Vietnam

[winston]

The Vietnam fund can fluctuate 4% a day ..

Vietnam first-half growth at decade-low of 3.9 pct

Vietnam's economy grew at 3.9 percent in the first half of the year, the lowest level in a decade, but is on course to meet the government's full-year target, officials said Wednesday. The General Statistics Office (GSO) warned, though, that high inflation could return to the communist nation. It said second-quarter growth was 4.5 percent and estimated the economy would expand in the next six months at 5.9 percent.

"This 3.9 percent is the lowest level on record since 1999", when first-half growth was 4.1 percent, said Bui Ba Cuong, head of the national accounts department at the GSO. But the GSO, in its report, said that although the economy faced many challenges in the first six months of 2009, it "has grown faster and has shown signs of recovery." First-half growth last year was 6.5 percent.

Vietnamese legislators agreed last month to lower the country's economic growth target this year to around five percent from 6.5 percent in the face of an economic slowdown that they said had hit production, trade, investment, job creation and revenues. The GSO said that "if we try to maintain the current pace, the year-end growth may reach around five percent".

Vietnam's economy expanded by 6.18 percent last year, its lowest level in almost a decade, and first-quarter growth was 3.1 percent, the lowest on record. But Vietnam was one of the few countries with positive growth in the first quarter of 2009 while the world's major economies battled recession. Inflation in Vietnam hit a record 28.3 percent last August before rapid disinflation occurred in the second half of the year. Government data released earlier showed consumer prices rose 10.27 percent in the first six months of this year, driven mainly by sharply higher food costs.

"Prices have increased slower but remain high and inflation may come back," the GSO said. Martin Rama, an economist with the World Bank in Vietnam, also recently said that the time when inflation was less of a concern to the country "may be coming to an end." Legislators said they hoped inflation could be maintained below 10 percent this year. "I would expect the growth to continue picking up," one economist said, citing the continued effects of government stimulus measures, as well as relatively weaker growth in the second half of last year which will be used as the comparative period.

Legislators have approved a maximum budget over-spending of seven percent of gross domestic product to allow for needed expenditure, including the stimulus measures. The economist, who declined to be named, said that despite an expected pickup in growth, he was not sure whether the government's five percent target was attainable. The World Bank has estimated 5.5 percent expansion for Vietnam this year, the Asian Development Bank 4.5 percent, and the International Monetary Fund predicts 3.5 percent.

The GSO said foreign investment commitments fell in the first half of the year to 8.9 billion dollars, a drop of 77.4 percent compared with the same period a year earlier. Actual foreign investment was about four billion dollars, a fall of 18.4 percent year-on-year, GSO said. GSO data released last week showed Vietnam's trade deficit in the first half dropped to an estimated 2.1 billion dollars, with imports falling more than exports.

http://sg.biz.yahoo.com/090701/1/4oygq.html

[winston]

Dont follow Vietnam that closely but it was down 4% today. Must be because of the devaluation of the Dong today ..

[winston]

And it's up 3% now eventhough the whole world is dropping.

This is the danger of investing into a place where you dont know the drivers and have to rely on the "experts" to provide you with the analysis.

And interest rates are going up in Vietnam so wouldn't Equities be hit especially when it has had a very good run ?

[winston]

Vietnam still under pressure after devaluation

Battling to contain inflation and bolster its trade, Vietnam had to devalue its currency after burning through reserves to defend the dong, but analysts say the economy is not out of the woods yet.

The State Bank of Vietnam (SBV) on Wednesday said that effective December 1, it was hiking interest rates by a full percentage point to 8.0 percent after inflation surged at the fastest pace in six months in November.

The communist-ruled country's central bank also reset the interbank exchange rate at a midpoint of 17,961 dong to one US dollar as of Thursday. That was compared to 17,034 on Wednesday -- a devaluation of 5.4 percent. The step came despite assurances from Vietnamese leaders that no devaluation was on the horizon.

Patrick Bennett, currency analyst at Societe Generale in Hong Kong, said it was "an appropriate response" to the dong's woes. "A weaker dong will help exports to recover," he said, while cautioning: "There is certainly still pressure on the currency." SBV Governor Nguyen Van Giau Thursday ordered companies to sell US dollars to state banks, in an indication that official reserves are depleted after months of intervention to prop up the beleaguered dong.

Vietnamese firms are estimated to be holding around 10.3 billion dollars, and analysts say that foreign exchange reserves have fallen from about 22 billion dollars at the start of the year to 16.5 billion now.

"In the (currency) black market, the heat has gone down a bit. But whether the move by the SBV will really work, no one can say right now as it's too early," said one Vietnamese banker who declined to be named.

Vietnam is targeting economic growth of around five percent this year, which would be the worst performance in a decade. The country is lagging other Asian nations' rapid recovery from the global financial crisis. The government is also aiming to limit inflation to 7.0 percent this year, after consumer prices surged by 23 percent in 2008.

Vietnamese share prices dropped 4.1 percent Thursday, hurt by doubts over government policy following the devaluation, according to economist Vuong Quan Hoang of the Hanoi-based Center Emile Bernheim. He said that "many players aren't sure what's next, so they are hesitant to put more money into stocks now".

Vietnam has already seen a precipitous drop in foreign direct investment. At about 19.7 billion dollars from January to November, the total was barely a quarter of the amount registered over the same period of 2008. And with the trade deficit running at more than 10 billion dollars over the 11 months, analysts said Vietnam was under far more pressure than other Asian countries that have weathered the economic crisis reasonably well.

Playing down the wider trade implications, Thai finance minister Korn Chatikavanij told reporters Thursday: "Vietnam's decision to devalue its dong will not affect exports or other currencies in the region." A devaluation would ordinarily boost a country's export competitiveness, but Moody's Economy.com economist Matt Robinson said Vietnam was caught in a bind.

"The weaker currency will increase the cost of Vietnam's imports -- particularly commodities, which are priced in foreign currencies," he said in a research report. "Vietnam relies heavily on imported capital equipment to spur economic development and improve productivity. Higher import costs risk fuelling inflation pressures further," Robinson said. "This quandary will continue to hamper efforts by policymakers to temper inflation pressures and promote sustainable economic development in the emerging economy."

Source: Dow Jones Newswires

http://sg.biz.yahoo.com/091126/1/4s1r9.html

[winston]

Vietnam is in much better shape than the rest of the countries that turned to the IMF for help in the last year. But sentiment is clearly not good.

Until recently, it looked like markets would look through any near-term problems, but not any more. The VN Index is down more than 20% in the last four weeks and if jitters over the Dubai situation get continue, it will slide further.

But despite these short-term risks, I like Vietnam. On a price-earnings ratio of 16 times this year’s earnings and 13 times consensus forecasts for next year, the market is cheap if you have a long-term focus and you’re willing to sit through a lot of volatility in the years to come.

I suspect most investors are planning to wait out the next few weeks and see if the latest wobbles turn into anything more. However if you don’t already have a position in Vietnam, it’s a good candidate to add when you decide to go back into the market. (But please bear in mind that as a frontier market, it is by definition high risk and should only ever be a small part of a portfolio.)

Source: Money Week Asia

[winston]

Vietnam Stocks Set for Rebound in January: Technical Analysis
By Nguyen Dieu Tu Uyen

Dec. 17 (Bloomberg) -- Vietnam’s benchmark index, the world’s worst performer this month after falling 15 percent, may recoup its losses in January after reaching its support level, according to Kim Eng Securities Vietnam Joint-Stock Co.

The VN Index has formed a so-called head-and-shoulders pattern since June, which ended at the 430 to 450 range and created a support level, said Nguyen Duy Khoa, head of the brokerage business at Kim Eng Securities Vietnam, a unit of Singapore-based Kim Eng Holdings Ltd. The index may rally next month until it reaches resistance of 490 to 500, he said.

The VN Index “is now at a support level to bounce back,” Khoa said in a phone interview yesterday. “This level can also be considered a temporary bottom for the index.”

The measure tracking 190 companies listed on the Ho Chi Minh City Stock Exchange fell 3.3 percent to 427.46 as of 9:32 a.m. local time, the lowest since July 22. Losses this month have trimmed the gauge’s 2009 gains to 40 percent as the government, struggling to control accelerating inflation and a widening trade deficit, raised its key interest rate to slow bank lending.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.

A rising head-and-shoulders comprises three consecutive peaks on a chart, with the neckline serving as the base of the pattern. Resistance refers to the upper boundary of a trading range, where sell orders may be clustered, while support is where there may be buy orders.

A rebound in volume may also signal a recovery for Vietnam’s stocks, Khoa said. Daily trading averaged 39 million shares this month, according to data compiled by Bloomberg.

“Historical trading volume data will also show us if the uptrend is established,” the analyst said. “If the volume reaches 42 to 45 million shares a day, it’s a positive signal for the market as it exceeded an average level of daily trading volume since June.”

http://www.bloomberg.com/apps/news?pid= ... YaDlJKiEL8

[winston]

Would you buy Vietnamese Equities when
1) Interest rate is at 8%
2) GDP growth is at 6%
3) Inflation is at 14% and
4) The Dong has depreciated by 5% recently ?

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

Vietnam Bank to Keep Benchmark Rate at 8% Next Month (Update1)
By Nguyen Dieu Tu Uyen

Dec. 25 (Bloomberg) -- Vietnam’s central bank will keep the benchmark interest rate at a one-year high of 8 percent in January to help strengthen the economy.

The central bank unexpectedly increased the base rate to 8 percent last month amid signs of quickening inflation, after holding it at 7 percent for 10 months to revive the economy. The government also subsidized corporate borrowing and reduced tax payments to boost gross domestic product.

“The central bank may want to keep rates unchanged because it doesn’t want to add to costs for companies, especially because the loan subsidy program has been pared back,” said Duong Thu Huong, Hanoi-based general secretary of the Vietnam Banks Association and a former deputy governor of the central bank.

The government is trying to find a balance between boosting economic growth and easing inflation, Prime Minister Nguyen Tan Dung told bankers at a conference Dec. 23.

Policy makers will also keep the refinancing rate at 8 percent and maintain the discount rate at 6 percent, according to a separate statement on the bank’s Web site today.

Average inflation has been below the government’s target of 7 percent this year, according to an announcement on its Web site yesterday. The consumer price index rose 6.5 percent in December, the fastest pace since April, the General Statistics Office said yesterday.

‘Acceptable Pace’

“Inflation is quickening, but still at an acceptable pace, so we don’t need to raise the base rate right now,” Le Xuan Nghia, Hanoi-based vice chairman of the National Financial Supervision Commission, and former head of the central bank’s department for banking strategy, said by telephone today. “It’s also better for businesses.”

The economy expanded 3.1 percent in the first quarter,the slowest pace on record, before growth quickened to 4.5 percent in the second quarter and 5.8 percent in the next three months. The Hanoi-based General Statistics Office will probably release December GDP figures next week.

Annual inflation may accelerate to 14.2 percent by the third quarter, Nomura Holdings Inc. predicted in a report released last week.

“Dangers are coming from the increases in inflation,” Ayumi Konishi, Asian Development Bank country director for Vietnam, said on Dec. 22. The ADB recommends Vietnam “really start looking carefully at the possibility and the need and time to tighten their monetary policy further.”

Currency ‘Vulnerabilities’

In addition to raising rates last month, the central bank also allowed the dong to depreciate 5 percent by setting a lower reference rate for the currency. A widening trade deficit had fueled concerns the currency will weaken as demand for dollars and gold increased.

Higher interest rates are needed because of “increased vulnerabilities, partly coming from the foreign-exchange situation,” the ADB’s Konishi said.

Vietnam aims to limit inflation to 7 percent next year, and for GDP to expand 6.5 percent, the government said in a report released on Dec. 3 at a meeting in Hanoi with international organizations.

The country will “transfer from a loose monetary policy to a cautious, flexible policy,” the report said.

http://www.bloomberg.com/apps/news?pid= ... SWV4tvadno

[kennynah]

i would not.... for one reason... a runaway inflation...will cause their money to lose value far quicker than any investment returns..

[kennynah]

Viet CB maintains IR at 8% - reported today

[LenaHuat]

No post since 27 April Vietnam is now scrabbling to dig rare earth for export to Japan. How to reap/invest in Vietnam - buy KepLand or CapitaLand?