Vietnam Stock Market News: Viet Nam to raise dong deposit rate cap to 12 pct

Vietnam Stock Market News: Viet Nam to raise dong deposit rate cap to 12 pct

SSC To Halt Licensing New Securities, Fund Management Cos

Monday, April 28, 2008
The State Securities Commission (SSC) said Monday that it has decided to temporarily halt issuing licenses to new securities and fund management companies as part of efforts to boost the industry's performance.
"In order to support the stable development of the stock market, the State Securities Commission will temporarily halt the reception of applications for setting up new securities and fund management companies," the SSC said on its Web site.
The SSC's move follows the government's asking last week of all state-owned companies to review their operations; these entities have invested VND23.34 trillion ($1.45 billion) in securities and fund management companies in recent months, according to analysts.
"The SSC's decision is a right move because it will help existing companies to improve operations in terms of service quality, rather than by simply slashing service fees," said Phan Hong Quan, a director of Hanoi-based EuroCapital Securities.
"Viet Nam's stock market is relatively small, and licensing too many securities companies has caused unfair competition," Quan told Dow Jones Newswires.
"Many local brokerage firms, including EuroCapital Securities, are seeking foreign investors for their expertise and to help boost operations," Quan said.
There are currently 87 securities companies and 30 fund management firms licensed by the SSC, but not all of them have started operations.
Quan forecast that about half of the existing securities companies will soon close their offices because of losses, following a 44% plunge in domestic stocks so far this year. The benchmark domestic share index has fallen more than 55% since its peak in March 2007. (Dow Jones)

April 28, Foreigners Net Buyers Of VND131 Billion Of Shares

Monday, April 28, 2008 of VND131 billion ($8.2 million) of Vietnamese stocks Monday, out of a total of VND289 billion traded, the Ho Chi Minh Securities Trading Center said.
Volume was 8.9 million shares, with foreigners accounting for 32.9%, according to the stock market operator. (Dow Jones)

Viet Nam to raise dong deposit rate cap to 12 pct

Monday, April 28, 2008
Commercial banks in Viet Nam will raise the ceiling rate on dong deposits with a maturity of six months or longer to 12% from 11%, effective Tuesday, the Viet Nam Banks Association said on Monday, a move that should help smaller lenders.

The ceiling for interest on deposits of less than six months will be raised to 11.5 percent from 11 percent, the association said in a statement, citing agreements by commercial banks at meetings in Hanoi and Ho Chi Minh City last week.

It said banks should have plans to implement the rates as agreed among members of the association "in order to stabilise the market's interest rate level, to limit funds being shifted from one bank to another".

The authorities are apparently worried that smaller banks may have trouble attracting deposits, which would lead to liquidity problems at a time when demand for loans remains strong and might prompt the need for central bank aid.

The cap was imposed as a way of stopping money being moved between accounts as banks outbid each other for deposits, a practice that was working against official efforts to tighten liquidity to fight inflation.

Annual inflation in April jumped to 21.42%, the sixth consecutive month of double-digit price rises.

The association said in its statement that the higher deposit rate should help protect depositors against rising inflation.

The central bank said last week that apart from injecting cash via open market operations, it would step up lending, especially to smaller banks, to boost their liquidity.

Viet Nam could ease its restrictions in the next few months. (Reuters)

Banks not allowed to offer promotion programmes?

Monday, April 28, 2008
The Ministry of Industry and Trade and the State Bank of Viet Nam have agreed not to grant more licences to commercial banks to carry out promotion programmes at this moment, in order to protect the current ceiling interest rate, according to Secretary General of the Viet Nam Banking Association Duong Thu Huong.
Stopping promotion programmes to maintain ceiling interest rate
Huong said that banks can continue the promotion programmes for which they got licences before. However, they will not be able to launch other promotion programmes in order to attract capital.

Promotion programmes have been used by banks as an effective tool to call for more capital from the public, especially as they are ordered not to offer deposit interest rates higher than 11% per annum. Banks have been trying to dodge the regulations by offering attractive gifts or bonus interest rates to clients, which have made actual deposit interest rates higher than 11% per annum.

However, the State Bank of Viet Nam and VNBA, who believe that high deposit interest rates will harm the national economy at this moment, have decided that promotion programmes should not continue.

Depositors want promotion programmes

Nguyen Thi Minh, a retired woman in district 3 in HCM City, said that with the interest rates offered by commercial banks all the same, the thing that helps her make a decision about which bank to deposit money in are promotion programmes, which means that promotion programme show the competitiveness of banks at this moment.

A recent survey made by a big joint stock bank shows that attractive promotion programmes can sway up to 50% of depositors, especially clients between the ages of 35-60.

That explains why the decision to stop licencing promotion programmes has been facing strong opposition from banks.

Stopping licencing promotion programmes? It’s illegal!

According to experts, VNBA setting the 11% ceiling interest rate proves to come contrary to the Competition Law, and may cause depositors losses.

If VNBA and the Ministry of Industry and Trade plan to stop licencing promotion programmes, they will, once again, be violating the rules of market liberalisation. The experts say that the two organs should think through the legal considerations before stopping licencing promotion programmes.

Lawyer Nguyen Van Hau, Head of the Information and Propaganda Division under the HCM City Bar Association, said that the State Bank of Viet Nam and the Vietnam Trade Promotion Agency would violate laws if they stopped licencing promotion programmes.

Promotion activities are considered legal activities under the Commercial Law. Competent agencies only have the right to prohibit promotion programmes if promotion programmes runners violate current regulations. If the prohibition by state management agencies can cause losses to enterprises, they can initiate legal proceedings against the agencies. (Tuoi tre)

Tien Phong Plastic pays 30% dividend

Monday, April 28, 2008
Shareholders of the Thieu nien tien phong Plastic JSC (Tifoplast) agreed on a 30% dividend for 2007 at the annual shareholders’ meeting on April 26.
Last year, the company’s total revenue hit VND 905 billion, up 12.9% compared to the targeted figure with a total production of over 33,000 tonnes, up 15% year-on-year.
Total after-tax profit hit VND 125.4 billion, up 5.5% compared to 2006’s figure.
According to Hoang Van Ngoc, chairman of the Management Board and General Director of Tifoplast, last year the company poured strong investment in modernising equipment and increasing production capacity from 30,000 tonnes a year in 2006 to 35,000 a year in 2007. At the same time, the company has also expanded its distribution network with over 200 sale agents and thousands of retail shops from Da Nang northwards.
Last October, the company was licensed to build a factory to produce plastic pipe in Binh Duong and is applying for construction of a similar plant in Vientiane, Laos. The company will also move part of its current factory in inner Haiphong city to the suburban areas to expand production.

This year, the company targets a total turnover of VND 1 trillion; total production of 36,000 tonnes and an after-tax profit of VND 140 billion. (Nhan Dan)

April 28, Stock market recovers after six continuous decreases

Monday, April 28, 2008
The domestic stock market recovered on the first trading session of the week as the market indicator of the southern bourse ended its string of six consecutive decreases while the HASTC-Index of the northern bourse saw the second increase in a row. Many stocks listed on both bourses gained on today’s session. Trading volumes were also improved.

Ending the trading session today April 28, the 1775th trading session of the Vietnamese stock market, the Ho Chi Minh City Stock Exchange (HOSE) opened a new week by seeing a rally on the stock market as the VN Index regained 3.54 points or 0.68% to 519.42 pts with the total matching order trade of nearly nine million shares and fund certificates worth over 382.5 billion dong, closing six consecutively decreasing sessions on the stock market.

Among 154 shares and fund certificates being listed on the southern bourse, the stock market saw 90 shares increasing while 10 others stood still at the comparative prices, 53 shares decreasing and one share with no trade namely BTC of Binh Trieu Construction and Mechanic Joint Stock Co.

Total order matching trading volume was over 8.9 million shares and fund certificates worth VND 383 billion.

SSI lost 1,000 dong to 50,000 dong per share, FPT slipped 1,500 to 82,500, STB dropped 600 to 34,100 dong per share.

Meanwhile, some others reaching the ceiling price included VNM, VPL, PVD up 2,000 dong to 132,000 dong, 115,000 dong and 115,000 dong per share, DPM, HPG and ITA leaped 1,000 dong to 52,500 dong, 62,000 dong and 71,000 dong, VIC jumped 1,500 dong and PPC bounced 700 dong per share.

STB kept the pole place in trading volume with 1,789,050 shares, DPM followed with over one million shares, SSI with 589,730 shares, FPT with 458,890 shares, VHG with 361,920 shares and others like VFMVF1, DPR, VSH and PRUBF1.

Foreign investors bought 69 share codes with the total volume of over 3.2 million shares worth VND 176 billion while sold only over 500,000 units worth VND 27 billion. DPM reached the biggest trading volume with 780,480 shares, SSI with 356,650 shares, FPT with 227,110 and VSH with 173,280 shares.

Similarly, the Hanoi Securities Trading Center (HaSTC) today April 28 surged on the stock market as the HaSTC Index added 2.16 points or 1.28% to end at 171.11 pts with the total market trade of 3,659,500 shares worth over 135 billion dong.

Amongst 135 listed shares on the northern bourse, the stock market saw 71 shares increasing while 47 others decreasing, nine shares stood still and eight shares with no trades.
Nine shares stood still including BTH, CJC, DCS, HEV, SJE, TJC, TPH, TXM and XMC.

Eight others with no trade were C92, CTB, HSC, HUT, NPS, PSC, VE9 and VTL.

MIC was the biggest gainer as adding 2,700 dong and followed by ACB and SCJ up 2,000 dong per share, others increased below 2,000 dong per share.

SD2 was the strongest decliner when losing 1,600 dong and followed by SD7 slipped 1,500 dong, SDA sropped 1,300 dong, CDC slipped 1,200 dong and BVS and L62 lost 1,000 dong. Others fell below 1,000 dong per share.

KLS took the first position in trading volume with 620,600 shares, followed by ACB with 341,200 shares, PVS with 226,600, DBC with 194,500 shares, PVI with 183,600 and HPC with 102,500. Others reached the trading volume of below 100,000 shares.

Power station approved for Mekong Delta

Monday, April 28, 2008
The Tan Tao Group has received approval for blueprints for a new power station, industrial zone and a new urban area in Kien Luong District in the Mekong Delta province of Kien Giang.

The Tan Tao chairwoman, Dang Thi Hoang Yen, said relevant agencies and ministries had agreed with the designs made by the group in cooperation with the provincial government.

The central government had already decided to build the 600-hectare, 4,400-megawatt power station.

The group was also assigned by Prime Minister Nguyen Tan Dung to join hands with the local government to design a deep-water port in the district.

Most Asian stock markets show marginal gains

Monday, April 28, 2008
Asian markets gained marginally on Monday as growing optimism about the US economy and a more stable dollar lifted Tokyo's index to a two-month high.

Still, many traders and investors remain cautious ahead earnings reports and key US economic data this week, as well as and central bank meetings on interest rate policies in the United States and Japan.

Optimism about the American financial sector's health has improved market sentiment, but some investors are wary ``before the earnings season gets into full swing,'' said Shinko Securities' strategist Tsuyoshi Segawa in Tokyo, where the Nikkei 225 stock index gained 30.9 points, or 0.2%, to 13,894.37.

Japanese financial stocks soared after gains in their counterparts on Wall Street last week. Mitsubishi UFJ Financial Group jumped 10%. Mizuho Financial Group closed up 9.5%, while Shinsei Bank jumped 13.5%.
The dollar's stability against the yen also buoyed exporter shares. Honda Motor Co. rose 3.0%, Nissan Motor added 2.8% and Mazda Motor shot up 7.9%.

In Hong Kong, investors sought the safety of utility companies amid the uncertainty. The blue-chip Hang Seng Index rose 0.6%, to 25,666.29.

``Several key data to be released this week may confirm the US economy is in recession,'' said Alex Tang, research director at Core Pacific Yamaichi International. ``I don't expect to see any positive catalyst from the coming economic indicators.''

The US is reporting gross domestic product and consumer confidence date this week, and many in the market expect the US Federal Reserve to cut its key interest rate another quarter point. The Fed has now cut its federal funds rate six times since September, and last cut the rate 75 basis points in mid-March.

Utility firms led Hong Kong's blue-chip gains. Hong Kong & China Gas, the city's dominant gas supplier, climbed 1.8%. CLP added 0.6%. Hongkong Electric rose 0.4%.

China Life Insurance, China's largest life insurer by premiums, fell 1.6% after it reported a 61% drop in first-quarter net profit on lower investment income.

Oil refiner Sinopec fell 2.7%. Its first-quarter net profit fell 69% from a year earlier, as a government subsidy couldn't fully offset surging oil costs. The poor earnings of Sinopec also pulled down the Shanghai market, where the benchmark index fell 2.3% to 3,474.72.

``The key focus of Monday's session was oil refiners, following the release of Sinopec's weak first-quarter earnings. The fact that oil prices hit a record high made a bad picture worse,'' said TX Investment analyst Qiu Yanying.

Sinopec's Shanghai shares fell 4.4%. And PetroChina, the publicly traded arm of China's biggest oil company, China National Petroleum Corp., fell 4.3%.

Chinese oil companies have suffered heavy losses on refining due to government controls that bar them from passing on record crude prices to consumers. Companies have been subsidizing their refining losses with profits from their drilling units.

New York crude oil futures hit a record high of US$119.93 a barrel on Monday after the weekend shut-in of a pipeline system that carries 700,000 barrels of North Sea crude a day to the UK.

Vietcombank to increase dividend to shareholders

Tuesday, April 29, 2008
Vietcombank's first shareholders' meeting was held in Hanoi on April 26 with the nomination of director board, supervision board for the term of 2008-2013, the approval on operation regulations, business orientation and plans in 2008.

Accordingly, the bank's director board includes seven members and the supervision board has five members with the wage equalling to 0.36% of its after-tax profit.

Speaking at the meeting, the bank's general director and chair Nguyen Phuoc Thanh pointed out changes and high risks of the domestic banking and stock market. This year the business safety will be given high priorities with targets of maintaining the bad debt ratio of 2.6% and the growth rate of below 30%. In addition, the bank plans to add 905 billion dong to the risk prevention fund, bringing the total figure to 2.321 trillion dong for particular risk prevention fund and 810 billion dong for general risk prevention fund.

By December 31, 2008, Vietcombank's total asset could be 211.084 trillion dong, rising 7.72% year-on-year while the revenue is targeted at 4.537 trillion dong, up 13.94% yoy, revenue from service and other activities estimated at 2.339 trillion dong, up 6.97% and a dividend of 12.08%.

Vietcombank expects to become a financial holdings group ranking among Asia's top 50-70 largest ones in the period of 2015-2020 with the capital scope of over US$30 billion and total ownership capital of about US$2 billion by 2015.

The meeting also passed the plan to select foreign strategic partners and the roadmap of domestic and overseas listings. (VNA)

PetroVietnam Drilling to pay 2007 dividend

Tuesday, April 29, 2008
PetroVietnam Drilling and Well Services Joint Stock Co (PV Drilling) recently announced that it would pay 2007 dividend of 18.51% in cash on May 30.
The registration deadline is on May 12.
The ex-interest date is on May 8.
PV Drilling plans to offer 20,027,946 ordinary shares at 10,000 dong par to the existing shareholders to pay dividend of 20% in shares on June 12.

Techcombank launches "super lucky saving" programme

Tuesday, April 29, 2008
Viet Nam Technological and Commercial Joint Stock Bank (Techcombank) recently launched "super lucky saving" programme lasting from April 23 to 22 July with the total value of nearly three billion dong.
The programme is for customers with saving accounts of from 10 million dong or US$1,000.
In addition, customers when joining this programme will receive 50% of registration fee for added service package including Techcombank Visa Debit card and internet banking service.

Cavico infrastructure construction firm posts 889.778b dong in total asset

Tuesday, April 29, 2008
Cavico Infrastructure Construction Joint Stock Co recently released the 2007 fiscal year with the total asset of more than 889.778 billion dong, total revenue from sales and service provision at 46.193 billion dong, the combined profit from sales and service provision of over 14.029 billion dong.

Also, the firm achieved about 1.043 billion dong from financial activities, 10.489 billion dong in net business profit, 3.6 billion dong in other profits, 14.091 billion dong in total pre-tax profit, and EPS of 3,361 dong.

It spent 1.102 billion dong on financial cost, 3.481 billion dong on corporate administration and 799.593 million dong on other costs. (DTCK)

Strong foreign buys save market from further plunge

Monday, April 28, 2008
The VN-Index fell for five consecutive sessions last week, losing a total of 19.04 points to close on Friday at 515.88. Trading volume averaged under six million shares per day, with value reaching a cumulative VND1.32 trillion (US$82.5 million), both figures comparable to the previous week.

An analyst from Kim Long Securities Co, who asked to remain anonymous, said that the VN-Index was saved from plunging further last week by the net buying of foreign investors.

Foreign investors last week picked up a total 8.73 million shares, worth nearly VND508 billion ($31.75 million). This accounted for about 38 per cent of the market’s entire value during the week. Meanwhile, they sold only 952,670 shares, totalling about VND60 billion.

So far this month, they’ve spent VND2.18 trillion to purchase 35.3 million shares, while selling only 7.8 million shares, worth VND522 billion.

"It’s notable than foreign investors have bailed out the market and kept it from plunging further," said the analyst. "However, these days may be numbered because, if the market continues its descent, overseas investors will also likely sell shares to cut losses."

The market slowdown has also had a big impact on domestic brokerage houses, who have seen their income from trading commissions dry up. To halt further dilution of a shrinking market, representatives of the Ministry of Finance and the State Securities Commission held a closed-door meeting last week in which they decided to halt granting operating licensces to new brokerage houses and fund management companies.

After the meeting, Deputy Minister of FinanceTran Xuan Ha said concerned agencies would seek to restructure to the stock market to ensure sustainable development of both the stock exchange and the over-the-counter (OTC) market.

Authorities would also get tougher on violations by brokerages to create more favourable conditions for the market to develop strongly, he said.

The establishment of a formal bond market was also still in the works, Ha indicated.

In Ha Noi over the past week, the Ha Noi Securities Trading Centre witnessed four down sessions before the HASTC-Index rose on Friday. For the week as a whole, the index lost 8.38 points to close at 168.95.

Total volume for the week on the northern bourse was 14.67 million shares, with a value of VND588 billion ($36.75 million). (VNS)

Thanh Cong Textile maker sets sights on real estate, securities business

Monday, April 28, 2008
The Thanh Cong Textile Garment-Investment-Trading Joint Stock Company (TCM) which is listed on the HCM City Stock Exchange plans to expand its business into real estate and securities brokerage.

Chairman Dinh Cong Hung announced at last week’s shareholder meeting that construction of the Thanh Cong Tower apartment complex would begin on a 10,000sq.m. plot in Ho Chi Minh City ’s Tan Phu district before June.

Also in Tan Phu district, the construction of the 6.4ha Thanh Cong Tower 2 is set to begin next year. It will include houses, a vocational training school, a conference centre, office buildings and a cultural centre.

Other residential projects are in the works, including Thanh Cong Tower 3 in district 4, Bui Huu Nghia apartment building in district 5 and a 20ha service and commercial area in the northern Bac Ninh province.

Based in HCM City , TCM is cooperating with several partners on a 200ha industrial park and a 3ha residential area in neighbouring Long An province, a 17ha bonded warehouse at Phu My Port in Ba Ria – Vung Tau province and a 10ha resort in the coastal province of Phan Thiet .

The Thanh Cong General Clinic, on Thanh Cong Tower 2’s grounds, will begin operation later this quarter It is capable of receiving 1,000 patients a day.

In May, Thanh Cong Securities company will become a trading member of the HCM City Stock Exchange.

The company intends to issue 10 million convertible bonds with a face value of 100,000 VND each to raise funds for its real estate projects this year alone. (VNA)

ABBank sets up training centre

Tuesday, April 29, 2008
An Binh Commercial Joint Stock Bank (ABBank) recently officially established a training centre specialising in building development strategies, organising training activities and developing human resources for its nationwide system.
This year, the centre will focus on three big programmes namely the programme to train branch directors, the programme to train profession and customer care skills for all staff.
In addition, ABBank also plans to invite prestigious foreign partners to teach and shares their experience to catch modern management technology in the world.

Gold trading floor out of control

Tuesday, April 29, 2008
In Viet Nam, the model of gold trading floor is showing the efficiency of capital mobilisation from businesses. However, no legal documents on controlling the gold trading floor’s operations has been created so far.

After the success of the ACB gold trading floor, the Viet Nam Gold Trading Association (VGTA) and its member businesses are accelerating the establishment of more trading floors.

At least two more new floors of its kinds will open in Hanoi in June.

Judging from the rapid development of the new form of business, VGAT Vice President Dinh Nho Bang said it is essential to create operational regulations to make gold trading floors run effectively. The VGTA has asked the Sate Bank of Viet Nam (SBV) to create a legal framework for gold trading floors as well as to-be-established gold trading centres in the near future in order to protect investors’ interests.

Under Decree No 160 on the SBV’s management, the SBV is entitled to manage gold export-import activities without controlling the gold market in general. Hence, it can be said that State regulations on the establishment and control of gold trading floors’ activities lack transparency, including the opening of gold trading accounts.

According to Luu Quang Dien, a member from the Executive Board and managing director of the Hanoi SJC Company, gold trading companies should joins hands with banks to maintain the smooth operations of the trading floors. In reality, when investors want to withdraw a large volume of gold, banks fail to meet immediate demand as they have to spend a certain period of time sourcing the gold.

To make gold trading floor operation move, apart from building strict legal regulations, it is important to develop a contingent of capable transaction staff.

Currently, gold prices are updated regularly through the media. Those who have a thorough grasp of the rules, will earn a high profit otherwise investors can face a risk of losing their investments.

Luu Quang Dien, Manager of SJC Hanoi, said that a gold trading floor would have great potential because physical gold trading is not very safe and requires a great amount of gold. Meanwhile, the virtual business of a gold trading floor offers convenience, safety and wide trading range for investors. Therefore, gold trading floors are very popular abroad.

Both investors and economists said gold trading in this way is even simpler than stock trading because the former requires a single code and investors have to consider and make their own decisions.

However, the floor has its own complexity. In the stock market, the increases occur between floor and ceiling prices within the domestic market but gold prices fluctuate unpredictably according to world prices. The transaction order is effective only in a day.

This business could bring huge profits but also cause great losses.

Mr Dien added that there has been a variance in terms of the trading in Hanoi and HCM City. The Hanoi gold trading market is not very large but has potential investors, most of whom are located in Hanoi, Haiphong, Quang Ninh and Lang Son. He predicted the great trading amount in the future will be concentrated in the northern region, not in the southern region.

In the context of unstable gold prices, gold trading floors will help investors reduce their risks and gold price gaps by responding to every change on the market.

In developed countries, gold trading via accounts makes up more than 60 percent of the total (the rest is physical gold trading.) Most of their enterprises are involved in gold trading because this helps them mobilize capital effectively.

In order to join these floors, investors only need to have accounts in banks with initial fixed capital. The more deposit, the more trading chances they have.

The minimum capital for each investor will be stipulated by floor. At ACB floor, it is 50 taels. In the coming period, the corresponding figures in new floors are expected to be reduced by 10 taels to attract more investors.

Mr Dien said Hanoi currently has no standard gold trading floor. In June, VATA will launch a new floor at Rubby Plaza in Le Ngoc Han street. This floor will open during the peak hours of the world gold market (until 9pm Viet Nam time). (VOV)

SBV implementing too rigid monetary policies: expert

Monday, April 28, 2008
Prof Dr Tran Ngoc Tho of the HCM City Economics University, said that the uncertain monetary market in recent days has been putting big difficulties on businesses. He has called for suitable policies in order to ease difficulties for businesses.

He said:

In the last several months, people have been suffering a lot from the fluctuations on the monetary market. The US$ price dropped unexpectedly and then went up unexpectedly. The market had an excess of foreign currencies, and then suddenly was short of foreign currencies. The interest rate unexpectedly jumped to 12-13% per annum. These uncertainties all have badly affected people and businesses.

Is that the price Viet Nam has to pay to curb inflation?

When applying measures to curb inflation, there are always difficulties for some groups. However, the noteworthy thing is that the above fluctuations originated from unclear signs given by the State Bank of Viet Nam.

Let’s take an example. The VND/US$ exchange rate dropped dramatically and then surged sharply after the State Bank of Viet Nam announced its intention to raise the VND/US$ exchange rate.

As a result, people who had dollars in hand rushed to sell them. They thought that the superfluous supply of dollars would lead to the fall of the dollar price. However, the reality was far different from that. Viet Nam has been witnessing big trade deficits for more than 10 years; therefore, it will never happen that the country will have dollars in excess.

An interest rate race among banks broke out after the interest rates on the interbank market surged to a level never before seen in history, over 30% per annum. In order to extinguish the interest rate war, the State Bank of Viet Nam imposed the ceiling interest rate scheme, a solution that has not been welcomed.

However, the State Bank of Viet Nam has been trying its best to stabilise the market with many solutions taken…

Only several commercial banks have met with difficulties and if the State Bank had found the solutions to settle the problems of these few banks, the market would not be as chaotic as now. It is true that the central bank tried to intervene in the market and pumped money into circulation, but the money did not get to the banks that needed money. The State Bank only finances commercial banks if banks have bonds; banks that don’t have bonds can’t get loans.

Imagine that a borrower only has a motorbike, but the lender (in this case the central bank) demands a house as a mortgage asset for the loan. Therefore, the borrower and lender cannot reach an agreement.

I think that the State Bank should be more flexible in this case in order to help ease difficulties on commercial banks. The lender still can accept a motorbike instead of a house as a mortgaged asset to provide a loan, and it can require stricter conditions on the loan.

What should Viet Nam do to settle the current problems?

Viet Nam is trying to curb inflation, but this does not mean that the central bank needs to tighten the monetary policies as tight as possible. This measure will help stabilise the macroeconomy in the immediate time, but will cause uncertainties in the microeconomy as people have to deal with too many difficulties. It is necessary to be determined to take action, but it is also necessary to be flexible.

If the dollar is in excess, the central bank should boldly spend VND to purchase dollars. The bank should also give interest rate liberalisation back to the market, while using necessary tools (exchange rate, interest rate) to regulate the monetary policies which aim to curb inflation and encourage economic growth.

It also requires flexible behaviour towards credit growth control. The 30% cap of credit growth rate should be understood as a cap for the whole economy, not for every bank. If every bank must restrain the credit growth rate at less than 30% as currently, a lot of banks will only be able to collect debts, not provide more loans, while businesses and individual cannot access bank loans anymore.

People are the main subject covered by the monetary policies; therefore, they have the right to get clear information about changes in policies in order to make suitable decisions. Don’t put more difficulties on businesses and people.

The tightened monetary policies have led to the stock and real estate market falls. Businesses, especially exporters, complain that they are facing too many difficulties. If the situation continues it could cause a lot of problems.

The most important thing is defining the right time for implementing policies. In early 1990s, Japan applied a harsh monetary policy (raising interest rates, raising compulsory reserve ratio, controlling the real estate market). The severe policy reduced inflation; however, Japan’s central bank’s blunder was that the country maintained the harsh policy for too long. As a result, the country fell into deflation ten years ago. Japan’s economy then experienced great difficulties. (Tuoi tre)

Vietcombank bosses face worried shareholders

Monday, April 28, 2008
Vietcombank's shareholders voiced strong concerns about shrinking share prices in the bank's first general shareholders meeting on Saturday, putting management on the hot seat to explain the bank's shrinking assets during the first quarter of the year.

In last December's initial public offering, the average winning price per share for Vietcombank stock was VND107,860. Four months later, the shares are trading on the over-the-counter market at about VND50,000 each, a loss of 54%.

One shareholder said the winning price was too high because of the fixed initial offering price of VND100,000 per share.

Based on his calculations of capital, profit, P/E ratio and the real situation in the domestic stock market last December, he now figured a more realistic offer price should have been around VND20,000.

Vietcombank chairman Nguyen Hoa Binh, however, said the downtrend of the bank's shares was in keeping with the overall trend on the stock market.

Many investors asserted that Vietcombank was harming the interests of shareholders by failing to reach agreement on suitable share prices with foreign strategic investors.

Vietcombank general director Nguyen Phuoc Thanh pointed to the difficulty in meeting the legal requirement set out in Decision No 109 that shares be sold to foreign strategic investors at a price higher than the winning bid in last year's IPO.

However, he noted, if Vietcombank were unable to sell more shares to strategic foreign investors, it would be unable to finalise the equalisation process, putting the bank into a catch-22 situation.

As it stands, outside investors still only hold about 9% of equity in the bank, while the State continues to own over 90%.

Meanwhile, companies with less than 20% sold to investors, are not allowed to list on the stock market, leaving Vietcombank shares in a sort of trading limbo on the over-the-counter market.

"I haven't heard any specific plan to sell more shares or reduce losses to investors," complained one shareholder.

Bank leaders said they could ask the Government to allow them to list on the stock market, as a special case.

Some individual shareholders were calling on Vietcombank to start buying back shares from large institutional investors to keep the share price from plunging deeper.

Others were calling for issues of bonus shares to existing shareholders at prices of around VND50,000 to help them minimise their losses.

A few shareholders also voiced anger over the fact that, of the capital reaped by Vietcombank through its IPO, it was only allowed to retain 30%, with the remaining 70% going into the State.

They felt that this operated to the detriment of shareholders and wanted to know how even the 30% of capital gained from the IPO was being spent.

These and other questions were left unresolved at the conclusion of the meeting.

The meeting voted to elect a seven-member executive board and five-member supervisory board, which would be paid a total of 0.36% of the bank's net profits.

The shareholders also approved an annual dividend of 12.08% for existing shareholders. (Viet Nam News)

Banks rush to make financial investments

Tuesday, April 29, 2008
Although share prices slash, many shares have lost their liquidity, particularly bank shares are under high pressure because of unfavourable movements of the monetary market, many banks still plan to promote financial investments in addition to other business activities.
For example, the Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) will set aside 650 billion dong to buy stake of potential companies, according to the bank's plan on using equity in 2008. Furthermore, Sacombank will newly establish some subsidiaries with total capital of 1.110 trillion dong. In 2007, Sacombank made some financial investments into such businesses as Truong Hai Automobile, Huu Lien A Chau Steel, Sacombank Investment Co Early March, Sacombank continued injecting another 25 billion dong into the Yersin Da Lat University.

Additionally, Sacombank plans to set up some affiliated companies such as a gold and jewellery company that has been licensed, an insurance company, a card joint venture with ANZ and others, aiming to form the Sacombank Finance Group to be slated for the middle of this year. In 2007, Sacombank reported strong growth of profit, much of which came from capital contribution into other economic organisations.

As for the Asia Commercial Joint Stock Bank (ACB), in addition to financial investments, in 2007 the bank gained significant profit. The bank will expand business fields, develop operations in new fields professionally and closely manage risks. ACB will also scale up existing subsidiaries. As scheduled, ACB will spend another one trillion dong making investments in the upcoming time, bringing total investment capital to two trillion dong. The bank will establish some affiliated companies such as ACB Capital, ACB Card Co, ACB Gold and Silver Co and others. With the establishment of new affiliated companies, ACB will further acquire stake of economic organisations in 2008.

ACB plans to spend some 1.13 trillion dong buying more shares of businesses, bringing total initial investment capital to 1.4 trillion dong. All these investments will be assigned to ACBS, the bank's securities affiliate.

According to Nguyen Thanh Toai, vice general director of ACB, the bank's financial investments this year will be channeled via affifliated companies of which ACBS will be assigned most capital. ACB will select those companies which have stable operations, high growth potential, strong financial status. The bank's capital will mainly be invested into IPO companies.

Although having modest operation scopes, Pacific Bank said that in addition to diversifying business activities, it will switch from credit-focused trend to financial investment. Pacific Bank will also establish some affiliated companies operating in different fields. According to Pacific Bank, promoting financial investments as well as relations with many financial, insurance institutions will help the bank have more capital and improve revenue of banking services.

With a plan on raising capital from 2.8 trillion dong to 7.4 trillion dong in 2008, the Vietnam Export and Import Commercial Joint Stock Bank (Eximbank) said that, a part of the new capital will be used to expand scopes and business fields. Additionally, Eximbank will increase financial investment items and portfolios.

The above fact demonstrates that many banks are looking forward to opportunities to develop new financial investments in 2008. However because of increasingly gloomy moves of the stock market and no sign of recovery, many banks have seemed to be worried and have not yet been able to develop new investments. (DTCK)

Dilemma: IPOs unable to find customers

Monday, April 28, 2008
IPOs have become less and less attractive to investors. Experts believe that the main reason behind the problem is overvalued shares.
The quiet IPOs
In the first quarter of 2008, only 10 IPOs were organised at the HCM City Stock Exchange (HOSE), 1/3 of which failed as there were few participants.
The situation was even worse at the Hanoi Securities Trading Centre (HASTC), where many IPOs were cancelled as there was no interested investor. The IPO of the big company Habeco saw investors register to buy only 13% of total shares offered. Habeco’s and Vietcombank’s share prices have been decreasing sharply on the OTC market since their IPOs, which is another reason why investors are less interested.
It is very likely that “quiet” will appropriately refer to the IPOs of big names slated for 2008. A lot of big corporations are planning to make IPOs in 2008, including the Bank for Investment and Development of Vietnam (BIDV), Vietinbank, MobiFone, and Mekong Housing Bank.
A lot of reasons have been cited to explain the failure of IPOs, among which the biggest reason is the fall of the stock market, which has been making investors turn their backs on shares. Some experts have suggested delaying IPOs in order to reduce supply in order to rescue share prices from continuously sliding.
However, the suggestion has not received the support of many other experts, who believe that the delay of IPOs would slow down the equitisation process, which should be sped up instead.
Dr Le Tham Duong, Head of the Business Administration Faculty under the HCM City Banking University, said that the main problem of the failed IPOs was unsuitable prices.
“Investors would certainly be interested if the share issuer offers suitable prices,” Duong said, adding that enterprises should provide transparent information to the public in order to gain the confidence of investors in enterprises.
Changing the way of making IPOs?
Currently, enterprises, especially big ones, always make IPO first, and then negotiate with partners to select strategic shareholders. The basis for negotiations is the average IPO price, and the sale stake prices applied to strategic shareholders must not be lower than the average IPO price.
Experts say that the high starting prices of Sabeco, Vietcombank and Habeco made the P/E of the companies’ shares much higher than the average market’s P/E right at the moment of making IPO. As a result, none of the three companies have finished selecting strategic partners.
It is obvious that the state, as the owner of enterprises and the seller of stakes, aims to optimise the profit gained from IPOs. However, EuroCapital, a securities company, thinks that the government should declare a main purpose of IPOs: renovate equitised enterprises’ corporate skills or try to get as much money as possible from selling stakes.
The government should select strategic investors first and set specific requirements on the minimum time of holding stakes (in order to avoid speculation) and set requirements on partners in renovating enterprises. The IPO should be made later, and be carried out at s suitable moment in order to avoid possible shocks and supply & demand imbalance.
Experts have also advised investors to buy shares of equitising enterprises at this moment, as they can have opportunities to own big enterprises at low prices. (VnMedia)