Vietnam

[helios]

quoted from a media release, pls read this w a pinch of salt & pepper:

Record US$20.3 billion FDI drives Vietnam real estate
But with 33 cars and 1,230 motorbikes registered everyday, experts at Cityscape Asia call for strategic approach to supporting infrastructure Record 2007 Foreign Direct Investment (FDI) worth US$20.3 billion is driving Vietnam's real estate industry but experts have urged existing and would be investors and developers to take an holistic approach and support local and regional infrastructure requirements.

The cautionary advice came during keynote presentations at the Cityscape Asia conference. The three-day event which took place at the Suntec Singapore International Convention & Exhibition
Centre, played host to 6,000 industry professionals and is part of the largest B2B real estate event brand in the world.

During his presentation entitled, ‘Where to Invest and What to Build in Vietnam’ Philip Atkinson, Regional Director of Dubai-based Limitless, who broke ground last December on their US$220 million Halong Star project, located on Vietnam's N.E. coast, called for investors and developers to pursue an all-embracing strategy.

'Give Vietnam what it needs, responsible investment, affordable high quality environments providing a solid base for sustainable growth," urged Atkinson. "Although demand will continue to out-pace supply in almost every sector, supporting infrastructure is critical. This includes hard and soft infrastructure such as schools, hospitals, roads, trains, airports, communications and power stations."

Atkinson continued, “The decision to invest in a particular sector or geographical area in Vietnam remains subject to the standard due diligence and feasibility that any investment opportunity requires. The lesson for today is to look beyond the boundary of the site being considered and appreciate the bigger picture. Ultimately the bigger picture bears a greater influence on the viability of any project.”

Some major Infrastructure projects are underway throughout Vietnam and in Ho Chi Minh City (HCMC) such as the Thu Theim bridge, 4 new ring roads, the new Metro project and a 19.7 kilometre subway, but massive investment still needs to be made.

However, with the sub prime issues in the US and other parts of Western Europe and saturation of other more mature property markets in S.E. Asia, Vietnam still remains a lucrative proposition. With GDP growth of averaging 8% annually, Vietnam is home to some 85 million people, 45 million of whom are under 35 years of age. So with the ensuing urbanisation, demand for residential and commercial space is continuing to outstrip supply. That supply and demand imbalance is now stoking inflation (currently running at 15.8%) from skyrocketing real estate prices (The rental cost of a three-bedroom apartment in HCMC is now tenth highest in the world).
But foreign investment continues unabated. Vietnam currently attracts more overseas investment than India. In 2005 FDI was recorded at US$ 5.8 billion, a year later it reached US$ 10.2 billion and in 2007 it virtually doubled to US$ 20.3 billion. Indeed over the last 20 years Vietnam has amassed US$ 98 billion in FDI for over 9,500 projects.

[kennynah]

heard this from cnbc yesterday...10 Jun 08

Vietnam is now experiencing 14% inflation... they've hiked their interest rate yesterday(sorry, forgot that figure)....

[winston]

Another way to play Vietnam is thru Luks Group Vietnam 0366 listed in HK. However, you have plenty of time to catch the falling knife so there is no real need to jump in now.

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Vietnam's economy was a test case of success until recently.

Yesterday, the official rate of its currency - the dong - fell 2 percent against the dollar to a record low in what analysts described as an effective devaluation of the currency as the economy struggles with double-digit inflation.

The black market and offshore forwards market both continue to value the dong significantly lower than its official rate, reflecting the view that Vietnam's authorities have moved too slowly to combat inflation currently running at more than 25 percent, Reuters reported.

Just last week, the government said it had no plans to devalue the currency.

But analysts said a cut in the official dong rate yesterday was an effective devaluation. The move, however, would not prevent continued pressure on the currency given signs that the balance of payments is deteriorating.

Our personal concern here is over Vietnam concept stocks listed on the Hong Kong bourse.

The largest among these counters is Luks Group Vietnam Holdings (0366), which operates a property and cement business in Vietnam.

Luks has rallied from HK$1 in April, 2006 to as high as HK$16.50 in May 2007, up 1,550 percent in just 13 months!

But then it started declining. Yesterday, the stock closed at HK$5.

As of December, 2007, its net asset value stood at HK$4.14 per share.

The management has undertaken several buybacks in the past two months.

Dr Check is not convinced.

Further declines to HK$3 may perhaps make the stock attractive.

[winston]

HK listed Vietnam-related stocks have fallen 20 percent or more in the last two weeks.

Shares of GR Vietnam Holdings (0139) have dropped 20 percent while Luks Group (Vietnam Holdings) (0366) plunged 25 percent.

"Investors offloaded Vietnam-related stocks as they feared the depreciation of the Vietnamese dong will drag down asset values," a European investment bank analyst said. But he noted not all companies that have operations in Vietnam will be impacted much.

"Shares of Stella International (1836) and Yue Yuen Industrial (0551) did not drop a lot last Friday as their footwear businesses in Vietnam are in US dollars not dong," he said.

[LenaHuat]

For those who read Chinese: 谢国忠：中国助越完成3件事可避免亚洲危机 at
http://finance.ifeng.com/fhgcz/200806/0615_2178_597848.shtml
Xie is a MIT-educated ex-Morgan Stanley economist for Asia.

[iam802]

From Bloomberg:

http://www.bloomberg.com/apps/news?pid= ... efer=home#

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Vietnam's Capital Controls Will Prevent Crisis, S&P's Chew Says

By Patricia Lui

June 19 (Bloomberg) -- Vietnam's ``extensive'' capital controls and the management of its currency will prevent overseas investors from fleeing the nation even as inflation accelerates and economic growth slows, said Standard & Poor's.

Foreign funds are mostly limited to buying property and stocks, said Ping Chew, the Singapore-based head of Asian sovereign and corporate ratings at S&P, the first of three ratings firms to put the nation's debt on ``negative'' watch. Stocks have slumped 59 percent this year, the world's worst performance, and the dong is set for its biggest drop since 2001, falling 3.6 percent.

``Vietnam is not in a currency crisis,'' Chew said in a June 17 interview. ``There's definitely a bit of hot money that went in. But is it going to leave en masse like that which decimated Asia in 1997? I don't think so.''

S&P put the country's BB long-term foreign currency rating on ``negative'' watch May 2, saying the country's overheating economy was a risk to stability. That is two levels below investment grade. Vietnam's inflation rate rose to 25 percent in May as food and energy prices climbed and the trade deficit tripled in the first five months of the year.

Foreign investors have cut their stock purchases in half this year to $334.2 million, according to data compiled by Bloomberg.

Household Difficulties

The dong closed at 16,619 per dollar yesterday, and is allowed to trade 1 percent either side of a reference set by the central bank each day. The State Bank of Vietnam weakened the dong by 2 percent on June 11 seeking to prevent currency speculation and raised rates to 14 percent, the highest in Asia, from 12 percent to curb inflation.

Forwards contracts are pricing in a 33 percent drop in the next year, after taking into account interest-rate differentials, according to offshore 12-month non-deliverable forwards at 24,900 per dollar. Forwards are agreements in which assets are bought and sold at current prices for future delivery.

The impact of a run on the currency may be limited, said Joseph Lau, an economist at Credit Suisse Group in Hong Kong.

``It's not a fully convertible currency,'' said Lau, adding that residents can't exchange dong for other currencies without valid business documentation. ``It is difficult for a householder to purchase dollars legally, which is why when they do want to do it, they have to go through the black market.''

Negative Outlook

Vietnam's foreign currency reserves are about $20 billion to $22 billion, he said. By comparison, the market capitalization of companies on Vietnam's benchmark stock market, the VN Index, is $9.08 billion, the second smallest in Asia after Sri Lanka, according to data compiled by Bloomberg.

``This is still a managed currency with extensive capital controls,'' said Chew. ``For the negative outlook to turn around, we need to see more tightening measures, we need to see them addressing lending problems in banks and we need to see them easing the economy to more sustainable levels.''

Bank's non-performing loans may increase as the economy slows and the central bank raises lending costs, said Chew. The economy expanded 7.4 percent in the first quarter from a year earlier. Last year, gross domestic product grew 8.5 percent, the fastest pace since 1996.

The balance sheets of banks in Vietnam may not reflect the state of the bad loans as the country has yet to adopt internationally accepted accounting standards, he said.

Non-performing loans are debts which fall behind on interest payments or are unable to service principal repayments.

[winston]

UPDATE 3-Vietnam suspends gold imports as trade gap widens

(Adds graphic on gold investment demand) By Lewa Pardomuan SINGAPORE, June 23 (Reuters) - Vietnam has temporarily suspended gold imports as Hanoi struggles with a trade deficit that has tripled this year, but the move is unlikely to lift local prices because of plentiful supplies and weak demand.

The move, in place for the past two weeks, is an effort by Asia's second-largest gold investor to ease the economic burden as Hanoi steps up efforts to rein in inflation by tightening credit, said Hyunh Trung Khanh, a consultant for the Vietnam chapter of the World Gold Council.

"The government is very concerned. They have to reduce the trade balance deficit. Gold is one of the main imports," he said.

But traders added only a prolonged suspension could cut domestic supplies and trigger a scramble for safe-haven assets.

Fears that the dong could fall in value are making dollar holders reluctant to let go of their foreign exchange.

"Of course this depends on how long the suspension lasts," said Adrian Koh, an analyst at Philip Futures in Singapore.

Traditionally, Vietnamese use gold for savings, jewellery and real estate transactions but when inflation is high many choose gold or the U.S. dollar to hedge against inflation.

Khanh said Vietnam had imported 60 tonnes of gold valued at $1.8 billion in the January-May period, up 100 percent from the same year-ago period.

The central bank have given quotas to 40 banks and trading houses to import 73 tonnes of gold in 2008, up slightly from about 70 tonnes in 2007.

"They have required companies and banks which have not imported yet to remit back their remaining quotas to the central bank. Eleven tonnes have not been imported yet," said Khanh.

Vietnam imported 77.7 tonnes of gold -- both for jewellery and for investment in 2007 -- well below purchases by main consumer India, which imported more than 700 tonnes last year.

Following a year of overheating and high credit growth, 2008 has been strained for Vietnam, where macroeconomic stability was taken for granted as it boasted one of the world's highest growth rates, averaging 7.5 percent a year since 2000.

Speculation that the dong would fall has weighed on the currency.

Gold powered to a record of $1,030.80 an ounce on March 17on record-high crude oil, which raised fears of inflation and expectations of more rate cuts in the United States, making the metal more attractive as an alternative investment.

Gold has since corrected and stood around $905.85 on Monday, and barely reacted to the news on Vietnam.

"We have imported quite a lot. So there's still quite a lot of gold inside the country, and the demand in June is slowing down. The difference between the local and international gold price is not very high," he said without elaborating.

The price of gold was quoted by local dealers at around $873 an ounce, lower than international prices.

"Re-export of gold is not restricted but we have not seen any selling on the international market so far because they can still make a good, handsome profit in the local market," said an official at the Vietnam Gold Traders Association.

[iam802]

Decide to put this here.

Presentatoin slide from CapitalLand on Vietnam:

"Vietnam Economic Outlook - Consolidation not Collapse"

http://info.sgx.com/webcorannc.nsf/ef3b ... enDocument

[winston]

Bring your US Dollar to spend in Vietnam...

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Vietnam Dong Investors Use Black Market for Dollars
By Patricia Lui and Wes Goodman

July 4 (Bloomberg) -- Vietnam's currency controls are forcing foreign investors into the black market to obtain dollars, aggravating declines in the world's worst-performing stock market and pushing benchmark bond yields above 20 percent.

Businesses that aren't controlled by the government pay about 7 percent more than the official rate when using the dong to buy dollars because the state gives its trading companies priority access to the U.S. currency, the World Bank said. The premium is reducing demand for the nation's stocks and bonds, according to PXP Vietnam Asset Management.

``There is clearly a shortage of dollars,'' said Kevin Snowball, a money manager at PXP Vietnam in Ho Chi Minh City, which oversees $117 million. ``If you have dollars and you want to buy dong, you will get the official rate, but if you have dong and you want to buy dollars it's a completely different story.''

Vietnam's financial markets are tumbling after the central bank raised interest rates three times this year to 14 percent to tame inflation that accelerated to a 16-year high of 26.8 percent in June. The economy expanded 6.5 percent in the first half, the slowest in at least seven years, while the trade deficit more than doubled to $14.8 billion.

Rally to Rout

Vietnam's benchmark stock index, which climbed 168 percent in the past two years as Prime Minister Nguyen Tan Dung encouraged state companies to raise cash and finance expansion, slumped 53 percent since December. Yields on five-year government bonds jumped to 20.53 percent on June 13, the highest since at least July 2006, from 8.71 percent on Jan. 3.

The dong has dropped 5 percent this year, its biggest decline since 1998, to 16,846.5 per dollar as of 4:40 p.m. in Hanoi. Traders are pricing in an 18 percent drop in the coming year to 20,500, according to offshore 12-month non-deliverable forwards. The contract was at 16,080 on Dec. 31. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are settled in dollars.

The official rate will fall 6.4 percent to 18,000 by the end of the year, according to Calyon, the investment banking arm of Credit Agricole SA. HSBC Holdings Plc, Europe's biggest bank by market value, predicts it will strengthen 4.4 percent to 16,140 by year-end.

`Currency Crisis'

Vietnam may suffer a ``currency crisis'' similar to the slump in the Thai baht that triggered the regional collapse in 1997, Morgan Stanley analysts said in a report May 28.

``The central bank is not providing dollars, except to some importers and some working capital for exporters,'' said Noritaka Akamatsu, a Hanoi-based economist for the World Bank. ``That's why there is some depreciation pressure.''

The State Bank of Vietnam allows the currency to trade 2 percent either side of its daily reference rate. Gold shops and street money changers offer a black market rate of about 18,000, said Akamatsu. Banks offer a similar rate by adding fees to sell dollars, he said. The rate was as high as 19,500, he said.

The dong slumped in the forwards market in May as foreign investors trapped in the bond market bet against the currency to hedge against losses, Akamatsu said.

Frozen Market

Rajeev De Mello, who helps oversee about $600 billion as head of Asian bonds at Western Asset Management Co.'s Singapore office, sold Vietnamese bonds in April and says the market has frozen. Western Asset, part of Baltimore-based Legg Mason Inc., also couldn't get a price for dong forwards, he said.

``Even when things were good, it was difficult to buy bonds in any size,'' said De Mello. ``Now when things are bad, it's impossible to either buy or sell.''

Union Investment in Frankfurt, Germany's third-biggest fund manager, forecasts a smaller decline in the dong than the forward market and is buying contracts, said Sergey Dergachev, the firm's emerging-market investor, who helps oversee the equivalent of $285 billion. Union Investment expects an 11 percent drop to 19,000 by Dec. 31.

The risk is Vietnam exhausts its currency reserves of $22 billion supplying dollars or that ``overkill'' in cooling growth causes losses at state banks, said the World Bank's Akamatsu.

Pramerica Fixed Income Asia, a unit of Prudential Financial Inc., the second-biggest U.S. life insurer, is staying away.

``It's a shocking and timely reminder of problems that developing countries face,'' said Clifford Lau, a Singapore- based portfolio manager at Pramerica that oversees $7.6 billion in emerging-market debt. ``Everyone is taking a step back.''

[winston]

Missed this rebound. Too many negative news out there and I did not watch this one.

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Vietnam's stock market has recovered 24 percent in the past three weeks.