Depositors flock to enjoy higher interest rates

Tuesday, May 20, 2008
Banks on May 19 rushed to lift deposit interest rates to around 14% per year in an attempt to attract more clients. At the same time, depositors kept banks tellers busy as they took advantage of the offer.

Two sound joint stock banks listed on the local stock market had already moved up their deposit rates.

Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank) gave an interest rate of 14% yearly for terms of more than six months and 13.5-13.8% for those less than six months.

Asia Commercial Joint Stock Bank (ACB) lured in clients by offering 13.68% for 13 month terms, 13.56% for 12 month terms and 13.44% for nine month deposits.

Many other banks have also raised interest rates for all deposit terms, but seem to have focused on short and mid term deposits.

Hanoi Building Commercial Joint Stock Bank (Habubank) introduced rates of 15% per annum for 1-24 month deposit terms and 12-14.4% for one to three weeks.

Vietnam Commercial Joint Stock Bank for Private Enterprises (VP Bank) has given 15% for over six month terms.

Export and Import Commercial Joint Bank (Eximbank) offered 14.196% rates for 7-13 month terms and 14.004% for those from one to six month terms.

DongA Commercial Joint Stock Bank offered 13.8% per annum for 1-6 month terms and 14% per year for 7-12 month terms.

Saigon Commercial Joint Stock Bank (SCB) presented an annual interest rate of 13.8% for deposits of over nine months.

Bank assumed that over the next few days all banks would present new rates, in which minimum deposit rates would be about 13% per year, maxing out at around 15%. However, Nguyen Thanh Toai, deputy general director of ACB Bank, told Vietnam News, “I think the deposit rates won’t exceed 15%.”

Costs to mobilise capital [including money for compulsory reserves, compulsory notes, liquidity and other costs] were often 2-2.5% of the deposit rates, he explained.

The busy trading at commercial banks on May 19 was the result of the interest rates lifting from the central bank on May 17.

From these lifted rates, deposit rates were moved up to 18% per year instead of the 12% ceiling cap. The new rates came into effect on May 19. (VNA)

May 20, Stock market continues drop, VN Index plunges to below 450pts

Tuesday, May 20, 2008
Today the Ho Chi Minh City Stock Exchange (HOSE) witnessed another gloomy session, marking the 12th consecutively decreasing session. The VN Index dropped another 6.43 points or 1.41% to close at 449.24 pts with the total matching order trade of over 2.6 million shares and fund certificates worth 95 billion dong. After 12 declines, the VN Index lost 73.12 points in total.

Among 151 shares and three fund certificates being listed on the southern bourse, the stock market saw ten shares increasing, nine others stood still, three with no trades and 132 shares decreasing.

Particularly, out of ten gainers, six shares reached the ceiling price namely ITA up 1,000 dong to 74,500 and DTT, LGC, SGH, SSC, VHG, TRC, TSC, RHC and DHG.

Three shares with no trades were BTC, DPC and HBD.
DPM reached the biggest trading volume with 551,250 shares, SSI with 215,230 shares, BMI with 149,630, SBT with 109,760 and VIP with 106,660 shares.

Foreign investors bought 60 share codes and two fund certificates with the total volume of over 800,000 shares and fund certificates. Of which, SSI took the pole place with 209,050 shares, BMI with 136,810, DPM with 116,180, PVD with 62,930, ITA with 32,420 and others like TS4, ANV, HAS, DPR and VHC.

Like previous sessions, the Hanoi Securities Trading Center (HaSTC) today May 20 still kept decreasing impetus on the stock market by falling another 2.53 points or 1.84% to end at 135.21 pts with the total market trade of 1,132,700 shares worth over 26 billion dong.

Amongst 137 listed shares on the northern bourse, the stock market saw ten shares increasing while 96 others decreasing, three shares stood still and 28 shares with no trades.
Ten shares increasing were L62 added 1,000 dong, S99 +900, NVC +800, LTC and VNR +500, BCC and CJC up 400 dong, SJC +300, BTS +200 and HPC leaped 100 dong per share.

Three shares stood still including BTH, HJS and TKU.
HSC showed the strongest decline when losing 5,900 dong and followed by MIC lost 2,900 dong, ACB slipped 1,800, BVS and VSP dropped e1,600 dong per share.

PVI reached the biggest trading volume with 260,000 shares and others with below 100,000 shares.

It’s time to make IPO abroad: SSC

Tuesday, May 20, 2008
Nguyen Ngoc Canh, Head of the International Cooperation Division under the State Securities Commission (SSC), said that it is now the right time for Vietnamese companies to make IPOs and list on foreign bourses, when the domestic stock market is lackluster, investors escape from trading floors and commodities remain unsalable.

Do you think that making IPOs abroad is the right choice for Vietnamese companies now?

Listing companies are facing big difficulties now, while state owned enterprises, though having been operating well, still find it difficult to successfully to make IPOs at this moment.

The situation is familiar to the regional markets, including China. As the stock index has dropped from 6,000 to 3,400 points, China saw only two out of 52 companies successfully making IPOs.

Therefore, I think that it’s reasonable for state owned enterprises to make IPOs abroad to mobilize capital.

Could you please elaborate on this?

By successfully issuing securities and successfully mobilizing capital on foreign stock markets, companies will restore confidence from domestic investors, attracting them back to the market.

By listing on foreign bourses, companies will be able not only to mobilize capital for their business and production, but also to heighten their images and position on the international market.

Which procedures must Vietnamese enterprises follow to list on foreign bourses?

First of all, enterprises need to fully understand the Securities Laws and Enterprise Laws. As for equitised companies, the plans to list on foreign bourses needs the approval at the shareholders’ meeting, while state owned enterprises need the approval of the organism in charge.

Second, every enterprise should consider thoroughly when choosing suitable bourses to list on. Every stock exchange sets its own conditions and offers different advantages.

Could you please give suggestions about which bourses should be listed on?

As I said before, different markets would require different conditions for listing. Enterprises should learn about every market in order to find the most suitable ones for them.

Hong Kong, a long standing market, which gathers many big investment funds of the world, proves to be the good choice for enterprises, which want to access foreign capital sources with low cost.

Besides, Singapore has also emerged as financial centre of the region, which I think can also be the place for Vietnamese companies to mobilize capital and list their shares.

High-tech companies can think of more distant markets like the US’s Nasdaq.

I think that in the immediate time, we should let some competent companies which can meet the requirements for listing set by foreign bourses do so. Other companies will learn the lessons from the predecessors. (Dan Tri)

Rushing to buy gold before tax hikes

Tuesday, May 20, 2008
Domestic gold prices will be higher than the world’s price and gold smuggling becoming more serious are two things that may occur after the gold import tax is raised to 1%.

As stipulated by the Government, the import gold tax will be 1% instead of 0.5% as of May 20, 2008. Fearing that the prices would skyrocket as the result of the tax hike, people are rushing to buy gold before the decision on tax increases comes into effect.

However, many people complained that they had not much time to arrange money to buy gold. The decision on raising the tax was signed on May 15, but the information only arrived on May 17.

The gold price soared by VND400,000/tael in the last two days of the last week. The price stayed at VND17.66-17.74mil/tael. SJC system said that the sales unexpectedly reached 4,000 tales late last week, or double ordinary days. The price levels prove to be high enough for speculators, who bought gold before at lower prices, to sell gold at a profit.

Analysts all said that the domestic gold price will be higher than the world’s price once the import tax is raised. However, some gold traders said that the import tax increase proves to be unavoidable in the context of a high trade deficit. They said that the price increases after the tax increase will not be too large, while the biggest concern is that the State Bank may stop granting gold import quotas.

The gold demand is now very great as people want to buy gold to hoard in the context of high inflation. Besides, many people want to buy gold as investment deals, when other investment channels prove to be gloomy. The end of gold imports, if it occurs, will cause the serious imbalance between supply and demand, which will make the domestic prices skyrocket.

Analysts have also pointed out that gold smuggling, which was a problem many years ago, will reoccur. The concern originates from the fact that Vietnam’s gold consumption level is increasing, with 50 tonnes of gold imported in the first five months of 2008.

Nguyen Thi Cuc, Deputy General Director of PNJ, said that though banks have been trying to raise deposit interest rates, the mobilized capital has not seen considerable improvement. It is because many people decide not to make deposits, but save money in gold.

Dinh Nho Bang, Secretary General of the Vietnam Gold Association, though not giving exact figures, affirmed that the volume of gold kept by people is quite large.

Bang said that it is the right of people to choose where they inject money. In other countries, when the dollar value decreases, the countries’ central banks have to restructure the foreign currency reserves by raising the gold volume. The US, for example, has gold accounting for 65% of its national reserve. (VnMedia, DTCK)

Teco, SaigonTel expects software park license in city soon

Tuesday, May 20, 2008
Teco Group and its partner Saigon Telecommunication and Technologies Corp., or SaigonTel, a member of Saigon Invest Group, are expected to obtain a license next month for building a big software park in HCM City.

The two companies, which have planned the project since early last year, have submitted the proposal to the city authorities to develop the project costing US$1.2 billion in Thu Thiem New Urban Area in District 2, the local party said.

Dang Thanh Tam, chair of Saigon Invest Group, told Daily that the park will be built on 16 hectares at the total investment of some US$1.2 billion, higher than the two companies' initial plan of more than US$500 million.

The two companies will set up a joint venture named the Teco-SaigonTel Software Park joint venture, whichSaigonTelwillholda20% stake while the foreign partner 80%.

At the park, the two companies will develop some 5-7 high-rise buildings with the total space of some 700,000 square metres for hi-tech, software, banking and insurance companies.

After more than one-year of preparation, we have finished all the paperwork for submission to the city authorities. We hope to receive the license next month," he said.

Tam said Teco is a multinational group operating the 10-hectare NanKang Software Park in Taipei, which yields annual revenue of some US$10 billion.

He said that the park in Vietnam would help NanKang Software Park's software companies to set up shop in Vietnam.

When Teco sets up the park in HCM City, its satellite companies will also come along, with billions. of US dollars in investment capital, Tam said.

Leaders of Teco Group and SaigonTel signed a memorandum of understanding (MOU) in March 2007 to establish the joint venture. Leaders of Thu Thiem Urban.Area Authority and the HCM City Department of Planning and Investment as well as the Vietnam Culture and Economics Office in Taipei witnessed the signing ceremony, which took place at the Nankang Sofware Park in Taiwan.

SaigonTel chair Dang Thanh Tam, who signed the MOU with chair Ted Huang of Teco, then told the Daily that the park would be built like the Nankang Sofware Park.

SaigonTel Corp is the owner of the 500-hectare ICT Kinh Bac Park and is attracting hi-tech projects. It is also the investor of two ICT SaigonTel buildings in Quang Trung Software City in HCM City's District 12.

Saigon Invest Group has been developing more than 20 industrial parks and 10 urban centres. It has been attracting the investment of and cooperating in joint investment with well-known investors like Canon, Marubeni Group (Japan), Foxconn Group and MiTac Group (Taiwan).

The group is also coopering with Foxconn Group to develop some industrial-urban -entertainment complexes in the country. (Sai Gon Times)

FPT sets up three subsidiaries

Tuesday, May 20, 2008
The Ho Chi Minh Stock Exchange (HOSE) on May 15 announced that FPT Technology Investment Development Joint Stock Co recently passed the plan to establish three subsidiaries including FPT Information System Service Ltd Co, ERP FPT Service Ltd Co and FPT government and Telecommunication System Ltd Co.
In addition, the company also plans to change name to FPT Joint Stock Co.

Idico housing and urban area development firm targets pre-tax profit growth of 12%

Tuesday, May 20, 2008
Idico Housing and Urban Area Development Joint Stock Co (UIC) last year posted over 510 billion dong in total revenue and 19.9 billion dong in pre-tax profit, EPS of 2,745 dong, up 9.8% yoy, and a dividend of 1,500 dong.

In 2007, UIC carried out 28 works with a total value of construction and installation of 17.57 billion dong.

This year the firm targets to reach over 587 billion dong in revenue, 22.4 billion dong in pre-tax profit, increasing 12% yoy.

Cho Lon real estate trader posts 82.7b dong in 2007

Tuesday, May 20, 2008
Cho Lon Real Estate Joint Stock Co (coded RCL) reported that last year it gained over 82.7 billion dong in net revenue, up 11.9% year on tear, 11.8 billion dong in after-tax profit, up 25.4% and EPS of 7,897 dong.

During the first quarter of 2008, the company's revenue from sales and service provision was posted at 30.3 billion dong, growing 1.81% yoy and 3.37 billion dong in after-tax profit, up 77.8% from the last quarter of 2007.

Metallic Joint Stock Co reports performance in Q1

Tuesday, May 20, 2008
Listed firm on the Ho Chi Minh City Stock Exchange, Metallic Joint Stock Co (HMC) recently released the business results in the first quarter of 2008 with the net revenue from sales and service provision of over 1.115 trillion dong, jumping 42.2% from the Q4 2007, after-tax profit of 15.92 billion dong, rising 86.8% yoy and 45% from the Q4 of last year.

The company targets to gain 3.8 trillion dong in revenue, 60 billion dong in pre-tax profit and a dividend of 16-18% in 2008.

EuroCapital securities broker joins HaSTC

Tuesday, May 20, 2008
The Hanoi Securities Trading Center (HaSTC) recently approved EuroCapital Securities Joint Stock Co to become the 79th member and Ho Chi Minh City Stock Exchange (HOSE) is consecrating the granting of license to the broker to operate on the bourse.

EuroCapital is established by Eurowindow, Lien Minh Investment Joint Stock Co, Decotech High Technology Construction, Investment and Development Joint Stock and individuals.

The Hanoi based broker with a chartered capital of 150 billion dong, licensed to operate in fields of business, brokerage, self-trading, deposit, corporate finance consultancy, listing consultancy, corporate value appraisal, acquitisations and mergers and liquidity. The firm plans to hike the chartered capital to 500 billion dong within 2008.

DIC to pay dividend and issue more shares

Tuesday, May 20, 2008
The Ho Chi Minh City Stock Exchange (HOSE) recently announced that the registration deadline for DIC Trade and Investment Joint Stock Co (coded DIC) to pay 2007 dividend is on May 28 and issue more shares.

In particular, DIC will pay 2007 dividend of 19% in cash on June 16.

The company also plans to issue 2.24 million shares to the existing shareholders at the ratio of two new shares for three shares held and the price of 10,000 dong per share.

The time to register and deposit is from June 17 to July 2.

The trading date is scheduled on July 30.

Hai Phong Securities to hike chartered capital to 300b dong

Tuesday, May 20, 2008
Hai Phong Securities Joint Stock Co (coded HPC)'s shareholders' annual meeting recently passed the plan to scale up chartered capital to 300 billion dong via offering 12 million shares to the shareholders.

The share issue will be divided into two phases. In the first phase, the company would issue 4.8 million shares to the existing shareholders at the ratio of one new share for four shares held. In the second one, HPC would issue 6.24 million shares to the existing shareholders and strategic partners and the remaining 960,000 shares will be sold to the company's employees.

PVFC buys over 1.9m DPM coded shares

Tuesday, May 20, 2008
The Ho Chi Minh City Stock Exchange (HOSE) reported that PetroVietnam Finance Corp (PVFC) purchased 1,942,300 DPM coded shares, bringing its size in the Phu My Nitrogenous Fertiliser Joint Stock Co (PVFCo) to 8,100,860 shares between February 28 and April 30, 2008.
On May 15, DPM closed at 46,800 dong per share.

Searefico to offer 3.385m shares

Tuesday, May 20, 2008
HCM City's Searefico Refrigeration Engineering Joint Stock Co announced that it would offer 3.385 million ordinary shares at 10,000 dong par with a total value of 33.85 billion dong to existing shareholders to hike chartered capital.

The 3.385 million bonus shares will be offered to shareholders at the ratio of 10:7.3 meaning 73 new shares for 100 shares held.

The date to close the list of shareholders is May 31.

Energy construction firm to go public

Tuesday, May 20, 2008
Hanoi Securities Trading Center (HaSTC) on May 16 announced that it received enough documents from Energy Construction Joint Stock Co to list 3.25 million shares on the northern bourse.
The company with a chartered capital of 32.5 billion dong specialises in transportation, irrigation, civil and industrial construction and other services.

Northern Kinh Do to pay 2007 dividend of 18% in cash

Tuesday, May 20, 2008
Director of Northern Kinh Do Joint Stock Co (coded NKD), Nguyen Thi Ngoc Lien yesterday announced that the company will pay a 2007 dividend of 18% in cash and a 2008 dividend of targeted 22% in shares.
Last year, NKD posted a revenue of 561 billion dong that is expected to reach 700 billion dong in 2008, and the achieved after-tax profit of over 72 billion dong.

Arsenal club promotes Vinamilk coffee

Monday, May 19, 2008
One of the UK ’s leading football clubs, Arsenal, have kicked a goal in a deal to promote Vinamilk Moment coffee in the country.
Under a two-year agreement, Moment coffee will be recognised as the “Fully-fledged coffee of Arsenal football club in Viet Nam .”
The agreement allows Vinamilk to use the Gunners branding and its footballers to advertise Moment coffee.
Vinamilk will spend two million USD for the Arsenal marketing and advertising campaign, Vinamilk Deputy Director Tran Bao Minh said.
Arsenal Football Club Senior Marketing Manager Chris Bevan said it was an interesting deal for the club and said Arsenal’s players were pleased to be promoting the coffee.
Moment coffee is popular in Viet Nam , a leading country in coffee cultivation with an annual output of one million tonnes of coffee and an expected turnover of 1.8 billion USD this year.

Swiss government assists securities sector

Monday, May 19, 2008
Deputy Prime Minister Pham Gia Khiem has approved a Swiss-funded technical assistance project to help improve the capacity of the State Securities Commission (SSC).
The project has an investment of 1.135 million CHF, with 1.1 million CHF in non-refundable aid from the Swiss Government.
The state budget will inject around 35,000 CHF (550 million VND) into the project.

Viet Nam raises interest rates to fight inflation

Monday, May 19, 2008
Viet Nam raised interest rates from Monday in a move that aims to tackle double-digit inflation by strengthening the dong, the local currency, putting money into banks and reducing credit growth.
The State Bank of Viet Nam increased its base rate to 12% from 8.75%, and allowed commercial banks to offer depositors rates of up to 150% of the benchmark rate, or 18%.
Viet Nam has suffered double-digit inflation for half a year. Consumer prices surged more than 21% year-on-year in April, driven mainly by food and energy prices, fuelling popular anger and labour unrest.

The communist government has made tackling inflation a top priority, while cutting the economic growth target for the year to 7.0% from last year's 8.5% increase in gross domestic product.

Jonathan Pincus, the UN Development Programme's chief economist in Viet Nam, said the interest rate increase was an anti-inflationary measure that would strengthen banks and the value of the Vietnamese currency.

'A problem when you get into inflation is that people expect the currency to devalue and instead buy gold or dollars or property,' Pincus said. 'It becomes a self-fulfilling prophecy, because if fewer people want to hold the currency, there is less demand for it and the value goes down.'

Higher interest rates, he said, strengthen the dong and further fight inflation by raising the cost of borrowing, thus limiting the rapid credit growth that has increased the money supply.

Most Vietnamese commercial banks on Monday increased their interest rates for savings accounts to around 14%, Viet Nam state television reported. (Thomson Financial)

Viet Nam dong sets new multi-month low versus US dollar

Monday, May 19, 2008
During early deals on Monday, the Viet Nam dong fell to a new multi-month low of 1.6178 against the US dollar. The pair closed last week's deals at 1.6160.
The Viet Nam central bank announced that it hiked the key interest rate to 12% from 8.75% to fight inflation by strengthening the local currency. The annual inflation has almost surged more than 21% in April, due to higher food and energy prices. (RTTNews)

Hapaco Yen Son sees earning rise nearly 29% in Q1

Monday, May 19, 2008
Hapaco Yen Son Joint Stock Company (YSC), earned VND15.14 billion in the first quarter of 2008, 28.96% higher than the same period last year.
Post-tax profits reached VND1.58 billion, an increase of 200.36%. Earning per share for the first quarter this year was VND2,203.

Gov't Expected to Have Supportive Measures for Stock Market Soon

Monday, May 19, 2008
The government of Viet Nam is expected to give measures to support the plunging stock market soon, said Nguyen Son, head of the State Securities Commission (SSC)’s Market Development Committee.

Leaders of the SSC, the Monetary Policy Consultancy Council and the Finance Ministry met with the prime minister May 15 to propose solutions to spur the market, Son told VnExpress newspaper, but declined to reveal details of these measures.

PM will surely decide the supportive measures today or tomorrow, he said.

In the previous decline when the market’s key index fell to below 500, a series of measures were implemented, such as narrowing daily trading band, limiting banks from selling collateral shares, and having the State Capital Investment Corp (SCIC) to buy shares. The market then had a short period of recover.

May 19, Foreigners Net Buyers Of VND64.5 Billion Of Shares

Monday, May 19, 2008
Foreign investors were net buyers of VND64.5 billion ($4 million) of Vietnamese stocks Monday, out of a total of VND146 billion traded, the Ho Chi Minh Securities Trading Center said.
Volume traded totaled 3.5 million shares, with foreigners accounting for 49.7% , according to the stock market operator. (Dow Jones)

Investor confidence key to restoring market: experts

Monday, May 19, 2008
The stock market came close to grinding to a halt last week, as both the HCM City and Hanoi exchanges saw shriveling volumes and shrinking indices.

On the HCM City Stock Exchange, the VN-Index began the week on Monday by dipping below the psychological barrier of 500 points to close at 492.04. The downtrend continued throughout the week, with the Index falling to 460.04 at the end of the day on Friday.

The market saw only one or two gainers per day, if any, with most shares plunging to their floor prices and even greater damage limited only by the tight daily trading band of 2%.

Trading volumes were abysmal, with total volume for the week a sluggish 15.6mil shares, only half of the previous week's figure. Foreign investors accounted for about 4.7mil of the total.

Market turnover for the week reached only VND658bil (US$41mil).

Friday saw some recovery in volumes, with some renewed foreign investor interest, but it wasn't enough to stem the tenth straight session declines in the VN-Index, a ten-day total loss of 62.32 points or 13.42%.

Among codes with the highest trading volumes for the week, Phu My Fertilisers (DPM) led with nearly four million shares traded. No other codes saw volumes in excess of one million. Following DPM as most-active share was Sacombank (STB) with some 684,000 shares traded.

By mid-week, investors were talking openly of a possible market freeze, fueled by skittish domestic investors and global economic problems, including soaring oil prices and fears of high inflation and slower economic growth. Many seemed thirsty for fast measures from authorities.

The director of the State Securities Commission's Market Management Department, Nguyen Son, said on Friday, without disclosing further details, that the Government would make policy decisions within the next few days.

According to Viet Nam Association of Financial Investors general secretary Nguyen Hoang Hai, investor transactions played an important role in stimulating stock market liquidity, and liquidity was the most important factor in helping the market develop stably.

But the market was being greatly affected by investor psychology, said financial analyst Nguyen Quang A, a former chairman of VPBank.

"The liquidity of the stock market has decline for the past three months although shares prices have become cheap and far below their real values," said Hai. "To recover market liquidity is to restore market stability. This will require strong measures to restore investor confidence and increase demand for shares."

In the northern market, the HASTC-Index lost a total 14.49 points, or 9.4%, on the week to close Friday at 139.74. Trading turnover was VND217.31bil ($13.6mil) on a volume of about 6,7mil shares. (VNS)

Banks raise rates, stocks fall

Monday, May 19, 2008
VietNamese banks boosted interest rates on Monday after the central bank abolished a 12% ceiling rate on dong deposits and raised three interest rates over the weekend to fight a surge in inflation.

Annual inflation is galloping at more than 20% and the central bank has carried out a number of measures to try to stem the rise in prices.

The latest, announced on Saturday and effective on Monday, underlines the central bank's priority is to combat inflation, analysts said.

"This is a positive step the central bank has made to tighten monetary policy through market-oriented measures, which demonstrates the government's resolution in maintaining the policy priority on inflation control over growth," economist Helen Qiao at Goldman Sachs in Hong Kong said.

But the news weighed on the main Viet Nam stock index .VNI on the view that investors would find the higher bank rates more attractive than keeping their money in a market that has fallen 50% since the start of the year as inflation has jumped.

The cap on deposit rates was imposed in February to stabilise the banking system after banks started bidding aggressively for deposits when the central bank tightened monetary conditions.

In abolishing the cap, the central bank said banks can fix their own rates on dong deposits and lending at up to 150% of a base rate of 12%. Previously, a base rate of 8.75% had been applied to lending only.

The central bank said it would set the base rate each month but it could also adjust it when necessary.

The central bank also raised its refinancing rate on loans to commercial banks to 13% from 7.5% and its discount rate, used to buy debt from banks, to 11% from 6%.

Qiao said the move should help reduce the gap between nominal interest rates and inflation, making deposits more attractive and helping relieve tight liquidity in the wake of the central bank's anti-inflation measures, which have included higher rates and compulsory bank reserves.

SLOWING GROWTH

In response to the central bank's announcements, state-run BIDV, Viet Nam's second-largest bank by assets, started offering new rates on dong deposits on Monday.
If offered to pay up to 13.5% for dong savings of between six and 12 months, from 12% earlier. It offered dong loans at 16.5% to 18%, up from 13% on one-year loans offered in the interbank market on Friday.

Other banks, such as Sacombank STB.HM, followed suit.

The Ho Chi Minh stock index .VNI fell 0.95% on Monday, its 11th consecutive fall in a row.

"The lifting of 12% ceiling rate on dong deposits will not help the stock market have a U-turn because no matter how much demand grows for Sacombank's shares, it will not improve the demand of the whole market," said Bui Ngoc Long, Marketing Director at International Royal Securities.

Shares in Viet Nam's only listed banks fell. Sacombank dropped 1.8% and Asia Commercial Bank ACB.HN slipped 2.24%.

For weeks, commercial banks have held competitions to win cars, or offered gold and other incentives to lure depositors while dong deposit rates were capped at 12%.

Goldman Sachs has forecast Viet Nam's economic growth will slow in 2008 to 7.3% from 8.5% last year. It said the consumer price index would grow 19% on average in 2008 from 8.3% in 2007.

The fast-growing economy is a favourite foreign direct investment destination but economic risks have increased. Bank credit grew 50% last year and real estate prices soared.

Standard & Poor's this month cut its ratings outlook on Viet Nam's sovereign rating to negative from stable because of macro-economic concerns. (Reuters)

Banks increase interest rates under new mechanism

Monday, May 19, 2008
The two days for northern banks and one day for southern banks to prepare for the new interest rate mechanism following the meeting of the State Bank of Viet Nam was very short. As of this morning (May 19), many banks have applied new interest rates.

Besides state-owned commercial banks, the Bank for Investment and Development of Viet Nam (BIDV), which began preparations early and consulted SBV experts, small banks are the first to announce new interest rates, which are all at the highest levels. According to banking experts, the interest rates applied by BIDV will be the reference level for other banks.

In the afternoon on May 17, right after the SBV’s meeting in the north, OceanBank announced its new interest rates, applied as of May 19, with the highest rate of 14%/year.

Another joint stock company, Sacombank, immediately raised the rate on 6-month deposits in VND to 14%/year and 13.5 to 13.8%/year for deposits of less than 6 months.

DongA Bank announced the interest rate of 13.8% for 1-6 month deposits, 14%/year for 7-12 month deposits and 14.4% for 25 month deposits. The bank is applying the interest rate of 1.5%/month on average on loans.

While other banks haven’t released their new interest rates yet, they say they will make decisions in the next 1-2 days. The common rate will stand at 13% at the lowest and 15% at the highest levels, banks say.

However, specialists say the 15% rate will be rare because the State Bank of Vietnam restricts the loaning rate at 18%. If banks apply rates for deposits that are too high, they will suffer losses.

There is no feedback from businesses about the impacts of the new mechanism. However, many businesses hope that it will be easier for them to borrow capital from banks.

However, as many banks say they will apply the ceiling rate on loans, 18%, plus other conditions, it will not be especially easy for businesses to access bank money.

Cao Sy Kiem, a member of the Financial and Monetary Advisory Council, said that it would be difficult for a new interest rate race to kick off. He also warned that there will be some banks suffering losses. Newly transformed, newly established banks and those that are weak at management will face difficulties. They will have to adjust themselves to avoid floundering. Dissolution and merging may happen. (VNN)

Viet Nam builders halt projects to avoid bankruptcy

Monday, May 19, 2008
Accelerating inflation in Viet Nam has caused builders to halt residential property projects that they no longer view as economically viable, reported a branch of the US financial services firm Morgan Stanley.

Viet Nam’s year-on-year inflation rate reached 21.4% last month, the highest since at least 1992, according to government figures.

Construction costs in Viet Nam have risen as much as 40% since the end of 2007, Melissa Bon and Brian Wee of Morgan Stanley Asia (Singapore) Pte. said in a report.

“Some contractors are delaying construction work to avoid the risk of facing bankruptcy,’’ Bon and Wee wrote in a report following a visit to Ho Chi Minh City.

“With costs of construction materials escalating, contractors have opted to forgo construction, break contracts, and instead accept fines.’’

Residential property projects are also struggling to find financing in a tightened credit environment, the report said.

The International Monetary Fund said in March that tightened monetary conditions would be needed to slow Vietnamese credit growth that reached about 50% last year.

The government should also deploy macroeconomic tools instead of focusing on draining liquidity from the banking system and the central bank should allow more forex flexibility.

“In an effort to fight inflation, the government has told local banks to tighten credit for construction loans and has imposed a capital gains tax of 25% on all property transactions from January 2009 onwards,’’ Morgan Stanley said.

“These steps have likely contributed to the reduction in expectations for the residential market, particularly among speculators,’’ Bon and Wee wrote, citing a drop of as much as 40% in Ho Chi Minh City residential prices since the end of 2007.

Supply shortage

Vietnamese inflation may worsen a shortage of property supply in the country by making it more difficult for developers to carry out projects, said fund manager VinaCapital Investment Management Ltd. in a report this month.

Recent increases in borrowing costs and instructions by the State Bank of Viet Nam to local banks to increase their cash reserves have caused a slowdown in the residential property market in HCMC, said the Viet Nam unit of CB Richard Ellis Group Inc. in an April newsletter.

“Exceptionally high’’ growth in company earnings in Viet Nam last year was driven in part by “corporate speculation’’ in the property market, said the UK-listed fund Viet Nam Holding Ltd. in a note this week.

The real-estate market’s poor performance this year suggests that some publicly traded companies may report losses as a result, Viet Nam Holding said.

Constraints in the real-estate market present opportunities for well-capitalized developers, with foreign property companies able to position themselves for “the next up-tick in the cycle,’’ the Morgan Stanley report said.

Keppel Land Ltd., Allgreen Properties Ltd., and CapitaLand Ltd. have the largest exposure to Viet Nam among Singaporean property developers, according to the report.

With construction costs up 40% since 2007, builders would rather take fines, says Morgan Stanley. (Bloomberg)

It’s time to mobilize funds: Prudential official

Monday, May 19, 2008
General manager explains stock market performance and offers advice on improving the economy. The Prudential Viet Nam Fund Management Company (PVFMC) the first international fund management firm licensed in Vietnam, now manages some US$1.4 billion and is seeking to mobilize three additional Vietnamese funds worth around $500 million in total.

Acting general manager of the fund, Pham Ngoc Bich, says temporary fluctuations on the financial market could offer attractive investment opportunities.

PVFMC believes that it’s now a good time to launch a number of other securities investment products, Bich says.

Reporter:Are you worried about the current fluctuations on the Vietnamese financial market?

Pham Ngoc Bich: 15 years ago, the Chinese securities market looked the same as the Vietnamese market looks now.

Viet Nam is one of the smallest financial markets in the world.

Its total capital value was $30 billion late last year, smaller than the market capital value of a major bank in Hong Kong.

So, it is easily affected even by minor changes on the local and foreign markets.

Another thing is that Viet Nam has very few securities investors (330,000 stock trading accounts among the country’s population of 86 million), and most lack stock trading experience.

According to the State Securities Commission (SSC), some 70% of the country’s stock trading accounts are owned by individual investors.

Most investors in Viet Nam have focused on shares instead of bonds or fund certificates.

Every time the stock market increases some 5%, many fund certificates gain the same amount even though they are balanced fund certificates.

But according to theory, when the stock market rises by 5%, balanced fund certificates should only be up around 2.5%.

The same fluctuations of fund certificate and stock prices show that investors do not pay attention to the difference between different types of fund certificates.

But it seems that 2008 will not be a successful year for stock trading-at least not as successful as previous years. Correct?

Sure, 2008 will be a tough year for securities firms.

But while the short term forecast is bleak, we are very optimistic about long-term investment.

In the long term, the chaos of the securities market will not strongly affect the funds under our management.

On the contrary, the market’s temporary fluctuations may bring attractive investment opportunities as investors buy stocks at lower prices.

The stock market is currently facing difficulties but we see it’s now a good time to mobilize a number of other stock investment products.

Last year, the securities market grew very fast so no one paid attention to any products other than stocks.

However, it’s changing now.

Investors have more experience and they know more about the risks of securities trading.

Institutional investors usually invest when the market recedes and stock prices fall.

So, we believe that now’s a good time to set up member funds.

We plan to set up more funds this year and over the next few.

We’re looking at a domestic fund, member fund, and other foreign funds.

These funds will be much bigger than our current funds.

We are also preparing to establish an open fund as soon as we get the government’s permission.

Could you talk more about your plans to set up these funds?

The Member Investment Fund in Viet Nam is being mobilized from institutional investors in Viet Nam and foreign organizations with a total value of some $75 million from three to six months.

More than 10% of the fund’s planned capital has already been mobilized.

Another investment fund is also being mobilized from foreign investors with a value of around $200 million.

As Prudential has a large distribution network in Asia, we have sold these investment fund certificates mainly to investors from South Korea, Hong Kong and Singapore as they see a lot of investment opportunities in Vietnam.

Another real estate fund is to complete its capital mobilization of some $200 million and plans to disburse this month.

Has the Vietnamese economy’s recent problem influenced foreign stock investors?

Viet Nam’s economy still has a lot of potential for development.

The real estate markets for offices, buildings, tourism and industrial parks are still growing.

The next two to five years will see more people earning salaries of $5,000 on average a year, though this level equals just one-fifth of the amount of people who earn as much in Hong Kong.

Many investors are still rushing to Vietnam thanks to its low labor costs.

Exports have also been smoother after the country joined the World Trade Organization (WTO).

In your opinion, are speculation funds a threat to a market like Vietnam?

I know a number of speculation funds currently operating in Viet Nam but they are not big and are having problems because the country has not given permission for blank sales and the transactions are made with permitted margins.

These funds are now operating with serial purchases and sales as an exploration of the market.

What do you think about Viet Nam’s move to build a legal corridor for foreign-owned fund management firms?

Viet Nam has many foreign fund management companies operating under representative offices, without permission to conduct trade activities-not an arm of the parent company.

I know that many of them have participated in illegal trade activities.

But these companies are still helpful to Viet Nam.

I think the government’s permission of this is right.

In your opinion, what should Vietnamese authorities do to boost the economy?

It would be good for the State Bank to allow a wider forex margin.

In the long term, the Vietnamese dong must be stronger to accompany the country’s strong economic growth.

Secondly, the country’s trade deficit now is too high.

If the flow of investment capital turns around, this will be a problem.

Thirdly, 60% of products made in Vietnam are raw materials.

For long term success, the country should focus on processed products instead of exporting crude oil, rubber and coffee, and should spend more on developing infrastructure and a processing industry.

The government can also seek advice from veteran economic experts abroad like the Asian Development Bank (ADB) as they once experienced similar problems in South America, China, India and Thailand. (TBKTSG)

May 19, Stock market opens new week with decline

Monday, May 19, 2008
Today the Ho Chi Minh City Stock Exchange (HOSE) opened a new week by seeing another fall, marking the 11th consecutively decreasing session. The VN-Index dropped another 4.37 points or 0.94% to close at 455.67 pts with the total matching order trade of over 3.5 million shares and fund certificates worth 147 billion dong. After 11 declines, the VN-Index lost 66.69 points in total.

Among 154 shares and fund certificates being listed on the southern bourse, the stock market witnessed 21 shares increasing, five others stood still and 128 shares decreasing.

Out of top ten shares with the largest market capitalisation, gainers were DPM by adding 100 dong to 46,000 dong per share, ITA reached the ceiling price with 1,000 dong to 73,500 dong and VPL leaped 2,000 dong to 118,000 dong per share.

Meanwhile, STB lost 500 dong to 27,400, PPC slipped 600 to 33,300, VNM dropped 2,000 to 120,000, PVD and VIC tumbled 1,500 to 82,000 and 81,500 dong per share, FPT and HPG plunged 1,000 to 57,000 and 67,500 dong per share.

In the group of gainers, DHG added 3,000 dong to 167,000, GMD jumped 1,000 to 54,500 and others like TRC, DPR, PMS, VHG, ANV and SBT.

NTL lost 40,000 dong or 50.96% to 38,500 dong per share due to ex-interest date.

DPM took the first place in trading volume with 779,980 shares, followed by HPG with 207,630, VFMVF1 with 154,220, SBT with 124,660 and VIP with 116,660 shares.

Foreign investors bought 70 share codes and two fund certificates with the total volume of over two million units. Of which, DPM reached the biggest trading volume with 494,600, PPC with 221,460, PVD with 185,510 and HPG with 151,560 shares being transferred.

Similar to previous sessions, the Hanoi Securities Trading Center (HaSTC) today May 19 still kept decreasing impetus on the stock market by falling another 2.00 points or 1.43% to end at 137.47 pts with the total market trade of 1,342,500 shares worth over 36 billion dong.

Amongst 136 listed shares on the northern bourse, the stock market saw 15 shares increasing while 93 others decreasing, six shares stood still and 22 shares with no trades.

15 shares increasing were CJC and LUT +700, VTL added 600 dong, YSC leaped 400 dong, CIC, S99, SJC and XMC+300, BCC, POT and PPG +200, BTS, PGS, PSC and TKU up 100 dong.

Six shares stood still including BBS, BTH, DHI, DST, KBC and SAP.
ACB showed the strongest decline when losing 1,800 dong and followed by VSP lost 1,700, BVS slipped 1,600, RCL and SCJ plunged 1,500, NBC, NTP and VDL tumbled 1,200, CDC and SD7 dropped 1,100 and PVS, SDA and VC2 slashed 1,000 dong. Others lost below 1,000 dong per share.

PVI reached the biggest trading volume with 328,800 shares, followed by TBC with 88,600, ACB with 64,500, PVS with 63,100 and POT with 62,300 shares.

Securities Depository Centre to cooperate with Taiwan counterpart

Monday, May 19, 2008
Viet Nam Securities Depository and Taiwan Securities Depository signed a memorandum of understanding (MoU) on cooperation in their development on May 13 in Taiwan.
Under the MoU, these two members of the Asia-Pacific Central Securities Depositories Group (ACG) will exchange views on developing new services, share expertise and establish cooperation relations.

Banks raise rates after central bank removes cap

Monday, May 19, 2008
Banks boosted interest rates on Monday after the central bank abolished a 12-percent ceiling rate on dong deposits and raised three interest rates over the weekend to fight double-digit inflation.

The cap was imposed in February to stabilise the market after banks started bidding aggressively for deposits following a series of monetary tightening measures by the central bank.

On Monday, state-run BIDV, Viet Nam's second-largest bank by assets, started offering new rates on dong deposits, paying up to 13.5% for dong savings of between six and 12 months, from 12% earlier.

The Hanoi-based BIDV said it also offered dong loans at 16.5% to 18% per year, from 13% on its one-year loan offered on the interbank markets last Friday VNIBOR.

Other banks, such as Ho Chi Minh City-based Sacombank (coded STB), followed suit with offers of higher rates.

In abolishing the cap on deposits, the central bank said commercial banks can fix their own rates on dong deposits and lending at up to 150% of a base rate of 12 percent. Previously, a base rate of 8.75% had been applied to lending only.

The central bank also raised its refinancing rate on loans to commercial banks to 13% from 7.5% and its discount rate to 11% from 6%. The changes were effective Monday.

Annual inflation has jumped in Viet Nam to more than 20% and the central bank has carried out a number of measures to tighten liquidity to try to stem the rise in prices. (Reuters)