One-third of local firms interested in acquisitions

Monday, April 28, 2008
A recent global survey conducted by the Grant Thornton Group International has shown that 30% of Vietnamese businesses plan to buy other companies.
The survey also revealed that of the respondents, only 3% said they might sell their companies in the coming three years.
The result is evidence of a healthy investment climate in Viet Nam , where businesses are optimistic about their opportunities ahead. Businesses said acquisition or mergers would be strategic tools for development.
However, the local figure is considered low compared to the global 44% of businesses who plan to buy other companies.

Vietcombank General Shareholders' Meeting 2008: Puzzle Pieces

Monday, April 28, 2008
Vietcombank, one the largest commercial bank in Viet Nam held its first General Shareholders' Meeting on April 26, 2008. For the first time the name Viet Nam Joint-stock Bank for Foreign Trade has ever appeared. The meeting marked a new stage of development for Vietnam's most hitorically rich commercial bank.
However, much of its headache will still be ahead. The SGM was organized amid the stock market chaos, with Vietcombank's stock price plunged by about 50% compared to its IPO price in late 2007 (at the time VND 107,000/share). The majority of its shareholders attended the meeting appeared to be puzzled and concerned, given the current stock price on the free market priced in between VND 50,000-60,000/share. A disgruntled shareholder also tried to explain his computation that Vietcombank's stock price should have been around VND 14,000-22,000/share, a number that shocks everyone that is familiar with the evolution of Vietcombank's IPO since its issue of convertible bonds in 2006.
Domestic shareholders shared the view that the Vietcombank's stock might have been mistakenly priced during the IPO process. They complained there should have been ways to alleviate the current difficult situation. Alternatives should be taken taking into account its next steps of selecting a "strategic partner" and listing its stocks. Some suggested the bank purchase stocks to enrich treasury stock, creating liquidity and stopping the price from further drop.
CEO of Vietcombank, Nguyen Phuoc Thanh, unveiled the fact that the bank now faces a dilemma. The current market price of 50-60,000 would damage the trust of existing shareholders who bought Vietcombank stock at over 100,000. But if the bank thinks about any higher price than the market level, it could hardly identify a business partner, a critically important assignment of the BOD predefined at the outset of the IPO.
Vietcombank has now 15,500 shareholders, but they collectively hold only 9% of its equity. 91% remains with the State. All major decisions regarding the future of the bank will still be made by the government. Given its 15,500 shareholders, only 2,000 registered to attend the GSM, but only 700 showed up. The many shareholder left the GSM before the discussion session on the bank's business plan and the voting for this year's BOD. (Saga Viet Nam)

Viet Nam Accelerates State Enterprise Restructuring

Monday, April 28, 2008
Viet Nam is speeding up restructuring state-owned enterprises (SOEs), including equitization of big corporations from now to 2010.
Viet Nam is facilitating the restructure of state agricultural and forestry farms, and equitization of large state corporations and economic groups, including the Viet Nam National Textile and Garment Group, the newspaper quoted a report presented by the country's Steering Board for Enterprise Renewal and Development at a national conference on SOE restructure on April 23.
Viet Nam will also have specific policies and mechanisms designated for large SOEs and economic groups so that they will intensify investment in technology renewal, make their finance healthier, and focus on major business fields and avoid rampant investment.
Viet Nam is to restructure 1,553 SOEs, including equitization of 950 enterprises in the 2007-2010 period, said the steering board. The country restructured 5,366 SOEs, of which 3,756 were equitized in 2007.
Of the SOEs equitized last year, 17 enterprises had capital of over 100 billion Viet Namese dong (VND) (nearly 6.3 million U.S. dollars) each, and some others, including the Bank for Foreign Trade of Viet Nam (Vietcombank), the Viet Nam Insurance Corporation and the Saigon Beverage Corporation had capital of more than 1,000 billion VND (62.5 million dollars) each.
"In the 2008-2010 period, we will equitize all 104 state corporations according to market rules, in attachment to listing their shares in the local stock market. We are also created favorable conditions for equitized enterprises to list shares abroad," Viet Namese Prime Minister Nguyen Tan Dung told domestic and foreign business leaders in January.
Viet Nam, housing 6,000 SOEs in early 2001, had only 1,400 SOEs in late 2007, including over 400 plantations and more than 100 public utilities, he said, noting that most of equitized firms are operating effectively, and recording rapid growth.

Can Viet Nam handle its stock market?

Monday, April 28, 2008
Poorly managed and overrun by investors who act like gamblers, Viet Nam’s stock exchanges may have been born into a country that wasn’t ready for them.
Is Vietnam prepared for a financial market that follows market-based principles and helps the country integrate into the global economy? Based on market developments earlier this year, the answer is no.
The State Securities Commission’s (SSC) decision to cut the share trading band on the stock markets to 1 percent and 2 percent on March 25 was a Band-Aid solution to the market’s major fall earlier this year.
No established stock market would change its rules so abruptly.
In the long term, it could be hard to attract investors, especially foreign ones, to a market that does not adhere to normal principles.

The strength of a stock market can be demonstrated by its management agencies’ ability to establish and enforce “delicate” policies that help them achieve their desired targets fairly.

The most important responsibilities of the SSC are to enforce regulations and ensure market transparency.

But investors can hardly find accurate data about listed companies as SSC has not pushed them on this issue.

Earlier this year, a company preparing to list said their assets had grown about ten-fold because the prices of the properties they invested in were soaring.

SCC should have blown whistle on this false claim.

Such claims could be found in many announcements of listed companies but SSC and the two stock exchanges’ managers did nothing to correct it.

Recently, when the stock markets stalled for 10 straight days two weeks ago, everyone worried that their collapse would affect many important sectors, especially the banking sectors which had been generous to stock loans, and the economy as a whole.

But the stock market managers’ role should have been to coordinate with other responsible government agencies to find out and address the root cause of the fall, not only focus on reversing the trend.

The answer as to whether or not Vietnam is ready for stock markets is even more apparent when we take a closer look at the listed companies.

There is some level of greed on all markets, but the greed that many listed companies displayed on our market last year was too much.

Equitization and initial public offerings have brought giant sums of money to many companies, arousing in them a desire to earn as much as possible for themselves without regard for the interests of shareholders.

Share auctions earned these companies bit money that they did not how to spend effectively.

They therefore started issuing bonus shares to turn the money into an increase of their capital.

They also invested in other companies and saw their investment double or triple after some time.

Obviously, the market was unprepared for this “strategy” so stock prices ballooned and burst, as we’ve unfortunately seen.

Listed companies do not know how to use their financial capacity to encourage employees and develop optimum business strategies.

Their executive officers, who often hold the largest stakes, have ignored small shareholders and the companies’ long-term future to make decisions that only benefit themselves in the short term.

Finally, local investors have played the stock market as if they were gambling.

For them, stock prices must fluctuate vigorously to make big money fast.

Very few care about dividends let alone a long-term investment strategy.

It is different in other countries: individuals invest in stock indirectly through mutual funds or pension funds.

Few would spend the whole day at the stock exchange and even fewer would use bank loans to invest in stocks.

Foreign investors, who are expected to stabilize the market, are in fact a varied lot.

Many of them are professional investors.

Many others are sheer speculators.

They can one day buy a lot of shares and become a company’s “strategic partner,” but a few months later they sell the shares for a big profit.

An example was Texas Pacific Group (TPG) Ventures which bought into top Vietnam technology firm FPT at a low price to become its strategic partner in late 2006 but sold a large volume of the shares for big profits six months later.

When the main market components are not prepared for the long-term, abnormal fluctuations are inevitable.

Let us hope the market’s harsh natural selection will force everybody to think and act professionally.

In the mean time, it’s sensible – and essential – to slow the opening of the financial market.

Just imagine, if the stock market grew larger without reservation and the participation of foreign investors continued to grow unchecked, could a new stock market crash be even more disastrous than the last one? (TBKTSG)

SHB offers free ATM cards

Monday, April 28, 2008
Free ATM cards have been offered by Sai Gon-Hanoi Commercial Joint Stock Bank (SHB) in the sale promotion programme from April 30 to June 30.
The fee for opening ATM cards is VND 100,000 each.
In addition, customers can apply for the bank’s overdraft arrangement which promises a maximum credit of VND 200 million customers or VND 300 million (with mortgaged property).
Saving account also enjoys a non-due interest from SHB.
The activity is to celebrate the National Reunification Day (April 30) and May Day (May 1).

VIB Bank remains open after regular time

Monday, April 28, 2008
As of April 28, some Vietnam International Commercial Joint Stock Bank (VIB Bank) branches, namely the headquarter in Hanoi, Ba Dinh district branch, My Dinh transaction office (Hanoi) and District 5 branch, Thanh Do branch in Ho Chi Minh City, will remain open after regular hours.
The new working hours will be from 8.00-12.00 noon and 1pm-6.30pm on weekdays, and from 8-11am on Saturdays.
There will be no changes in the services for customers.
VIB Bank plans to apply the new timetable across the country from Sep 2008. (TBKTVN)

Military Bank opens additional branch in Ha Tay

Monday, April 28, 2008
The Military Commercial Joint Stock Bank (MB) has officially opened an additional branch in 634 Quang Trung street, Ha Dong city, Ha Tay province, bringing the total number of its branches nationwide to 71.
The branch provides various banking services to individuals, groups in the area. Being one of eight key economic areas in the North, Ha Tay province has great potential and a good market for the bank.
At its inauguration, Ha Tay branch presented gifts to the first 500 customers and its staff gave 10 million VND to a local orphanage.

Central bank won’t change rates on inflation

Sunday, April 27, 2008
Viet Nam’s central bank will not change the benchmark interest rate because month-on-month increases in inflation show recent policy measures have been effective, according to Governor Nguyen Van Giau.
Consumer prices in the Southeast Asian nation surged 21.4% this month from April 2007, the most since at least 1992, according to figures released Friday by the General Statistics Office in Hanoi.
From a month earlier, prices rose 2.2%, compared with gains of 3% in March from February.
“We are fine with this month’s inflation since we care more about month-on-month prices, and on a monthly basis you can see that inflation has slowed down and showed that the central bank’s short-term measures have been effective,’’ Giau said Friday
“So we will keep the base rate at its current level of 8.75%.’’
The State Bank of Viet Nam has raised interest rates, increased bank reserves and sold compulsory bills this year in a bid to slow money-supply growth and combat inflation. (Bloomberg)

Property developer, Vincom profit ups 33 per-cent on rentals

Vincom Joint-Stock Co., a Vietnamese real estate developer, said first-quarter profit rose 33% on increased office rentals and higher revenue from advertisements placed in the company’s premises.
Net income surged to VND38 billion (US$2.4 million) in the three months ended March 31, from VND28.5 billion ($1.77 million) in the year-earlier period, the Hanoi-based company said this week.
Sales rose to VND53 billion ($3.29 million) from VND43 billion ($2.67 million).
A “wide range” of clients signed contracts to rent stalls at higher rentals and “many’’ contracts were secured for partners to post promotional posters in and outside Vincom’s buildings, the company said, without providing more details.
Vincom shares gained VND1,500 ($0.09), or 1.7%, to VND90,500 ($5.6) on the Ho Chi Minh Stock Exchange, the country’s main board.
The property developer has 120 million shares outstanding, and a market value of VND11 trillion($684 million), making it the seventh-biggest company on the Ho Chi Minh Stock Exchange, according to data compiled by Bloomberg. (Bloomberg)

Foreign Fund Management Applicants Must Have Securities Assets of US$300Mln

Sunday, April 27, 2008
Foreign investors who want to set up 100% foreign owned fund management companies in Viet Nam must be managing securities with the market value of at least US$300 million, according to the Finance Ministry’s draft regulation on foreign transactions in Viet Nam’s stock market.
Foreign fund management companies who want to establish branches in Viet Nam must have at least US$500 million in total registered capital of their managed funds and securities companies.
Before Viet Nam opens its securities market under its WTO commitments, the wholly foreign owned fund management companies and branches of foreign fund management companies are only authorized to provide asset management services for foreigners in Viet Nam.
Foreign-invested fund management companies are allowed to be converted into the wholly foreign owned firms.
The wholly foreign owned fund management companies have operational duration of less than 99 years and branches of foreign companies less than five years.
The draft also regulates that a foreign investor is allowed to open a Viet Nam dong account for indirect investment capital at a credit institution licensed to trade foreign currency. All transactions related to securities market such as buying and selling shares, transferring money and payment, will have to be made via this account.
Hoang Phong, a partner with Thanh Ninh law firm, said the draft would become a basis for the finance ministry and other market regulators to manage business of foreign fund management companies.