SSI, PVD, BVS, BTS and VNR, creating bad impacts on the market. The banking corporation had to correct the information but the share items suffered before the correction.
In fact, the warning has not caused havoc because investors are wise enough to question: why are foreign investors still buying shares despite HSBC’s warning?
In the six consecutive trading sessions from June 26 to July 3, foreign investors bought more than they sold, while they bought more than at any other time during the trading sessions just before and after HSBC’s warning was released.
On July 2, when the VN Index fell down to below 1,000 points and disappointment pervaded the trading floors, foreign investors bought shares in large quantities. The purchasing volume was 2.5-fold higher and the purchasing value was 3-fold higher than the sales (bought: 1.673mil units, VND252bil; sold: 633,000 units, VND71bil).
On July 3, 2007, a lot of share items that, according to HSBC report, had high P/E indexes like FPT, SJS, TAC, HRC, and PVD, were hunted by foreign investors, and many of the items have run out of room for foreign investors.
Huynh Anh Tuan, Head of the Brokerage Division under ACB Securities Company, said that in most cases, domestic investors should not follow foreign investors, but they should analyse the recent moves by foreign investors.
Vu Ngoc Huy, a Viet Kieu investor on SBS trading floor, noted: “If foreign investors believed the warning of HSBC, they would not buy shares in such large quantities. Having 20 years of experience as an investor in the US, I dare say that foreign investors do not pay any attention to the warning.”
Director of an investment fund also said that foreign investors all had their own sources of information and analysis, and they knew what to do at a given time. Domestic investors prove to be too hasty when selling shares for fear that the VN Index will fall to below the 1,000 point level.
Analysts have reminded the public that the scenario has occurred at least three times so far this year. Domestic investors, believing warnings of foreign experts, tried to sell shares while foreign investors tried to buy. And domestic investors have since had to buy shares from foreign investors at high prices.
Source: VNE
The Hong Kong and Shanghai Banking Corporation (HSBC) has relied on the P/E indexes of listing companies as the main basis for the warning.
HSBC concluded that the P/E indexes of many share items were too high though they had been adjusted recently.
It is not understandable why HSBC just refers to the P/E indexes to give such a conclusion. Both foreign and domestic securities experts think that it is a correct method, but ultimately insufficient.
Huy Nam, a securities expert, said: “If only looking at the P/E Index, no one would dare inject money in blue chips like FPT, VNM, STB, ITA, TDH, and VHS. I think it is necessary to consider other indexes as well, including profit, prospects and demand and supply basis.”
The director of a securities company said that HSBC was presumptuous to give such a conclusion. Investors should still buy share items which have a high P/E index as long as they have good prospects and profitability. If the profit is big next year, the P/E will decrease, he said.
Securities expert Tran Ngoc Nam also questioned if HSBC wasn’t too hasty giving the warning at a very sensitive moment. He recalled that in May 2007, HSBC cited false information about the P/E indexes of SSI, PVD, BVS, BTS and VNR, creating bad impacts on the market. The banking corporation had to correct the information but the share items suffered before the correction.
In fact, the warning has not caused havoc because investors are wise enough to question: why are foreign investors still buying shares despite HSBC’s warning?
In the six consecutive trading sessions from June 26 to July 3, foreign investors bought more than they sold, while they bought more than at any other time during the trading sessions just before and after HSBC’s warning was released.
On July 2, when the VN Index fell down to below 1,000 points and disappointment pervaded the trading floors, foreign investors bought shares in large quantities. The purchasing volume was 2.5-fold higher and the purchasing value was 3-fold higher than the sales (bought: 1.673mil units, VND252bil; sold: 633,000 units, VND71bil).
On July 3, 2007, a lot of share items that, according to HSBC report, had high P/E indexes like FPT, SJS, TAC, HRC, and PVD, were hunted by foreign investors, and many of the items have run out of room for foreign investors.
Huynh Anh Tuan, Head of the Brokerage Division under ACB Securities Company, said that in most cases, domestic investors should not follow foreign investors, but they should analyse the recent moves by foreign investors.
Vu Ngoc Huy, a Viet Kieu investor on SBS trading floor, noted: “If foreign investors believed the warning of HSBC, they would not buy shares in such large quantities. Having 20 years of experience as an investor in the US, I dare say that foreign investors do not pay any attention to the warning.”
Director of an investment fund also said that foreign investors all had their own sources of information and analysis, and they knew what to do at a given time. Domestic investors prove to be too hasty when selling shares for fear that the VN Index will fall to below the 1,000 point level.
Analysts have reminded the public that the scenario has occurred at least three times so far this year. Domestic investors, believing warnings of foreign experts, tried to sell shares while foreign investors tried to buy. And domestic investors have since had to buy shares from foreign investors at high prices.
Source: VNE
HSBC forecast rocks investor confidence
A HSBC report predicting the VN-Index will drop to 900 points by the end of the year caused havoc on the exchange on July 3.
The index, the country’s primary stock indicator, on July 3 closed at 977.3 points with the HCM City Securities Trading Centre trading at a price-earnings (P/E) ratio of around 33 times on 2006 earnings.
“Assuming 25 percent EPS (earnings per share) growth this year and 15 percent next (roughly the rate of nominal GDP growth), this equates to a P/E of 25 on 2007 earnings and 21 on 2008,” the report said, indicating the market is currently grossly overvalued.
Most investment funds are not hurrying to pump more money into the stock market, wrote HSBC analysts, and are expected to use their cash positions during initial public offerings of large State-owned enterprises during the second half of the year.
HSBC indicated it would not be aggressive buyer at this time, though “the fundamental long-term story for Viet Nam is very much intact.” The leading global bank predicts the index to move sideways over the next few months.
The HSBC forecast shocked Vietnamese investors given local analysts have been predicting the index would rebound to as high as 1,300 points by the end of the year.
However, foreign fund managers were seemingly unfazed by the HSBC news.
Juerg Vontobel, chairman of the Viet Nam Holding Asset Management, said foreign investors have been very cautious before deciding to invest in the local stock market.
Fund managers worry that share prices in an emerging market like Viet Nam were too high and the market was not as attractive as it had been six months ago.
Vontobel suggested that retail investors should avoid taking out loans to invest in stock and if already exposed to debt should consider selling shares as soon as possible.
Vo Ngoc Huy, deputy investment manager at Sacombank Securities, did not agree with HSBC’s assessment, saying the market is still largely based on local supply and demand.
“Local investors now seem to be more confident in making decisions. They are well-informed about the stock market and do not depend too much on foreign investors’ lead,” he said.
Having already gone through a few market fluctuations, investors have also become more patient, he added, and would not be affected by the negative forecast.
Analysts also argue that any market declines over the short term should be limited by positive mid-year earning reports.
Vu Hoai Chang, a SME Securities analyst, said it was impossible for the market to fall so sharply due to solid macro-economic factors and positive business performance.
He also stressed “ HSBC made the prediction based on an unsuitable P/E ratio”. By only looking at the P/E of shares, investors would not buy any stock, he said.
Do Thuy Anh Phuc, an investor at SSI, remains optimistic and does not foresee the market dropping below 950 points. She predicts the HCM City bourse will recover in the next few days as local investors go bargain hunting and become net buyers.
Source: VNA
The index, the country’s primary stock indicator, on July 3 closed at 977.3 points with the HCM City Securities Trading Centre trading at a price-earnings (P/E) ratio of around 33 times on 2006 earnings.
“Assuming 25 percent EPS (earnings per share) growth this year and 15 percent next (roughly the rate of nominal GDP growth), this equates to a P/E of 25 on 2007 earnings and 21 on 2008,” the report said, indicating the market is currently grossly overvalued.
Most investment funds are not hurrying to pump more money into the stock market, wrote HSBC analysts, and are expected to use their cash positions during initial public offerings of large State-owned enterprises during the second half of the year.
HSBC indicated it would not be aggressive buyer at this time, though “the fundamental long-term story for Viet Nam is very much intact.” The leading global bank predicts the index to move sideways over the next few months.
The HSBC forecast shocked Vietnamese investors given local analysts have been predicting the index would rebound to as high as 1,300 points by the end of the year.
However, foreign fund managers were seemingly unfazed by the HSBC news.
Juerg Vontobel, chairman of the Viet Nam Holding Asset Management, said foreign investors have been very cautious before deciding to invest in the local stock market.
Fund managers worry that share prices in an emerging market like Viet Nam were too high and the market was not as attractive as it had been six months ago.
Vontobel suggested that retail investors should avoid taking out loans to invest in stock and if already exposed to debt should consider selling shares as soon as possible.
Vo Ngoc Huy, deputy investment manager at Sacombank Securities, did not agree with HSBC’s assessment, saying the market is still largely based on local supply and demand.
“Local investors now seem to be more confident in making decisions. They are well-informed about the stock market and do not depend too much on foreign investors’ lead,” he said.
Having already gone through a few market fluctuations, investors have also become more patient, he added, and would not be affected by the negative forecast.
Analysts also argue that any market declines over the short term should be limited by positive mid-year earning reports.
Vu Hoai Chang, a SME Securities analyst, said it was impossible for the market to fall so sharply due to solid macro-economic factors and positive business performance.
He also stressed “ HSBC made the prediction based on an unsuitable P/E ratio”. By only looking at the P/E of shares, investors would not buy any stock, he said.
Do Thuy Anh Phuc, an investor at SSI, remains optimistic and does not foresee the market dropping below 950 points. She predicts the HCM City bourse will recover in the next few days as local investors go bargain hunting and become net buyers.
Source: VNA
Warehouses to help stabilise gold prices
Last week saw the country’s first two bonded warehouses open, a move that is expected to help stabilise the domestic gold market and drive prices closer to global levels.
Agribank Jewelry Co (AJC) opened a bonded warehouse on June 25 in Ha Noi. Four days later, Sai Gon Jewelry Co (SJC) followed suit in HCM City.
"We expect to reduce processing times for gold imports from two to three days to less than a day, and cut transportation costs from US$1.00-1.10 a tael to $0.60-0.70," says AJC Director Nguyen Thanh Truc.
The gold depositories will also help consumers cut costs by eliminating much of the transportation, customs, and airport storage fees, and reduce interest rate payments on bank loans, says Nguyen Huu Thuan, SJC deputy general director.
In addition, companies will no longer have to transport gold via intermediaries in Hong Kong, Singapore, Switzerland or Japan. Janet Leung, director of Hong Kong-based Securicor, says the bonded warehouses will make gold imports easier to handle and more secure.
Going through intermediaries also requires the use of high cost insurance programmes, which can run as much as $1,500 to ship 100 kilograms of gold.
The warehouses are also expected to stabilise domestic gold prices by adequately managing supply levels. Previously, shortages often caused local prices to trade VND500,000-700,000 ($31.25-43.75) a tael higher compared to global levels, says SJC general director cum chairman of the Viet Nam Gold Association, Nguyen Thanh Long.
The International Gold Council this year estimates that demand for gold in Viet Nam could reach 70-80 tonnes. A Brink’s Viet Nam representative, Ben Van Kerkwijk predicts in the short run demand will accelerate.
Companies are already showing interest in storing gold and other precious metals at the two depositories.
Truc says that Switzerland’s PB Bank and Japan’s Mutsui Group were finalising paperwork to store gold in AJC’s warehouse, while Securicor has already made a deposit.
SJC’s bonded warehouse has drawn interest from international banks including HSBC, Mutsui Corp, Bipelle Group, DBS Bank Ltd and the Bank of Scotia Mocatta, said Thuan. Bipelle, an arm of Banca Popolare Italiana Group, has already finalised paperwork to deposit 1-2 tonnes of gold with SJC.
As importing gold becomes easier, SJC expects to process up to 12,000 taels of gold every five days against the current rate of 8,000 taels in seven days.
A problem, though, is finding adequate insurance coverage. Foreign partners often do not want to use a local insurer.
AJC has solved the problem by allowing Securicor to cover insurance issues by signing contracts with foreign policy providers. This set up limits AJC’s access to foreign partners, says Truc.
The State Bank of Viet Nam approved the creation of bonded warehouses to generate profits for both the private sector and central bank. The difference, though, is depositories have to spend more time concentrating on consumer demands and needs, says Nguyen Dong Tien, deputy central bank governor.
Tien also says the central bank wants to have only a few bonded warehouses instead of creating multiple players, which would be harder to control.
Source: VNS
Agribank Jewelry Co (AJC) opened a bonded warehouse on June 25 in Ha Noi. Four days later, Sai Gon Jewelry Co (SJC) followed suit in HCM City.
"We expect to reduce processing times for gold imports from two to three days to less than a day, and cut transportation costs from US$1.00-1.10 a tael to $0.60-0.70," says AJC Director Nguyen Thanh Truc.
The gold depositories will also help consumers cut costs by eliminating much of the transportation, customs, and airport storage fees, and reduce interest rate payments on bank loans, says Nguyen Huu Thuan, SJC deputy general director.
In addition, companies will no longer have to transport gold via intermediaries in Hong Kong, Singapore, Switzerland or Japan. Janet Leung, director of Hong Kong-based Securicor, says the bonded warehouses will make gold imports easier to handle and more secure.
Going through intermediaries also requires the use of high cost insurance programmes, which can run as much as $1,500 to ship 100 kilograms of gold.
The warehouses are also expected to stabilise domestic gold prices by adequately managing supply levels. Previously, shortages often caused local prices to trade VND500,000-700,000 ($31.25-43.75) a tael higher compared to global levels, says SJC general director cum chairman of the Viet Nam Gold Association, Nguyen Thanh Long.
The International Gold Council this year estimates that demand for gold in Viet Nam could reach 70-80 tonnes. A Brink’s Viet Nam representative, Ben Van Kerkwijk predicts in the short run demand will accelerate.
Companies are already showing interest in storing gold and other precious metals at the two depositories.
Truc says that Switzerland’s PB Bank and Japan’s Mutsui Group were finalising paperwork to store gold in AJC’s warehouse, while Securicor has already made a deposit.
SJC’s bonded warehouse has drawn interest from international banks including HSBC, Mutsui Corp, Bipelle Group, DBS Bank Ltd and the Bank of Scotia Mocatta, said Thuan. Bipelle, an arm of Banca Popolare Italiana Group, has already finalised paperwork to deposit 1-2 tonnes of gold with SJC.
As importing gold becomes easier, SJC expects to process up to 12,000 taels of gold every five days against the current rate of 8,000 taels in seven days.
A problem, though, is finding adequate insurance coverage. Foreign partners often do not want to use a local insurer.
AJC has solved the problem by allowing Securicor to cover insurance issues by signing contracts with foreign policy providers. This set up limits AJC’s access to foreign partners, says Truc.
The State Bank of Viet Nam approved the creation of bonded warehouses to generate profits for both the private sector and central bank. The difference, though, is depositories have to spend more time concentrating on consumer demands and needs, says Nguyen Dong Tien, deputy central bank governor.
Tien also says the central bank wants to have only a few bonded warehouses instead of creating multiple players, which would be harder to control.
Source: VNS
Monday, July 02, 2007
Long-term mortgages open property market
Banks are beginning to widen the time frame on home loan deals from 10-15 years to as long as 30 years as the market matures and consumer incomes rise.
Phu My Hung JSC, a real estate developer, has for example recently signed agreements with nine banks to help provide consumers with 20-30 year home loans, including market leaders like Techcombank and Sacombank.
Housing agreements, over 25-30 year time frames are already popular in many other countries, says Nguyen Huu Dang, head of marketing at the Housing Development Bank (HDB), and finally Vietnam is catching on to the trend.
The HDB, another of the nine banks partnering with Phu My Hung, is even allowing clients to take out mortgages worth the full value of the property.
"These new services would offer people with stable incomes more opportunities to buy homes," says Dang.
HSBC is even delving into the home loan market, offering clients 25-year deals on 80% of property values.
Tran Xuan Huy, a Sacombank deputy director, indicated the bank has just begun its long term home loan programme this month, so it is still too early to determine its success, but foresees huge potential in the market.
Sacombank on Wednesday sealed a VND500mil (US$31,250) deal in which the International Finance Corporation, the World Bank's private investment arm, will lend financial support to consumers wanting to buy, build or repair homes.
Many other property developers are now searching or have already joined forces with banks to offer loan packages including the Khanh Hoi Import-Export Co in HCM City, which has jumped in bed with Incombank.
The two are offering a 20 year loans on 50% of a property's value.
Many consumers, though, still struggle with interest rates, which for the time being has curbed the number of financing deals inked.
Khanh Hoi reports that 90% of units sold in its latest apartment block have not used long term loan agreements or mortgages.
Even at an interest rate of 1% over 20 years, the monthly payments are still high for many consumers, said a Khanh Hoi representative in a recent interview.
On a 57sq.m apartment, the monthly fee could be as much as VND6mil (US$375) on a 20-year deal, said the representative. News reports put the average wage of a Vietnamese white collar worker in HCM City at around US$400-1,000.
Huy, though, remains confident that the property market will continue to grow this year, which will only encourage more banks to offer new and different home financing products.
"This is good for our co-operation [with developers and consumers] and for the domestic real estate market as a whole," says Huy.
Source: VNE
Phu My Hung JSC, a real estate developer, has for example recently signed agreements with nine banks to help provide consumers with 20-30 year home loans, including market leaders like Techcombank and Sacombank.
Housing agreements, over 25-30 year time frames are already popular in many other countries, says Nguyen Huu Dang, head of marketing at the Housing Development Bank (HDB), and finally Vietnam is catching on to the trend.
The HDB, another of the nine banks partnering with Phu My Hung, is even allowing clients to take out mortgages worth the full value of the property.
"These new services would offer people with stable incomes more opportunities to buy homes," says Dang.
HSBC is even delving into the home loan market, offering clients 25-year deals on 80% of property values.
Tran Xuan Huy, a Sacombank deputy director, indicated the bank has just begun its long term home loan programme this month, so it is still too early to determine its success, but foresees huge potential in the market.
Sacombank on Wednesday sealed a VND500mil (US$31,250) deal in which the International Finance Corporation, the World Bank's private investment arm, will lend financial support to consumers wanting to buy, build or repair homes.
Many other property developers are now searching or have already joined forces with banks to offer loan packages including the Khanh Hoi Import-Export Co in HCM City, which has jumped in bed with Incombank.
The two are offering a 20 year loans on 50% of a property's value.
Many consumers, though, still struggle with interest rates, which for the time being has curbed the number of financing deals inked.
Khanh Hoi reports that 90% of units sold in its latest apartment block have not used long term loan agreements or mortgages.
Even at an interest rate of 1% over 20 years, the monthly payments are still high for many consumers, said a Khanh Hoi representative in a recent interview.
On a 57sq.m apartment, the monthly fee could be as much as VND6mil (US$375) on a 20-year deal, said the representative. News reports put the average wage of a Vietnamese white collar worker in HCM City at around US$400-1,000.
Huy, though, remains confident that the property market will continue to grow this year, which will only encourage more banks to offer new and different home financing products.
"This is good for our co-operation [with developers and consumers] and for the domestic real estate market as a whole," says Huy.
Source: VNE
Tuesday, June 26, 2007
Vietnam to weaken dong
Vietnam will engineer a decline in the dong of as much as 1 percent this year to support exports, a Bloomberg news agency’s report Monday quoted Deputy Prime Minister Nguyen Sinh Hung as saying.
Intervention by State Bank of Vietnam, the country’s central bank, has led to a depreciation of about 1 percent in each of the past three years, even as foreign investment drove faster economic growth.
The currency has dropped 0.4 percent this year, while the Indian rupee gained 8.6 percent, the Philippine peso climbed 6.2 percent and the Thai baht rose 2.5 percent.
“We are making the decision to depreciate it a little bit to ensure our exports because there is a good inflow of dollars,” Hung said in an interview Sunday while attending the World Economic Forum in Singapore.
“Our concern is the appreciation of the Vietnam dong.”
HSBC Holdings Plc., Europe's biggest bank by market value, this month said the currency would appreciate as foreign investment inflows increase and policy makers try to stem inflation. A stronger dong would make imports cheaper and cool growth in exports of crude oil, textiles and furniture.
Source: Thanh Nien
Intervention by State Bank of Vietnam, the country’s central bank, has led to a depreciation of about 1 percent in each of the past three years, even as foreign investment drove faster economic growth.
The currency has dropped 0.4 percent this year, while the Indian rupee gained 8.6 percent, the Philippine peso climbed 6.2 percent and the Thai baht rose 2.5 percent.
“We are making the decision to depreciate it a little bit to ensure our exports because there is a good inflow of dollars,” Hung said in an interview Sunday while attending the World Economic Forum in Singapore.
“Our concern is the appreciation of the Vietnam dong.”
HSBC Holdings Plc., Europe's biggest bank by market value, this month said the currency would appreciate as foreign investment inflows increase and policy makers try to stem inflation. A stronger dong would make imports cheaper and cool growth in exports of crude oil, textiles and furniture.
Source: Thanh Nien
Saturday, June 23, 2007
Small- and medium-size businesses upbeat about economy
Small- and medium-size Vietnamese enterprises (SMEs) are optimistic about the national economy and the opportunities to be brought about by good economic performance, a Hong Kong and Shanghai Banking Corporation HSBC survey has found.
The survey on SME’s beliefs was conducted by Acorn Marketing and Research Consultancy of 501 Vietnamese SMEs in the first quarter of 2007.
The aim of the survey was to find out the viewpoints and thinking of SMEs on the prospects of Vietnam’s national economy.
The survey was conducted at the same time as HSBC’s survey of Asia-Pacific businesses carried out by A.C. Nielson.
This is the biggest survey in Asia, involving the participation of 1,800 SMEs in nine countries and territories: Hong Kong, China, Taiwan, Singapore, India, the Republic of Korea, Malaysia, Indonesia and Australia.
The 501 Vietnamese companies were asked about their viewpoints on the national economy, investment and recruitment plans, as well as about trade prospects with China, the rest of Asia and the world.
Thomas Tobin, Chief Executive Officer of HSBC in Vietnam, said that most of the polled enterprises said they were very upbeat about the national economy and the international trade volume. They said they were ready to make further investment and recruit more staffs.
In general, Vietnamese SMEs said they were optimistic about economic performance for the next six months. 76% of them said that the economic growth rate would reach more than 8%. HCM City-based enterprises prove to be more optimistic about the national economy than enterprises in other localities.
In the international survey, Indian SMEs prove to be the most optimistic, followed by Singaporean, Chinese and Indonesian.
74% of Vietnamese SMEs revealed that they had investment plans for the next six months. No enterprise said it would shut down or cut production.
Indonesian enterprises are most optimistic about business development, followed by China, Australia and Singapore. The majority of Hong Kong businesses do not have investment plans, while 27% have investment plans and 11% plan to cut production this year.
With the optimism about the national economy, some 70% of Vietnamese SMEs said that they would recruit more staffs in 2007.
Chinese SMEs were the most optimistic in employment, followed by Indonesian, Indian and Singaporean. Most Hong Kong businesses (73%) do not have personnel adjustment plans for this year. However, 13% of the polled enterprises said that they planned to raise their workforces by less than 10%, and 11% of enterprises plan to raise their workforces by over 10%. Only a few enterprises said that they would cut staffs.
Vietnamese enterprises all expect a growth in trade volume with China, the rest of Asia and the world over the next six months.
Source: VNA
The survey on SME’s beliefs was conducted by Acorn Marketing and Research Consultancy of 501 Vietnamese SMEs in the first quarter of 2007.
The aim of the survey was to find out the viewpoints and thinking of SMEs on the prospects of Vietnam’s national economy.
The survey was conducted at the same time as HSBC’s survey of Asia-Pacific businesses carried out by A.C. Nielson.
This is the biggest survey in Asia, involving the participation of 1,800 SMEs in nine countries and territories: Hong Kong, China, Taiwan, Singapore, India, the Republic of Korea, Malaysia, Indonesia and Australia.
The 501 Vietnamese companies were asked about their viewpoints on the national economy, investment and recruitment plans, as well as about trade prospects with China, the rest of Asia and the world.
Thomas Tobin, Chief Executive Officer of HSBC in Vietnam, said that most of the polled enterprises said they were very upbeat about the national economy and the international trade volume. They said they were ready to make further investment and recruit more staffs.
In general, Vietnamese SMEs said they were optimistic about economic performance for the next six months. 76% of them said that the economic growth rate would reach more than 8%. HCM City-based enterprises prove to be more optimistic about the national economy than enterprises in other localities.
In the international survey, Indian SMEs prove to be the most optimistic, followed by Singaporean, Chinese and Indonesian.
74% of Vietnamese SMEs revealed that they had investment plans for the next six months. No enterprise said it would shut down or cut production.
Indonesian enterprises are most optimistic about business development, followed by China, Australia and Singapore. The majority of Hong Kong businesses do not have investment plans, while 27% have investment plans and 11% plan to cut production this year.
With the optimism about the national economy, some 70% of Vietnamese SMEs said that they would recruit more staffs in 2007.
Chinese SMEs were the most optimistic in employment, followed by Indonesian, Indian and Singaporean. Most Hong Kong businesses (73%) do not have personnel adjustment plans for this year. However, 13% of the polled enterprises said that they planned to raise their workforces by less than 10%, and 11% of enterprises plan to raise their workforces by over 10%. Only a few enterprises said that they would cut staffs.
Vietnamese enterprises all expect a growth in trade volume with China, the rest of Asia and the world over the next six months.
Source: VNA
Friday, June 22, 2007
Where are billion dollars to be injected?
Vietnamese people heard recently that foreign investment funds are planning to pour several billion dollars worth of capital into Vietnam. And a question has been raised about where the huge capital is to be injected in, as there seems to be no more room for foreign investors.
Foreign investors now hold 49% of shares in big companies, including AGF, BMP, SAM and TAY, and 30% in STB. Under the current regulations, foreign ownership must not be higher than 49% in local joint stock companies, and 30% in local joint stock banks, which means foreign investors have no more opportunities to buy shares of the companies.
Meanwhile, the room for foreign ownership in other companies is also nearly running out: the foreign ownership in BT6 is 48.96%, CII 48.98%, SJS 44.98%, and VNM 46.26%. Especially, REE and SHC “have been well in advance of the age” as the two companies have sold 55.47% and 56.5% of shares respectively to foreign investors
Dang Huu Chau, former student of Tokyo University, who is now the securities broker for many Japanese tourists/securities investors in Vietnamese stock, also said that the share items of which the foreign ownership hits the ceiling level of 49% or 30% are the ones that can bring the fattest profit. Many Japanese investors want to make investments in these blue chips, but they cannot because there is no more room for them.
The Securities Brokerage Division under the Saigon Securities Incorporated (SSI) also said that many foreign investors could not buy the share items they want though they placed orders three weeks ago.
In fact, foreign investors still can buy some blue chips, but just in small volume as the room in these companies is nearly running out. However, as for foreign investment funds, the small volume is not worth their disbursement.
Don Lam, Director General of Vina Capital stressed that only when Vietnam offers more room for foreign investors, can the market become more bustling.
Raising the foreign ownership ratio in local companies proves to be the best solution to lure more foreign capital into Vietnam. However, the State Securities Commission (SSC) has recently stated that the Government of Vietnam does not think of this issue right at this moment. As such, several billion dollars worth of investment capital are still waiting to be injected in Vietnam.
Foreign investors believe that opportunities will come in several months, when a lot of big companies make IPOs. They also heard that SSC is compiling a new regulation on foreign investors’ management, which may allow foreign investment funds to open branches in Vietnam sooner than that stipulated in WTO commitments. However, analysts have warned that there would not be many chances for them, as the companies that make IPOs operate in the fields that limits foreign ownership, including banking, telecommunication and finance.
These companies include Vietcombank, BIDV (banking), MobiFone and Vinaphone (telecommunication).
In May 2007, foreign investors doubled the investment in Vietnam’s stocks: they injected $150mil in stocks in May, while the figure was $80mil in April, equal to the sum of money they poured into Vietnam in December 2006, and February 2007 (Source: Vietnam Monitor 2, June 8, 2007, HSBC Hong Kong).
Garry Evans, the stocks analyst of HSBC, who has been keeping close watch over Vietnam’s stock market, has advised investors to remain cautious with their deals, and not to become aggressive buyers at this moment, since the P/E Index proves to be too high: 34. The analyst said that investors should wait for the IPOs to appear in August, October and December.
However, a lot of foreign investors cannot keep patient as they were advised, as they have been put under hard pressure to disburse funds’ capital. Investment funds from the Republic of Korea, for example, have successfully raised $1bil worth of capital and they now compete with others in capital disbursement. Korean investors are the ones who won the right to buy most of Bao Viet’s shares at the recently held auction.
The analyst has named some share items that foreign investors can still buy in, FPT, VHS, PPC, PVD, SJS and ITA (the foreign ownership in these companies is below 20%). If the HCM City Securities Trading Centre (HSTC) does not offer more commodities, the foreign capital flow will not be able to increase.
Meanwhile, HSTC has reported that it has just received the applications for listing from few companies. At this moment, it seems to be not the right time to list, when the daily trading value is just VND500-600bil ($31.25mil).
Source: VNE
Foreign investors now hold 49% of shares in big companies, including AGF, BMP, SAM and TAY, and 30% in STB. Under the current regulations, foreign ownership must not be higher than 49% in local joint stock companies, and 30% in local joint stock banks, which means foreign investors have no more opportunities to buy shares of the companies.
Meanwhile, the room for foreign ownership in other companies is also nearly running out: the foreign ownership in BT6 is 48.96%, CII 48.98%, SJS 44.98%, and VNM 46.26%. Especially, REE and SHC “have been well in advance of the age” as the two companies have sold 55.47% and 56.5% of shares respectively to foreign investors
Dang Huu Chau, former student of Tokyo University, who is now the securities broker for many Japanese tourists/securities investors in Vietnamese stock, also said that the share items of which the foreign ownership hits the ceiling level of 49% or 30% are the ones that can bring the fattest profit. Many Japanese investors want to make investments in these blue chips, but they cannot because there is no more room for them.
The Securities Brokerage Division under the Saigon Securities Incorporated (SSI) also said that many foreign investors could not buy the share items they want though they placed orders three weeks ago.
In fact, foreign investors still can buy some blue chips, but just in small volume as the room in these companies is nearly running out. However, as for foreign investment funds, the small volume is not worth their disbursement.
Don Lam, Director General of Vina Capital stressed that only when Vietnam offers more room for foreign investors, can the market become more bustling.
Raising the foreign ownership ratio in local companies proves to be the best solution to lure more foreign capital into Vietnam. However, the State Securities Commission (SSC) has recently stated that the Government of Vietnam does not think of this issue right at this moment. As such, several billion dollars worth of investment capital are still waiting to be injected in Vietnam.
Foreign investors believe that opportunities will come in several months, when a lot of big companies make IPOs. They also heard that SSC is compiling a new regulation on foreign investors’ management, which may allow foreign investment funds to open branches in Vietnam sooner than that stipulated in WTO commitments. However, analysts have warned that there would not be many chances for them, as the companies that make IPOs operate in the fields that limits foreign ownership, including banking, telecommunication and finance.
These companies include Vietcombank, BIDV (banking), MobiFone and Vinaphone (telecommunication).
In May 2007, foreign investors doubled the investment in Vietnam’s stocks: they injected $150mil in stocks in May, while the figure was $80mil in April, equal to the sum of money they poured into Vietnam in December 2006, and February 2007 (Source: Vietnam Monitor 2, June 8, 2007, HSBC Hong Kong).
Garry Evans, the stocks analyst of HSBC, who has been keeping close watch over Vietnam’s stock market, has advised investors to remain cautious with their deals, and not to become aggressive buyers at this moment, since the P/E Index proves to be too high: 34. The analyst said that investors should wait for the IPOs to appear in August, October and December.
However, a lot of foreign investors cannot keep patient as they were advised, as they have been put under hard pressure to disburse funds’ capital. Investment funds from the Republic of Korea, for example, have successfully raised $1bil worth of capital and they now compete with others in capital disbursement. Korean investors are the ones who won the right to buy most of Bao Viet’s shares at the recently held auction.
The analyst has named some share items that foreign investors can still buy in, FPT, VHS, PPC, PVD, SJS and ITA (the foreign ownership in these companies is below 20%). If the HCM City Securities Trading Centre (HSTC) does not offer more commodities, the foreign capital flow will not be able to increase.
Meanwhile, HSTC has reported that it has just received the applications for listing from few companies. At this moment, it seems to be not the right time to list, when the daily trading value is just VND500-600bil ($31.25mil).
Source: VNE
Monday, June 18, 2007
SBV strives for controlling inflation
In late May 2007, the monetary policy of the State Bank of Vietnam (SBV) seemed to see a turning-point.
By asking commercial banks to increase their compulsory reserve for both the Vietnam dong (from 5% to 10% for deposits of less than 12 months) and foreign currencies (from 8% to 10%), the SBV has officially sent a signal: it will give priority to keeping inflation lower than the economic growth rate.
The consumer price index (CPI) of the first five months increased by 4.3% compared to that of late 2006. The CPI of June 2007 is forecast to increase 0.4%. Thus, the CPI of the first half of the year will be more than 4.7%. Will the CPI of the whole year be less than 8%, lower than the expected growth rate of 8-8.5%? Maintaining the inflation rate of 3.3% for the last six months of the year seems to be a difficult mission.
Before releasing the new regulations on compulsory reserve, SBV Governor Le Duc Thuy told the press that controlling inflation was one of the top missions of the central bank. He stated that this agency realised that it was necessary to take some measures to keep inflation under control.
Those measures had actually been realised regularly but the policy to control inflation was clearer in May.
Firstly, the SBV took a positive step in withdrawing the volume of cash circulating in the market through the operations of the open market. In May only, around VND12,000-VND15,000 billion (US$750 - $937.5 million) was withdrawn from circulation through auctions of quasi-money papers.
Secondly, banks were reminded very frequently about credit control, especially raising the quality of credit.
While the credit growth rate of state-owned commercial banks is less than 20% compared to the same period of last year, the outstanding debt balance of joint stock banks has quickly grown.
Many joint stock banks have boosted loans for stock investment and this has contributed to their credit growth. By warning banks to not give loans for stock investment that exceed 3% of their total outstanding debt balances the SBV has officially fixed the 3% limit for stock loans.
The third measure, which is being performed by the SBV, is flexibly controlling the foreign exchange rate.
Since mid May, the devaluation of the Vietnam dong against the US dollar has gone faster. By June 12, 2007, the US dollar/Vietnam dong exchange rate of the Bank for Foreign Trade of Vietnam (Vietcombank) was equal to the inter-banking exchange rate daily announced by the SBV.
Previously, in late December 2006 and the first quarter of 2007, the exchange rate of banks was always much lower than the daily-announced inter-banking exchange rate. Even in the first quarter of 2007, the Vietnam dong gained higher value (0.3%) compared to the US dollar. However, in the past three weeks, the devaluation of the Vietnam dong against the US dollar has reached 3.5%/year, according to the Hong Kong and Shanghai Banking Corporation (HSBC).
With the above measures, the SBV can completely maintain the devaluation of the Vietnam dong at 1% in 2007 as its goal. Once it can control the exchange rate, inflation control will be more effective.
However, some challenges still exist and the most difficult is the prediction of financial investment flow. It is difficult to know whether foreign investment in stocks from now to the year’s end will suddenly rise.
It is not accidental that the value of the Vietnam dong continuously increased against the US dollar in January 2007, the time foreign investors ‘pumped’ up to US$350 million into the stock market. At that time the forex limits of many banks were always full and they couldn’t change Vietnam dong for US dollars and the SBV had to buy US dollars, increasing the national foreign currency reserve.
Source: VNE
By asking commercial banks to increase their compulsory reserve for both the Vietnam dong (from 5% to 10% for deposits of less than 12 months) and foreign currencies (from 8% to 10%), the SBV has officially sent a signal: it will give priority to keeping inflation lower than the economic growth rate.
The consumer price index (CPI) of the first five months increased by 4.3% compared to that of late 2006. The CPI of June 2007 is forecast to increase 0.4%. Thus, the CPI of the first half of the year will be more than 4.7%. Will the CPI of the whole year be less than 8%, lower than the expected growth rate of 8-8.5%? Maintaining the inflation rate of 3.3% for the last six months of the year seems to be a difficult mission.
Before releasing the new regulations on compulsory reserve, SBV Governor Le Duc Thuy told the press that controlling inflation was one of the top missions of the central bank. He stated that this agency realised that it was necessary to take some measures to keep inflation under control.
Those measures had actually been realised regularly but the policy to control inflation was clearer in May.
Firstly, the SBV took a positive step in withdrawing the volume of cash circulating in the market through the operations of the open market. In May only, around VND12,000-VND15,000 billion (US$750 - $937.5 million) was withdrawn from circulation through auctions of quasi-money papers.
Secondly, banks were reminded very frequently about credit control, especially raising the quality of credit.
While the credit growth rate of state-owned commercial banks is less than 20% compared to the same period of last year, the outstanding debt balance of joint stock banks has quickly grown.
Many joint stock banks have boosted loans for stock investment and this has contributed to their credit growth. By warning banks to not give loans for stock investment that exceed 3% of their total outstanding debt balances the SBV has officially fixed the 3% limit for stock loans.
The third measure, which is being performed by the SBV, is flexibly controlling the foreign exchange rate.
Since mid May, the devaluation of the Vietnam dong against the US dollar has gone faster. By June 12, 2007, the US dollar/Vietnam dong exchange rate of the Bank for Foreign Trade of Vietnam (Vietcombank) was equal to the inter-banking exchange rate daily announced by the SBV.
Previously, in late December 2006 and the first quarter of 2007, the exchange rate of banks was always much lower than the daily-announced inter-banking exchange rate. Even in the first quarter of 2007, the Vietnam dong gained higher value (0.3%) compared to the US dollar. However, in the past three weeks, the devaluation of the Vietnam dong against the US dollar has reached 3.5%/year, according to the Hong Kong and Shanghai Banking Corporation (HSBC).
With the above measures, the SBV can completely maintain the devaluation of the Vietnam dong at 1% in 2007 as its goal. Once it can control the exchange rate, inflation control will be more effective.
However, some challenges still exist and the most difficult is the prediction of financial investment flow. It is difficult to know whether foreign investment in stocks from now to the year’s end will suddenly rise.
It is not accidental that the value of the Vietnam dong continuously increased against the US dollar in January 2007, the time foreign investors ‘pumped’ up to US$350 million into the stock market. At that time the forex limits of many banks were always full and they couldn’t change Vietnam dong for US dollars and the SBV had to buy US dollars, increasing the national foreign currency reserve.
Source: VNE
Friday, June 15, 2007
Hunger for Vietnam bonds despite market worries
Vietnam, often touted as Asia's next economic tiger, is tapping banks for ideas on a global bond offering for launch later this year, banking sources say.
The rarity value of sovereign debt from this up-and-coming emerging market means the offering will be snapped up, even though world markets are jittery that global interest rates are on the rise.
Vietnam's last sovereign dollar bond in 2005 attracted hefty demand and the bond has performed well in the secondary market, boosting the prospects of the upcoming offer, analysts say.
"It should do quite well," Joseph Lau, an economist at Credit Suisse, said. "Last time around there was a huge amount of interest, but the success of the deal would also be dependent on the external conditions," he said.
Added to which, Vietnam is flexible about its plans.
"They are pretty open about their options. They are looking for Q3 or Q4 this year," said a banker, whose bank has been consulted by the Southeast Asian state. "The mandate could happen at the end of summer."
Asia's sovereign bond underwriting market is dominated by Citigroup, Credit Suisse, Deutsche Bank, HSBC, JPMorgan and UBS .
Vietnam raised $750 million in its maiden international bond issue in October 2005 through Credit Suisse.
The 2016 bond offer had initially offered $500 million in debt but it was expanded after generating an order book of $4.5 billion.
The January 2016 bond was sold to yield 7.125%, and is currently trading to yield around 6.2%.
Bankers expect the new deal to be between $500 million and $1 billion with a maturity of at least 10 years. Some say it could be a 30-year offering if demand for the paper is strong.
"It has scarcity value. Even in this market it will get sold," said Dilip Shahani, Asia Pacific research head at HSBC.
"I still believe the economy can grow at 7-8%. It needs infrastructure, they have a huge population and that's just the domestic side of the story."
He said the export sector could benefit from investors who look to diversify away from a reliance on neighboring China.
Gradual economic reform, strong growth and its entry into the World Trade Organization has entrenched the country in investors' minds.
Foreign direct investment commitments rose to a record $10 billion in 2006, a significant amount considering Vietnam's gross domestic product of around $60 billion and per capita income at just $720 a year.
The Vietnam government plans to re-lend the proceeds of the bond offering to state-owned enterprises, such as in energy and shipping, who will eventually become borrowers themselves in the international markets.
"The medium-to-long-term strategy seems to be to eventually allow major state enterprises to sell their own bonds," said Credit Suisse's Lau.
Source: Thanh Nien
The rarity value of sovereign debt from this up-and-coming emerging market means the offering will be snapped up, even though world markets are jittery that global interest rates are on the rise.
Vietnam's last sovereign dollar bond in 2005 attracted hefty demand and the bond has performed well in the secondary market, boosting the prospects of the upcoming offer, analysts say.
"It should do quite well," Joseph Lau, an economist at Credit Suisse, said. "Last time around there was a huge amount of interest, but the success of the deal would also be dependent on the external conditions," he said.
Added to which, Vietnam is flexible about its plans.
"They are pretty open about their options. They are looking for Q3 or Q4 this year," said a banker, whose bank has been consulted by the Southeast Asian state. "The mandate could happen at the end of summer."
Asia's sovereign bond underwriting market is dominated by Citigroup, Credit Suisse, Deutsche Bank, HSBC, JPMorgan and UBS .
Vietnam raised $750 million in its maiden international bond issue in October 2005 through Credit Suisse.
The 2016 bond offer had initially offered $500 million in debt but it was expanded after generating an order book of $4.5 billion.
The January 2016 bond was sold to yield 7.125%, and is currently trading to yield around 6.2%.
Bankers expect the new deal to be between $500 million and $1 billion with a maturity of at least 10 years. Some say it could be a 30-year offering if demand for the paper is strong.
"It has scarcity value. Even in this market it will get sold," said Dilip Shahani, Asia Pacific research head at HSBC.
"I still believe the economy can grow at 7-8%. It needs infrastructure, they have a huge population and that's just the domestic side of the story."
He said the export sector could benefit from investors who look to diversify away from a reliance on neighboring China.
Gradual economic reform, strong growth and its entry into the World Trade Organization has entrenched the country in investors' minds.
Foreign direct investment commitments rose to a record $10 billion in 2006, a significant amount considering Vietnam's gross domestic product of around $60 billion and per capita income at just $720 a year.
The Vietnam government plans to re-lend the proceeds of the bond offering to state-owned enterprises, such as in energy and shipping, who will eventually become borrowers themselves in the international markets.
"The medium-to-long-term strategy seems to be to eventually allow major state enterprises to sell their own bonds," said Credit Suisse's Lau.
Source: Thanh Nien
Monday, June 04, 2007
Deutsche Bank to buy limited share of Habubank
Deutsche Bank AG has received the informal nod from Vietnam’s central bank to buy a 10% stake in a local commercial bank.
The firm initially sought 20%, which is only allowed in extraordinary cases.
The State Bank of Vietnam (SBV) released a statement saying that Deutsche Bank and the
Hanoi Building Commercial Joint Stock Bank (Habubank) would soon complete procedures for the acquisition to then be submitted to SBV for the formal approval.
The two banks have entered into a strategic co-operation explore potential partnership in areas such as credit cards, affluent banking and the development and distribution of investment products.
Deutsche Bank has also committed to assist Habubank in managing financial sources and banking business risk.
Earlier the German bank had proposed to buy up to 20% stake in Habubank, expecting to become its largest shareholder be represented on the lender’s management board.
Under Vietnam’s current banking regulations, a foreign bank can only own 10% of a Vietnamese bank, while total foreign holdings are capped at 30%. In exceptional cases, the government can allow a foreign bank to own up to 20% of a Vietnamese bank if proposed by the SBV.
Deutsche Bank is known as a leading bank in both homeland and the EU. The bank is developing a network to 72 countries worldwide.
It opened its first Vietnamese branch in 1992.
Habubank is Vietnam's sixth-largest private commercial joint stock bank by assets and is one of the best-capitalized Vietnamese banks with 21 branches in the country.
It held around VND12 trillion ($748 million) in assets with a pre-tax profit of VND248 billion at the end of last year.
Overseas banks have been eager to tap the growing demand for credit in Vietnam, a nation of 84 million people where only 5% use banking services.
At least two more banking groups are now waiting for the Vietnam central bank to raise the cap on foreign ownership to buy an additional 10% stake of two local banks.
The Vietnamese Orient Commercial Joint Stock Bank, or OCB, said it was ready to sell an additional 10% of its shares to the French banking group BNP Paribas, which last year acquired a 10% stake of OCB.
Earlier this year, HSBC announced it would pay $71.5 million to double its 10% stake in Vietnam Technological and Commercial Joint Stock Bank (Techcombank), the country’s third-largest joint stock bank by assets.
Vietnam's joint-stock banks were small in size and controlled only 15% of the lending market in 2005, while state-owned commercial banks controlled 75% of the lending market.
Most economists believe the rapidly evolving nation will achieve its target of an annual 7.5-8% real GDP growth over the next five years, making it one of the most attractive markets in the region.
Deutsche Bank , HSBC and UOB obviously see immense growth opportunities for their businesses in this environment and are taking steps to create a foothold.
Source: Thanh Nien
The firm initially sought 20%, which is only allowed in extraordinary cases.
The State Bank of Vietnam (SBV) released a statement saying that Deutsche Bank and the
Hanoi Building Commercial Joint Stock Bank (Habubank) would soon complete procedures for the acquisition to then be submitted to SBV for the formal approval.
The two banks have entered into a strategic co-operation explore potential partnership in areas such as credit cards, affluent banking and the development and distribution of investment products.
Deutsche Bank has also committed to assist Habubank in managing financial sources and banking business risk.
Earlier the German bank had proposed to buy up to 20% stake in Habubank, expecting to become its largest shareholder be represented on the lender’s management board.
Under Vietnam’s current banking regulations, a foreign bank can only own 10% of a Vietnamese bank, while total foreign holdings are capped at 30%. In exceptional cases, the government can allow a foreign bank to own up to 20% of a Vietnamese bank if proposed by the SBV.
Deutsche Bank is known as a leading bank in both homeland and the EU. The bank is developing a network to 72 countries worldwide.
It opened its first Vietnamese branch in 1992.
Habubank is Vietnam's sixth-largest private commercial joint stock bank by assets and is one of the best-capitalized Vietnamese banks with 21 branches in the country.
It held around VND12 trillion ($748 million) in assets with a pre-tax profit of VND248 billion at the end of last year.
Overseas banks have been eager to tap the growing demand for credit in Vietnam, a nation of 84 million people where only 5% use banking services.
At least two more banking groups are now waiting for the Vietnam central bank to raise the cap on foreign ownership to buy an additional 10% stake of two local banks.
The Vietnamese Orient Commercial Joint Stock Bank, or OCB, said it was ready to sell an additional 10% of its shares to the French banking group BNP Paribas, which last year acquired a 10% stake of OCB.
Earlier this year, HSBC announced it would pay $71.5 million to double its 10% stake in Vietnam Technological and Commercial Joint Stock Bank (Techcombank), the country’s third-largest joint stock bank by assets.
Vietnam's joint-stock banks were small in size and controlled only 15% of the lending market in 2005, while state-owned commercial banks controlled 75% of the lending market.
Most economists believe the rapidly evolving nation will achieve its target of an annual 7.5-8% real GDP growth over the next five years, making it one of the most attractive markets in the region.
Deutsche Bank , HSBC and UOB obviously see immense growth opportunities for their businesses in this environment and are taking steps to create a foothold.
Source: Thanh Nien
Wednesday, May 16, 2007
HSBC publishes "Vietnam Monitor" report
The Hong Kong and Shanghai Banking Corporation (HSBC) on May 3 announced a report on Vietnam’s economy “Vietnam Monitor”, which said that foreign investors triggered the stock market fall in April.
According to HSBC, after the P/E index reached 32 in April, foreign investors decided to sell shares out to make profit, which worried domestic investors, who then sold shares in big quantities, leading to the sharp fall of stocks prices.
The trading value at the HCM City Securities Trading Centre (HSTC) decreased from $63mil in March to $47mil in April. Foreign investors bought $345mil worth of shares in January, and $158mil in February. In March, they sold shares out on 14 out of the 22 transaction days of the month, while they bought $83mil worth of shares in April only.
HSBC said that the prices of blue chips prove to be relatively expensive for foreign investors. Moreover, foreign investors do not want to buy shares at this moment as they are still waiting for big corporations to list on the bourse. Shares of big corporations like Vietcombank, Incombank, MobiFone and Vinaphone are expected to be equitised and available on the bourse in the time to come.
HSBC has also given the P/E indexes of listing companies in Vietnam. However, the indexes of several companies have been found as being false.
The Saigon Securities Incorporated’s P/E index (SSI), for example, was 251.8, while Nguyen Duy Hung, Chairman of SSI, said that SSI’s P/E was only 25.2, according to the Hanoi Securities Trading Centre (HASTC).
The information about false figures stirred up the market as HSBC is a prestigious institution.
HSBC on May 14 had to announce the changes in its report, admitting the errors in calculating the P/E indexes of SSI and four other companies: Bao Viet (BVS), Vinare (VNR), the Petroleum Services and Drilling Company (PVD) and But Son Cement Joint Stock Company (BTS).
In a report announced in early May, the P/E indexes of the four companies are 59.1, 76.4, 108.7 and 6.2, respectively. In the new report, the information about the four companies’ P/E remains absent as HSBC still needs to get updated information.
HSBC’s representative has attributed the errors to the lack of source materials. He said that the changes in the P/E indexes of several companies did not affect other conclusions released in the report.
Full report: HSBC's "Vietnam Monitor"
Source: VNE
According to HSBC, after the P/E index reached 32 in April, foreign investors decided to sell shares out to make profit, which worried domestic investors, who then sold shares in big quantities, leading to the sharp fall of stocks prices.
The trading value at the HCM City Securities Trading Centre (HSTC) decreased from $63mil in March to $47mil in April. Foreign investors bought $345mil worth of shares in January, and $158mil in February. In March, they sold shares out on 14 out of the 22 transaction days of the month, while they bought $83mil worth of shares in April only.
HSBC said that the prices of blue chips prove to be relatively expensive for foreign investors. Moreover, foreign investors do not want to buy shares at this moment as they are still waiting for big corporations to list on the bourse. Shares of big corporations like Vietcombank, Incombank, MobiFone and Vinaphone are expected to be equitised and available on the bourse in the time to come.
HSBC has also given the P/E indexes of listing companies in Vietnam. However, the indexes of several companies have been found as being false.
The Saigon Securities Incorporated’s P/E index (SSI), for example, was 251.8, while Nguyen Duy Hung, Chairman of SSI, said that SSI’s P/E was only 25.2, according to the Hanoi Securities Trading Centre (HASTC).
The information about false figures stirred up the market as HSBC is a prestigious institution.
HSBC on May 14 had to announce the changes in its report, admitting the errors in calculating the P/E indexes of SSI and four other companies: Bao Viet (BVS), Vinare (VNR), the Petroleum Services and Drilling Company (PVD) and But Son Cement Joint Stock Company (BTS).
In a report announced in early May, the P/E indexes of the four companies are 59.1, 76.4, 108.7 and 6.2, respectively. In the new report, the information about the four companies’ P/E remains absent as HSBC still needs to get updated information.
HSBC’s representative has attributed the errors to the lack of source materials. He said that the changes in the P/E indexes of several companies did not affect other conclusions released in the report.
Full report: HSBC's "Vietnam Monitor"
Source: VNE
Wednesday, May 02, 2007
Vietnam’s life insurance market a potential goldmine
Vietnam's accession to the World Trade Organisation (WTO) in 2006 and steady recorded economic growth rates hovering around 8%, have foreign insurance multi nationals eying the market.
Under Vietnam’s WTO commitments foreign insurers have the right to open branch offices within the country and are permitted to offer a plethora of non-life insurance options after 5 years in operation.
To date only 6.5 million people out of the country’s population of over 84 million own life insurance and we believe due to this, Vietnam’s life insurance market is set to be a boon for foreign insurers, said David L Fried, regional director of the HSBC Insurance (Asia-Pacific).
Keen to tap into the future potential of what is seen as a young market, big global players such as Daiichi Life Insurance Company of Japan and the Hong Kong and Shanghai Banking Corporation (HSBC) have already opened representative offices in the country.
In a bid to increase their profile within the domestic marketplace, foreign companies are coming up with novel ways to introduce new services to attract customers. UK based Prudential have begun to offer an educational insurance package that insures a family's breadwinner, in the event of death or illness the children of the family's principle will have their educational development provided for by the company.
With new foreign firms entering the market, there has been fierce competition amongst insurers, said Phung Dac Loc, General Secretary of the Vietnam Insurance Association. Competition will be further heightened if the Ministry of Finance gives the go ahead for a new product that links insurance, savings and investment, he noted.
Vietnam's insurance industry has been running hot since the start of the millennium with a growth rate of 29% a year on average. Revenues from insurance have accounted for 2% of the country's gross domestic product (GDP).
Observers highlight the need to further open up the industry by pointing to the 110 trillion VND (6.87 billion USD) insurance has pumped into the country's economic development since 2001.
Source: VNE
Under Vietnam’s WTO commitments foreign insurers have the right to open branch offices within the country and are permitted to offer a plethora of non-life insurance options after 5 years in operation.
To date only 6.5 million people out of the country’s population of over 84 million own life insurance and we believe due to this, Vietnam’s life insurance market is set to be a boon for foreign insurers, said David L Fried, regional director of the HSBC Insurance (Asia-Pacific).
Keen to tap into the future potential of what is seen as a young market, big global players such as Daiichi Life Insurance Company of Japan and the Hong Kong and Shanghai Banking Corporation (HSBC) have already opened representative offices in the country.
In a bid to increase their profile within the domestic marketplace, foreign companies are coming up with novel ways to introduce new services to attract customers. UK based Prudential have begun to offer an educational insurance package that insures a family's breadwinner, in the event of death or illness the children of the family's principle will have their educational development provided for by the company.
With new foreign firms entering the market, there has been fierce competition amongst insurers, said Phung Dac Loc, General Secretary of the Vietnam Insurance Association. Competition will be further heightened if the Ministry of Finance gives the go ahead for a new product that links insurance, savings and investment, he noted.
Vietnam's insurance industry has been running hot since the start of the millennium with a growth rate of 29% a year on average. Revenues from insurance have accounted for 2% of the country's gross domestic product (GDP).
Observers highlight the need to further open up the industry by pointing to the 110 trillion VND (6.87 billion USD) insurance has pumped into the country's economic development since 2001.
Source: VNE
Wednesday, April 25, 2007
Vietnam Dong captures attention of derivative traders
DBS Group Holdings and Australia & New Zealand Banking Group have begun offshore trading in contracts tied to the future value of the currency, the dong. The $50 million of Vietnamese contracts that trade monthly may double in a year, Standard Chartered estimates.
More than $1 billion of Chinese yuan forwards change hands daily in an overseas market that did not exist 15 years ago, HSBC Holdings said.
Vietnamese Prime Minister Nguyen Tan Dung loosened currency controls this year and announced plans to increase sales of state-owned assets. The new currency market gives investors more opportunities to bet on an economy that expanded at a 7.7% annual rate in the first quarter and may grow 8.3% this year, according to the Asian Development Bank.
"You can't imagine the amount of money going into Vietnam," said Peter Soh, head of foreign exchange in Singapore at DBS, Southeast Asia's biggest bank. "Everyone thinks Vietnam will follow China's path. The dong must strengthen."
Vietnam's benchmark stock index is up 29% so far in 2007, after gaining 145% in 2006, the world's best performance. The economy is the fastest among the six biggest in Southeast Asia.
Investors need derivatives to trade the currency because the government only allows them to buy dong for specific purposes, such as investing in stocks or building factories. The contracts are settled in dollars.
"It's very positive," and is in line with government goals of having the currency trade overseas, State Bank of Vietnam's deputy governor, Phung Khac Ke, said in an interview in Hanoi. "It shows international investors are more and more interested in Vietnam."
The central bank's support coincides with Dung's plans to open the economy.
Dung, 57, became prime minister in June and last week approved a $1 billion sale of government bonds, the largest ever. The Communist Party this year told three of the four biggest state banks to prepare for initial public offerings.
Vietnam this year ended a decade-long policy of "managed devaluation" that caused the dong to weaken 30%. The currency gained 0.7% between Nov. 22 and Feb. 21. It has since fallen 0.4% to 16,041.05 per dollar as regulators curbed borrowing for stock market investment.
Three-month, nondeliverable forward contracts trade at 16,111 to the dollar, data compiled by Bloomberg found. The prices take into account higher interest rates in Vietnam as well as the expectations among traders for dong movements.
The central bank will "keep the dong stable, in a flexible manner, so that it can help our exports," Ke said.
Traders may be "turned off" by the central bank's support for gradual depreciation, said Sean Callow, a senior currency strategist in Singapore at the Sydney-based Westpac Banking. State controls may limit swings in the currency and opportunities to profit, he said.
Investors are still "testing the water" in Vietnam, said Amy Auster, head of international economics at the Melbourne-based ANZ Bank, which owns stakes in two Vietnamese banks.
Derivatives are financial instruments derived from stocks, bonds, loans, currencies and commodities, or linked to specific events like changes in the weather or interest rates.
Trading in the futures may increase once banks introduce a standardized contract for the dong by early June, DBS said in an e-mail. Between 15 and 20 banks in Singapore and five brokers may be interested in the market, DBS said. The central bank doubled the daily limit on dong moves against the dollar to 0.5% this year.
"Vietnam is the next market in Asia to look at," said Greg Clinton, global head of interest rate derivatives in Singapore at Standard Chartered, a London-based bank that makes two-thirds of its profit in Asia. "It's booming but it has currency restrictions, and that gives rise to a nondeliverable market."
Forwards are agreements to buy assets at a later specified date. A nondeliverable forward is typically settled in dollars and involves no physical exchange of other currencies.
Source: Thanh Nien
More than $1 billion of Chinese yuan forwards change hands daily in an overseas market that did not exist 15 years ago, HSBC Holdings said.
Vietnamese Prime Minister Nguyen Tan Dung loosened currency controls this year and announced plans to increase sales of state-owned assets. The new currency market gives investors more opportunities to bet on an economy that expanded at a 7.7% annual rate in the first quarter and may grow 8.3% this year, according to the Asian Development Bank.
"You can't imagine the amount of money going into Vietnam," said Peter Soh, head of foreign exchange in Singapore at DBS, Southeast Asia's biggest bank. "Everyone thinks Vietnam will follow China's path. The dong must strengthen."
Vietnam's benchmark stock index is up 29% so far in 2007, after gaining 145% in 2006, the world's best performance. The economy is the fastest among the six biggest in Southeast Asia.
Investors need derivatives to trade the currency because the government only allows them to buy dong for specific purposes, such as investing in stocks or building factories. The contracts are settled in dollars.
"It's very positive," and is in line with government goals of having the currency trade overseas, State Bank of Vietnam's deputy governor, Phung Khac Ke, said in an interview in Hanoi. "It shows international investors are more and more interested in Vietnam."
The central bank's support coincides with Dung's plans to open the economy.
Dung, 57, became prime minister in June and last week approved a $1 billion sale of government bonds, the largest ever. The Communist Party this year told three of the four biggest state banks to prepare for initial public offerings.
Vietnam this year ended a decade-long policy of "managed devaluation" that caused the dong to weaken 30%. The currency gained 0.7% between Nov. 22 and Feb. 21. It has since fallen 0.4% to 16,041.05 per dollar as regulators curbed borrowing for stock market investment.
Three-month, nondeliverable forward contracts trade at 16,111 to the dollar, data compiled by Bloomberg found. The prices take into account higher interest rates in Vietnam as well as the expectations among traders for dong movements.
The central bank will "keep the dong stable, in a flexible manner, so that it can help our exports," Ke said.
Traders may be "turned off" by the central bank's support for gradual depreciation, said Sean Callow, a senior currency strategist in Singapore at the Sydney-based Westpac Banking. State controls may limit swings in the currency and opportunities to profit, he said.
Investors are still "testing the water" in Vietnam, said Amy Auster, head of international economics at the Melbourne-based ANZ Bank, which owns stakes in two Vietnamese banks.
Derivatives are financial instruments derived from stocks, bonds, loans, currencies and commodities, or linked to specific events like changes in the weather or interest rates.
Trading in the futures may increase once banks introduce a standardized contract for the dong by early June, DBS said in an e-mail. Between 15 and 20 banks in Singapore and five brokers may be interested in the market, DBS said. The central bank doubled the daily limit on dong moves against the dollar to 0.5% this year.
"Vietnam is the next market in Asia to look at," said Greg Clinton, global head of interest rate derivatives in Singapore at Standard Chartered, a London-based bank that makes two-thirds of its profit in Asia. "It's booming but it has currency restrictions, and that gives rise to a nondeliverable market."
Forwards are agreements to buy assets at a later specified date. A nondeliverable forward is typically settled in dollars and involves no physical exchange of other currencies.
Source: Thanh Nien
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