Vietnam

[winston]

Anyone know if it's true Vietnam's the no. 2 textile and garments exporter in the world, after China?

Some of the Chinese textile companies have already moved to Vietnam due to the lower wages and the more relaxed environmental regulations there.

[Aspellian]

Monday, May 26, 2008
Minister of Finance: Stock Market Won't Recover Quickly

Minister of Finance Vu Van Ninh said any government measures to support the country's plunging stock market will have only a limited impact as fighting inflation remains the top priority.

Ninh said that because Viet Nam is facing financial, monetary and banking difficulties, the government's intervention would mainly aim to stabilize investor sentiment rather than engineer a quick recovery for the market, according to the report.

"The government's measures will only have limited impacts ... don't expect ( the government) to help the stock market recover quickly," Ninh said.

"Don't expect the government to step in to buy all the shares," he said.

"Fighting inflation remains the government's top priority ... we don't sacrifice the stock market but try to stabilize it," Ninh said.

The government is demanding that listed companies make their financial reports public, and is urging local investors to be patient and avoid offloading shares in massive volumes, the newspaper said.

In general, the market is growing, and foreigners are still buying as valuations of many shares are now low, Ninh said. (Dow Jones)

http://www.vnstocknews.com/2008/05/mini ... -wont.html

Monday, May 26, 2008
Market falls for third-straight week

The VN-Index has spent three straight weeks shedding points. In the past week alone, the index fell from 460.04 to 428.05, a one-week loss of 6.95%.

"The stock market for the past three weeks has fallen short of my expectations and those of many investors," said Ngo Minh Duc, an analyst from Eurocapital Securities. "We hoped for a modest recovery, but the results in hand reflect desperation. I think that we’re in for at least one more gloomy week."

While trading volumes averaged less than 3 million shares per day over the past week, the cumulative value of the week’s trades on the HCM City Stock Exchange reached VND645 billion (US$40.3 million), 13% higher than in the previous week.

Massive numbers of shares continued to be offered for sale without finding buyers.

Foreign investors helped pick up the slack, buying five times more than they were selling and picking up a total 7.8 million shares. This accounted for nearly 85 per cent of the entire market value for the week.

Foreign investor interest helped make Phu My Fertilisers (DPM), with a volume of 1.4 million shares traded, and Sai Gon Securities (SSI), with 800,000 shares, the most active codes on the bourse during the week.

A meeting during the week between officials of the Ministry of Finance and the State Securities Commission to formulate measures the Government might take to support the market did nothing to boost trading.

The State Bank of Viet Nam’s move a week ago to shore up capital-hungry commercial banks by raising the prime rate to 12% also appeared to have no positive impact on stock market investors.

The vice chairman of the National Assembly Committee for Finance and Budget, Dinh Van Nha, sounded an optimistic note, however, predicting that many investors will return in early June when a number of new listings are expected.

In Ha Noi over the past week, the Ha Noi Securities Trading Centre also witnessed five consecutive sessions of downturns, with the HASTC Index closing at the end of Friday’s trading session at 127.93.

For the week as a whole, the Ha Noi index lost 11.81 points, or 8.45% of its value.

Total volume for the week on the northern bourse was 12 million shares, with a value of VND108 billion ($6.75 million), only about half of the previous week’s figure. Shares prices hit the daily floor in 49 out of 137 codes listed on the Ha Noi market. (VNS)

http://www.vnstocknews.com/2008/05/mark ... -week.html

[Aspellian]

Anyone interested or monitoring Vietnam stock market? Do you guys think that this market has bottomed or there's still more room for further depression?

Other than investing via the unit trust of Lion Capital Vietnam Fund and individual company with exposure in Vietnam, any other funds/ways to invest in Vietnam?

[winston]

Vietnamese Inflation Reaches 25.2%, Fastest Since '92 (Update2)
By Jason Folkmanis

May 27 (Bloomberg) -- Vietnamese inflation accelerated to 25.2 percent in May, the fastest since at least 1992, driven by record rice and energy prices.

The increase in consumer prices was quicker than April's 21.4 percent gain from a year earlier, according to a statement released by the General Statistics Office in Hanoi today. On a monthly basis, prices rose 3.9 percent from April.

To combat inflation Vietnamese authorities have told banks to cut lending, put in place some price controls and instructed government agencies to halt non-essential construction projects. Last week the central bank raised its key interest rate to 12 percent from 8.75 percent and allowed banks to offer lending rates of up to 18 percent.

``We need to wait another two or three months before we could see the first impact of the measures taken by the government,'' said Alain Cany, chairman of the European Chamber of Commerce in Vietnam. ``But if at that point they can't find a way to begin to bring inflation under control one way or another, the problem could reach a crisis stage.''

Prime Minister Nguyen Tan Dung last week told the State Bank of Vietnam to focus its interest-rate policy on fighting inflation.

The ``tough measures came too late,'' wrote Mark Matthews, a strategist at Merrill Lynch & Co. in Hong Kong, in a May 23 report that blamed inflation for the reversal of fortune that turned the country from ``poster to problem child.''

`Vicious Cycle'

``Inflation has become embedded in the economy,'' Matthews said, citing a rising number of strikes over wage increases. ``To break this vicious cycle, Vietnam can expect a long period of tough monetary policy.''

Given the inflation rate, the recent weakening of the Vietnamese dong -- which strengthened earlier in the year against the U.S. dollar -- is ``a bad sign,'' Matthews wrote. The currency traded at 16,221 per dollar at 11:15 a.m. in Ho Chi Minh City, weaker than yesterday's 16,206. The currency's strongest level this year was set on March 21, when it touched 15,810.

Food costs have been the primary culprit for faster inflation, underpinned by surging international prices of rice, of which Vietnam was the third-biggest exporter and fifth- biggest consumer last year.

In late April, Dung issued a statement that said the nation's 2008 rice output would be sufficient for domestic consumption and to meet export contracts, amid a supply scare that led queues to buy the staple in Ho Chi Minh City, Vietnam's largest city.

Rice Prices

Prices in the food category including rice jumped 67.8 percent in May from a year earlier and 22.2 percent from April, the General Statistics Office said. Prices in the broader food category rose 42.4 percent from a year ago.

Rice prices are being driven by energy and fertilizer prices, as well as by increased costs of processing equipment and transport, Bui The Giang, deputy permanent Vietnamese representative at the United Nations, told a special UN meeting last week to address global food prices.

The rice price has ``exerted multiple pressures on the country's capacity to control inflation and ensure macro- economic stability,'' Giang told the UN meeting, according to a posting on the Web site of Vietnam's mission to the agency.

Prices in the category including construction materials jumped 23 percent from a year ago and 1.2 percent month-on-month, while prices in the category including transportation climbed 15.5 percent year-on-year, according to the Statistics Office.

Vietnam's Ministry of Finance has proposed that the government provide further compensation to oil and gas companies to sell petrol at prices below market rates in order to help contain inflation, the Vietnam Investment Review reported yesterday.

[iam802]

Prices in the category including construction materials jumped 23 percent from a year ago and 1.2 percent month-on-month, while prices in the category including transportation climbed 15.5 percent year-on-year, according to the Statistics Office.

I was just catching up on this news. Local property counters with exposure in Vietnam may be affected.

I do have exposure via unit trusts to the Vietname market. Need to take a look at it again.

[winston]

Vietnam Stocks Decline, Extending World's Worst Rout (Update1)
By Chen Shiyin and Nguyen Dieu Tu Uyen

May 30 (Bloomberg) -- The worst may not be over for Vietnam's stock market, the world's biggest decliner, as shares resumed declines after a computer breakdown halted trading for three days.

The benchmark VN Index fell 1.5 percent to 414.10, extending this year's 55 percent retreat, after a government report showed prices jumped the most since at least 1992, Morgan Stanley said Vietnam is heading for a ``currency crisis'' and Fitch Ratings cut its outlook on the nation's debt rating.

The Ho Chi Minh City Stock Exchange, which caps daily declines to 2 percent, fixed the computer error that interrupted the index's 17-day tumble, the longest streak since October 2003. The VN Index closed at its lowest since Aug. 2, 2006, as 139 of its 151 members dropped. It had tripled in value from the end of 2005 through 2007.

``We'll see a continuation of the selling,'' said John Shrimpton, a director of Dragon Capital Group, a Ho Chi Minh-based fund manager with assets of $2 billion. ``Inflation is one aspect causing the drop. The market was clearly overvalued.''

The VN Index, started in 2000, surged almost fivefold in the two years through its March 12, 2007, peak as the economy grew at the fastest pace in a decade and a government equity sale program helped lure foreign and domestic investors. Refrigeration Electrical Engineering Joint-Stock Co., the Ho Chi Minh City-based maker of air conditioners and electrical appliances, rose 523 percent from the end of 2005 through 2007. The company's shares have slumped 75 percent in 2008.

Lost Savings

Vietnam Dairy Products Joint-Stock Co., the country's biggest maker of dairy products, and PetroVietnam Fertilizer & Chemical Joint-Stock Co., Vietnam's largest fertilizer producer, contributed most to today's decline.

Local investors who own about 75 percent of listed shares in Vietnam, a Communist Party-led nation of more than 85 million people, are reeling from the plunge. Nguyen Van Hai lost almost 700 million dong ($43,000), and his parents sold their house to help repay loans he'd used to invest.

``I entered the stock market with hopes that I could earn enough to own a house and get married,'' the 29-year-old Hanoi- based taxi driver said. ``Those wishes have now vanished.''

Even after the tumble, Vietnamese stocks aren't cheap enough to prompt Templeton Asset Management Ltd.'s Mark Mobius to buy.

The 151 companies in the VN Index trade below 10 times estimated earnings, down from as high as 30 times, according to data from Dragon Capital. Stocks in the MSCI Emerging Markets Index trade for 13.5 times profit, data compiled by Bloomberg show.

``It's got a little way to go down still,'' said Mobius, who oversees $47 billion in emerging-market equities at Templeton in Singapore. ``If you're going to go in there, you better think long- term, otherwise you can get stuck with a very illiquid security.''

`Entrenched' Inflation

About 52,000 stocks and bonds changed hands on average each day this month on the Ho Chi Minh exchange, plunging from the 2007 daily average of 965,000.

The International Monetary Fund said last November lending to state-owned companies is exacerbating Vietnam's inflation, which is already more ``entrenched'' than in any other Asian country.

Consumer prices jumped 25.2 percent in May from a year earlier, the most since at least 1992 and the fastest pace in Asia, according to May 27 figures from the General Statistics Office in Hanoi. Food prices surged 67.8 percent.

Vietnam's central bank raised its key interest rate to 12 percent on May 17, the highest since it was introduced in 1998, from 8.75 percent. The country is heading for a ``currency crisis'' because the bank has kept the dong too strong as inflation soars and the trade deficit widens, Morgan Stanley said in a May 28 report.

Fitch Ratings cut its outlook for Vietnam's BB- rating to negative from stable yesterday, citing risks to the banking system because the government was too slow to respond to higher inflation.

`Hard Landing'

``The longer it takes the government to raise interest rates, rein in inflation and slow down demand, the more likely that would lead to a hard landing,'' James McCormack, head of Asia-Pacific sovereign ratings at Fitch in Hong Kong said in an interview with Bloomberg Television today. Interest rates ``have to be higher than inflation.''

Property developers have led this year's slump amid concern higher borrowing costs will curb home purchases. Idico Urban & House Development Joint-Stock Co., a Dong Nai province-based builder, retreated 81 percent, the most this year for any company listed on the Ho Chi Minh exchange.

Some foreign investors say the market is attractive enough to add to their holdings.

`Embryonic Market'

``We're increasing our investments in Vietnam even more,'' said Beat Lenherr, who oversees more than $20 billion of assets as Singapore-based chief global strategist at LGT Capital Management. ``This is an embryonic market that had a strong birth. Now the baby is struggling a little, but we think it'll get its strength back.''

Luong Minh, a 53-year-old state employee, who earns 5 million dong a month in Ho Chi Minh City, is less sanguine after losing 100 million dong in the stock market.

``I don't want to sell the shares I have, but the longer I keep them, the bigger the loss,'' Minh said. ``It is hard to sell now anyway as the market is almost frozen. We are desperate.''

[winston]

From UOB-Kay Hian

Developers’ Vietnam exposure turns riskier

The inflation in Vietnam skyrocketed to 25% in May despite tightening measures introduced by the Vietnamese government. The country is facing heightened risks of a currency crisis.

Also, the government recently cut its growth rate forecast for 2008 to 7.0% from the previous target of 8.5%-9.0%.

The deteriorating conditions in Vietnam could adversely impact developers with exposure there.

Keppel Land is the most exposed to Vietnam, drawing nearly 22% of its gross RNAV from Vietnam.

[winston]

Will put this "Vietnamese Dong" thread into the Vietnam thread. Don't see a lot of people speculating on the Vietnamese Dong.

======================================

Vietnam's Dong May Slump 30% in 12 Months on Deficit, OCBC Says

By Patricia Lui

June 2 (Bloomberg) -- Vietnam's dong may slump as much as 30 percent in a year and investors should sell the currency using 12-month offshore forward contracts, according to Oversea- Chinese Banking Corp.

The dong is set to extend losses from last week's nine- month low on accelerating inflation and a widening trade deficit, said Emmanuel Ng, OCBC's Singapore-based currency strategist. Fitch Ratings last week cut Vietnam's debt-rating outlook to negative and Morgan Stanley said the nation is headed for a ``currency crisis,'' similar to that of Thailand's baht in 1997.

``We extrapolated the 1997 Thai baht scenario on a six-to- 12 month horizon and if the dong was granted more freedom, it could fall like the baht,'' Ng said in an interview today. ``The stress on the dong may continue to build on the back of runaway inflation, the widening trade deficit and tight liquidity in the banking sector.''

The dong has dropped 1.5 percent this year against the dollar and traded at 16,255 as of 1:05 p.m. in Hanoi, according to data compiled by Bloomberg.

Twelve-month offshore non-deliverable forward contracts indicate the U.S. dollar will buy 21,930 dong, a 26 percent slump from today's spot rate. Such contracts, settled in dollars, are used by traders to bet on currencies they can't freely convert.

Deficit, Inflation

The dong completed a fourth weekly loss as crude oil prices climbed to an all-time high last month, increasing import costs and demand for dollars. The trade deficit widened to $14.42 billion in the five months through May from $4.25 billion a year earlier. Consumer prices rose 25.2 percent last month, the most since at least 1992.

The benchmark stock index is the world's worst performer this year, dropping 56 percent.

The State Bank of Vietnam, the nation's central bank, allows the dong to trade 1 percent on either side of a reference rate it sets every day. Money changers exchanged the dollar for 17,200 dong in Hanoi on May 30, according to Phung Trung Kien, the Hanoi-based investment specialist at the securities unit of Vietnam Joint-Stock Commercial Bank for Private Enterprises, compared with today's reference rate of 16,094.

``The implied valuations for the dong are very much at odds with what they are trying to preach this year, which is a 2 percent decline at most,'' OCBC's Ng said. ``Something has to give, and it's not going to be the trade account.''

Ng said that taking a position on the dong may be difficult for foreign investors due to the country's capital controls and the lack of a developed offshore market. Prices are available in the longer tenors, he said, ``provided you can find a counterparty.''

[winston]

Vietnamese Stocks May Not Rebound From 58% Plunge, Merrill Says
By Ian Sayson

June 6 (Bloomberg) -- Vietnamese stocks may extend this year's worst slump among global markets as the government raises interest rates to quell inflation, Merrill Lynch & Co. said.

Higher borrowing costs will restrain earnings growth and prevent a ``huge bounce'' in Vietnam's equities, Mark Matthews, Asia Pacific head of equity strategy at Merrill Lynch & Co. in Hong Kong, said in an interview yesterday.

The Ho Chi Minh Stock Index extended a record losing streak to 21 days on concern a widening trade deficit and inflation at a 16-year high will prompt overseas funds to sell local holdings. The benchmark index, at its lowest in 27 months, has lost 58 percent this year.

``It won't increase 30 percent in the next month or 50 percent in the next two months,'' Matthews said. ``Investors can take the time they need to find the companies they want in Vietnam. I'd wait for some more clarity from the government on how it's going to handle the issues facing the economy.''

The Vietnamese dong is headed for a fifth weekly loss as Standard & Poor's, Moody's Investors Service and Fitch Ratings lowered their outlook for the nation's debt to negative, citing a slow government response to inflation. Deutsche Bank AG, the world's largest currency trader, and Morgan Stanley are predicting a devaluation of the dong as inflation accelerated to the fastest since 1992.

Taking Action

The government will take action on the economy ``soon'' to stem the plunge, he said. ``The problem is once that bottom is in place there's no real reason why stocks should immediately go up.''

Central bankers raised Vietnam's base rate from 8.75 percent to 12 percent on May 19. They have no current plans to increase it further, Nguyen Dong Tien, a deputy governor of the State Bank of Vietnam, said June 2.

The government this week cut its growth forecast for 2008 to 7 percent from 9 percent, and said curbing inflation is its top priority.

Consumer prices in the Southeast Asian nation gained 25.2 percent in May, according to the Hanoi-based General Statistics Office. The trade deficit tripled in the first five months of the year to $14.42 billion from $4.25 billion a year earlier.

``There are so many things to deal with in Vietnam,'' Matthews said. ``The current account deficit is very high, inflation is very high and credit growth is extremely high, so there are going to be non-performing loans, probably. How do they deal with this requires a delicate balance.''

The speed of the government's response may determine whether Vietnam avoids a replay of Thailand's economic collapse in the 1990s that slashed the benchmark SET index by 85 percent from January 1996 through August 1998, Matthews said.

``There's no reason why Vietnam couldn't fall another 70 percent'' if there's a repeat of the errors in Thailand, where the policy response ``was extremely slow,'' he said. ``We will not see Vietnam rebounding, at least this year.''

[iam802]

LionCaptial Vietnam Fund update:

http://www.lookforlion.com/media/annouc ... 062008.pdf

Unfortunately, I can't copy and paste the text here. Please follow link to download and read the article.
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Just some additional points extracted to add on to previous posting by Winston:
- Corporate earnings impacted due to rising interest rates and rising input costs
- Fund intend to go long in consumer sector and companies which have exposure to infrastructure development in Vietnam.
- With WTO ascension, export-related companies will likely to benefit from increased market access.
- Service sector is also likely to grow from strong FDI inflows and private consumption demand.