Central bank urged to cut reserve requirements to boost stocks

Sunday, May 25, 2008
The State Bank of Viet Nam (SBV) should reduce reserve requirements for banks to help stabilize the stock market, the Viet Nam Association of Financial Investors said.

Reserve requirements for commercial banks should be cut to 8% of deposits from 11% at present, the association said in a statement on its website.

The reduction will raise the supply of funds in banks, it added.

“Investors will be more ready to join the stock market then,’’ Nguyen Hoang Hai, general secretary of the association, said in a telephone interview Friday.

Vietnam’s benchmark stock index has fallen 50% this year.

Bank lending rose 14.7% in the first four months, according to the central bank, reaching almost half the 30% cap that the central bank imposed to rein in credit growth and tame inflation.

The investors association represents members such as fund managers and brokers, and its board includes former government officials. (Bloomberg)

Techcombank to raise $309 million via dong bonds

Sunday, May 25, 2008
Technological & Commercial Joint-Stock Bank, 15% owned by HSBC Holdings Plc, has obtained the central bank’s approval to mobilize VND5 trillion (US$309 million) by bond sales this year.

“We will sell debt in Vietnam to local and foreign investors,’’ Nguyen Duc Vinh, chief executive of the bank, commonly known as Techcombank, said this week.

“However, the timing and the way we sell has yet to be decided.’’

Techcombank’s pretax profit more than doubled to VND219.2 billion ($13.5 million) in the first quarter this year, from VND108 billion ($6.6 million) last year, on increased lending and currency trading.

Earnings from outstanding loans were VND25.8 billion, 134% higher than a year ago, the Hanoi-based bank said last month.

Revenue in the three months ending March 31 jumped to VND1.17 trillion, from VND505 billion ($31.1 million) a year earlier.

Total assets doubled to more than VND46.2 trillion ($2.8 billion) as of March 31.

Techcombank, the country’s seventh largest by assets, also plans to sell bonds to the foreign markets, Vinh said. (CPV)

Foreigners brave market nosedive to buy more shares

Sunday, May 25, 2008
Foreign investors showed great faith in Vietnamese stocks, heavily buying shares offloaded by local players this month, brokers said. The VN-Index of 154 listed companies on the Ho Chi Minh Stock Exchange tumbled every day over the past three weeks, losing more than 18 percent, to close at 428.05 points on Friday.

So far this year, the benchmark index has plunged 54% to take out the unfavorable honor of being the world’s worst performing stock market.

Despite the gloomy market that has prompted local traders to jettison their stocks, foreigners remained net buyers.

When the market retreated below 500 points on May 12, foreign traders pumped in VND54 billion (US$3.3 million) into shares.

On May 20, local investors continued their share selling frenzy, sending the VN-Index below another key resistance level of 450 points.

In contrast, foreigners bought shares worth VND19 billion ($1.19 million).

The index dropped further in the next trading day, with 140 stocks falling, as local traders kept bailing out of the market.

Foreigners again continued to defy local player’s panic, notching up shares worth VND19.2 billion ($1.2 million).

They bought shares worth VND65.2 billion ($4 million) on Friday when the VN-Index lost 6.7 points, or 1.54%, to close at 428.05.

Investment fund Anpha Capital Managing Director Louis Nguyen revealed his fund had only lost around 2% over the first three months of the year.

His fund had entered the share market relatively late, favoring other investments in the early months of the year.

Profits from these investments had helped his fund avoid heavy losses, he said.

Despite expecting his fund’s losses from stocks to increase as the market’s free-fall continued, Nguyen said shares were becoming very attractive.

He said Anpha Capital was eyeing shares of five or six companies, which had good earning reports.

Another director of a foreign-owned investment fund in HCMC, who did not wish to be named, said his fund sustained fairly heavy losses as the market slumped this year.

However, he said his fund will still buy more shares on both formal and informal markets.

“We planned to pump more money in the market when it fell below 500 points.

But it kept on falling further, so we decided to wait for a suitable time,” he said.

Healthcare stocks attract investors

Healthcare stocks have moved to centre stage, receiving increasing investor attention in recent weeks. "Healthcare enterprises always post steady profits, even when the economy faces tough times," said Bien Viet Securities Co deputy director Vu Duc Nghia.

The Viet Capital Fund Management Co has also opened a fund dedicated to the sector. The Viet Capital Healthcare Fund targets investments in pharmaceutical, hospital/high-tech clinic, medical device and hospital service stocks.

The fund has total capital in the first stage of VND500 billion (US$31.25 million) with potential for further expansion and is currently open to domestic institutional investors which are reputable enterprises or financial institutions.

"The fund aims not only for long-term, sustainable profits with minimised risks for our investors, but also for opening up a new direction in areas with significant socio-economic benefits," said fund director Pham Gia Tuan. "It will also encourage the introduction of state-of-the-art diagnostic and treatment technology accompanied by high quality services for the Vietnamese people, reducing the burden on the public health sector."

According to analysts of the Viet Capital Fund Management Co, national spending on healthcare in Viet Nam is lower than in other nations, suggesting high potential for this sector’s further development.

Spending on healthcare in Viet Nam is only 1.48 per cent of GDP, while in Thailand it’s 6 per cent and in the US, 15.3 per cent.

Stock brokerages have also found that price-per-earning ratios for healthcare stock were currently around 24, compared to a total market average of 12-13.

"This rate is promising for investors in the future," Nghia said.

An anonimous teacher from the National Economic University noted that the high P/E rate was not decisive for the change of investors into healthcare stocks.

"Traders may be afraid of earning money from hot stocks like property or banking, and then losing it," he said. "Then they change to healthcare stocks."

Domestic pharmaceutical producers were still overdependent on imported materials, making it hard to keep a lid on drug prices, he said.

"But despite that, pharmaceutical enterprises still have a stable market which is enough to ensure investors a steady profit. Less is sometimes more."

Wall Street faces bleaker picture amid oil surge, hawkish Fed

Sunday, May 25, 2008
As Americans kick off vacation season, Wall Street is bracing for a darker outlook with surging oil prices likely to crimp an economic recovery and the Federal Reserve sounding increasingly hawkish.

The stock market, which had been on a strong run in April and early May, now looks increasingly fragile, analysts say.

The Dow Jones Industrial Average took a drubbing in the week to Friday, losing 3.9% to end at 12,479.63 ahead of the three-day US Memorial Day holiday weekend.

The Standard & Poor's 500 broad-market index slid 3.47% to 1,375.93 while the tech-led Nasdaq composite retreated 3.33% for the week to 2,444.67.

The market's tentative rally began to unravel in the past week as crude oil shot past 130 dollars a barrel for the first time ever and briefly hit 135 dollars.

To make matters worse, the markets got a clear message from the Fed that it would not lower interest rates further without a "significant" weakening of the US economic outlook.

That came in minutes from the April Federal Open Market Committee meeting, which indicated that the decision to lower the base rate to 2.0% was "a close call."

Deutsche Bank economist Joseph LaVorgna noted that the Fed's inability to keep stimulating gross domestic product (GDP) growth with rate cuts could mean deeper trouble as energy prices surge.

"The record high made in oil prices seriously complicates the economic outlook," he said.

"Higher energy costs raise the risk of higher headline inflation, lower GDP growth and a Fed which cannot further cut rates for fear of unhinging inflation expectations."

Ed Yardeni at Yardeni Research warned: "If oil prices continue to super-super spike, the outlook for both US and global economic growth would deteriorate."

"Stock prices aren't going up again until oil prices start coming down," he added.

The remaining hope for the markets, the prospect of rate cuts from the Fed, now seems increasingly remote, say analysts.

"The Fed has sent a clear message that it's not inclined to cut rates in June even if the economic picture continues to darken," said Avery Shenfeld, economist at CIBC World Markets.

"Such a darkening seems likely in the coming week's data, with ugly news on house prices, home sales, durable orders and personal income ... Add in soaring gasoline prices, and both equity markets and the dollar could be in for a tough week."

Despite the increasing gloom, market watchers say the stock market may be able to regain its footing, especially if there is some moderation in oil, which according to some is showing signs of a speculative bubble.

Al Goldman at Wachovia Securities said the market could see a rally this year if investors begin to put more cash to work.

"There is a ton of cash on the sidelines receiving a low rate of return," he said.

"Nothing motivates sidelined cash to buy stocks more than a rising stock market. Also, gloom is still pretty thick among investors, which creates the 'wall of worry' that bull markets classically climb. And every clear-thinking person knows that after a recession or economic hard times come economic recoveries."

Bonds edged higher over the past week. The yield on the 10-year Treasury bond fell to 3.831% from 3.850% a week earlier and that on the 30-year bond eased to 4.557% against 4.579%. Bond yields and prices move in opposite directions.

Data due in the holiday-shortened week include a report from the Conference Board on consumer confidence on Tuesday, and an update on first-quarter economic growth on Thursday. Friday, the government releases data on April income and spending, keys to economic activity looking forward. (AFP)

Tan Tao Group to built large urban area in Kien Giang

Sunday, May 25, 2008
Tan Tao Group has started construction of the Hai Au urban area in the An Hao precinct of Rach Gia in the Mekong province of Kien Giang.

Thai Van Men, General Director of the group, said the project is under the auspices of the program to develop the coastal urban areas of the province. It will be built in an area of 199.7 ha, with a total investment of 1,500 billion VND.

The project of luxurious villas, resorts and trade centres is expected to be a new attraction to visitors, with diversified cultural and art activities.

Tan Tao group, specialising in constructing industrial zones and urban areas, built the 4,400 MW Kien Luong thermo power project, which is considered one of the largest thermo power projects in Viet Nam. (NLD)