US Investors will return from holiday with same fears

Tuesday, May 27, 2008
The three-day weekend probably didn't bring much relaxation to investors if they stopped at a gas station on the way to the beach or a barbeque. With the average roadside price of gasoline pushing $3.88 a gallon — and going for well over $4 at filling stations in some parts of the country — energy prices have become a prime worry in the stock market.

That's not to say other concerns have dissipated. As Wall Street heads into this shortened week, it remains anxious about the still-slumping housing market, not to mention the ailing financial services sector. But so much of the economy's performance later in the year will depend on energy costs, so the focus will be on crude until investors see a substantial price retreat.

What's particularly troubling about oil's rise is that everyone knows it will affect the economy, but no one is sure exactly how. Experts are split over whether it will cause broad-based inflation, further economic weakness, or both at the same time.

None of these scenarios are good ones. And the fact that the Federal Reserve says its monetary policy will likely remain on hold until it's clear which situation plays out was a big reason the stock market did so poorly last week. The Dow Jones industrial average dropped 3.91%, while the Standard & Poor's 500 index fell 3.47% and the Nasdaq composite index declined 3.33%.

To be sure, expensive oil isn't necessarily destructive in the long term. If the economy holds up, U.S. consumers may be able to gradually adapt their behavior and spending — a trend that could end up actually controlling inflation.

"There are definitely signs that the high price of crude is destroying demand bit by bit," said Craig Peckham, market strategist at Jefferies & Co. "At this point, we're seeing an economy that is experiencing a headwind from the high price of crude, which at the end of the day could act as a natural regulator of the economy."

But among stock investors right now, "inflation fears have been trumping relatively benign growth numbers," he said.

This four-day week will bring a variety of economic readings on the housing market, consumer spending, business spending, and manufacturing.

On Tuesday, the Commerce Department releases its April data on new home sales, expected to show a decline from March sales, according to economists surveyed Friday by Thomson Financial/IFR. Also Tuesday, the Conference Board's consumer confidence index for May is anticipated to edge lower, too.

Wednesday, the Commerce Department reports on orders for durable goods, which are essentially big-ticket items ranging from cars to refrigerators to computers. April's durable goods orders are expected to have dipped by 1.1% after rising by 0.1% in March.

Then Friday, on top of data from Chicago purchasing managers on manufacturing and from the University of Michigan on consumer sentiment, the Commerce Department will report on personal spending. Economists predict spending rose 0.2% in April, compared with a 0.4% increase the previous month.

That report will include the closely watched personal consumption expenditures deflator, which is a measure of inflation at the personal level. Economists, on average, expect that it was steady in April at an annual rate of 2.2%.

Investors should get an additional sense of how consumers are spending their money in earnings reports this week from Borders Group Inc., Costco Wholesale Corp., Dell Inc., Sears Holdings Corp. and Tiffany & Co. (AP Business)

European, Asian markets mixed despite inflation concerns

Tuesday, May 27, 2008
European stock markets edged higher Monday after key Asian markets fell amid worries about high oil prices and the U.S. economy on a day when U.S. markets were closed for the Memorial Day holiday. Key stock market indicators edged up in Germany and France but the main market gauges fell more than 2% in Japan and Hong Kong after the Chinese government announced an overhaul of its telecommunications sector.

Crude oil futures rose to a record above $135 a barrel last week and were trading above $133 a barrel in electronic trading on Monday after militants in Nigeria said they destroyed an oil pipeline and killed 11 soldiers. The government said none of its troops had died.

In Germany, the DAX was up 0.1% at midday to 6,953.27 amid light trading, a reflection of the bank holiday in the U.S. and United Kingdom, traders said, though automobile stocks like Daimler AG, BMW AG and Volkswagen AG all posted declines after crude oil prices rose higher in trading.

Shares of Daimler were down 1.35% while BMW slipped 1.3%. Volkswagen, Europe's biggest automaker by sales, saw its shares slip 0.88% in late afternoon trading.

In France, the CAC-40 was up 0.28% to 4,947.36, led by France Telecom, which rose 2.2% on news that Finland may be willing to sell its stake in TeliaSonera, the Swedish-Finnish telecom giant.

In Tokyo, the benchmark Nikkei 225 index dropped 2.3% to 13,690.19.

"What underlined selling was ongoing concern over inflation as oil prices still remained very high," said Kazuhiro Takahashi, general manager at Daiwa Securities SMBC Co. in Tokyo.

Hong Kong shares were dragged down by a plunge in China Mobile, the mainland's largest mobile service provider, on worries about increased competition after China announced that it was restructuring its telecommunications sector. The blue-chip Hang Seng Index fell 2.4% to 24,127.31.

Traders said turnover has been relatively low lately, indicating trade would remain sluggish in the near future, as oil prices are likely to climb further and the U.S. economy slows.

"Trading is sluggish, as there's no clear picture for both local and regional markets," said Linus Yip, a strategist at First Shanghai Securities.

China Mobile shares tumbled 8.2%. China's three other Hong Kong-listed telecom operators — China Unicom, China Netcom and China Telecom — are also involved in the restructuring, but remained suspended from trading Monday.

On the Chinese mainland, the Shanghai benchmark index fell to a one-month low on renewed worries over further monetary tightening. The benchmark Shanghai Composite Index fell 108.55 points, or 3.1%, to 3,364.54, the lowest since April 23.

Financial shares were among the worst hit, with Haitong Securities plunging by the daily 10% limit and Industrial & Commercial Bank of China sinking 3%.

The Australian share market fell for a third day to an almost three-week low on concerns higher crude oil prices, a stronger Australian dollar and inflation will crimp economic growth and company earnings. The benchmark S&P/ASX 200 index dropped 1.1% to 5,707.

Pakistan's benchmark stock index plunged to its lowest level in eight months amid investor anxiety over political and economic uncertainty. The 100-share benchmark index at the Karachi Stock Exchange tumbled 3.3 percent to 13,011.74, the lowest since Sept. 11, 2007.

In currencies, the dollar was quoted at 103.43 yen midafternoon in Frankfurt, up from 103.28 yen in New York late Monday. The euro stood at $1.5771, compared with $1.5770 in New York. (AP)

Brewer Habeco to adjust chartered capital

Tuesday, May 27, 2008
The deputy prime minister Nguyen Sinh Hung recently singed the Decision No 575/QD-TTg adjusting the chartered capital mechanism for Hanoi Beer, Alcohol and Beverage Corp (Habeco).

According to the government's adjustment, the state will hold 189,592,400 shares or 81.79% of chartered capital, 1,290,200 preferential shares or 0.56% will belong to the company's employees, 36.55 million preferential shares or 15.77% for strategic investors and 4,367,400 shares or 1.88% of chartered capital will be sold to the public.

The government also required the Ministry of Industry and Trade to organise the first shareholders' meeting to set up Hanoi Beer, Alcohol and Beverage Corp and give supplementary for its trade name according to the law.

Tan Dai Hung Plastic producer reports performance

Tuesday, May 27, 2008
Tan Dai Hung Plastic Joint Stock Co recently reported that last year it gained 8.677 tonnes of plastic in output bringing in the total revenue of 290.146 billion dong and 8.776 billion dong in after-tax profit. The figures are expected to reach 7,000 tonnes, 243 billion dong and 21.1 billion dong this year.

Out of the after-tax profit of 8.776 billion dong, 438.810 million dong will be added to the company's finance preventive fund, 877.620 million dong for welfare fund, 7.28 billion dong will be shared under a dividend of 7% in cash to the shareholders and the unallocated 176.776 million dong will be transferred to 2008.

In addition, the company will offer 10.4 million shares worth 104 billion dong from the surplus capital to existing shareholders with a ratio 1:1 whereby total shares will be 20.8 million shares.

Sacombank and ANZ to launch card alliance

Tuesday, May 27, 2008
Saigon Thuong Tin Joint Stock Commercial Bank (Sacombank) is completing last proceedings with Australia and New Zealand Bank (ANZ), Sacombank's strategic partner, to debut their card alliance.

The group expected to receive the license to set up the card alliance with the total initial capital of US$20 million within this quarter. As the plan, Sacombank Group will hold 60% of capital and the remaining 40% belonging to ANZ.

According to Dang Van Thanh, Sacombank Group's chair, the alliance will apply absolutely secure management mode for card system through the network. Thanh added the alliance would create strength position for the group in issuing and expanding the market share of cards.

Up to the end of April, Sacombank has had 315 ATM machines through the network. The bank has also launched 2,000 POS in most of trade centres, restaurants and hotels.

Gold import spending estimated at US$1.5b in Q1

Tuesday, May 27, 2008
During the first quarter of this year, Vietnam's total gold import spending was up to US$1.5 billion, accounting for 50% of the year's gold import quota. If the country imports within limit of 70 tonnes of gold in this year, import spending could be US$2.6 billion, reported the Ministry of Finance (MoF).

One of main reasons making the strong increase of gold import is related to the gold fever and investment situation of population as well as the changes of reservation portfolios of financial institutions.

Thus, MoF made a decision to increase the gold import tariff from 0.5% to 1%.

The decision will take effect from May 26.

Indochina Capital names Mahony as fund manager

Tuesday, May 27, 2008
Terry Mahony, who is currently serving as a non-executive director of Indochina Capital Viet Nam Holdings, has been appointed an executive member of the management of the entity that manages the fund. He will remain on the board of directors of the fund itself. The new appointment is effective June 2.

The closed-end fund, listed on the London Stock Exchange, provides institutional investors exposure to prelisted equity, state-owned entity equity, listed equity, fixed income, short-term instruments and other investments in Vietnam, where it has a nine-year track record.

In his new role, Mahony will serve as co-CIO along with current CIO Tung Kim Nguyen. As well as help run money, he will also play an active role in training the next generation of equity managers at the firm.

"We have a wealth of promising talent available to us in Vietnam," says Peter Ryder, CEO of Indochina Capital Corporation, the parent of Indochina Capital Advisors, the company which manages the fund. "Working with someone of Terry's seniority and experience will accelerate their development." This will also free up Ryder's time to focus on the more strategic aspects of the business.

Mahony has lived in Asia since 1981 in several careers, many focused on emerging-market finance, interrupted by a stint running a Latin American fund for Baring Asset Management. He built HSBC Investments' global emerging-markets capacity in the early 1990s, and then did the same for Trust Co of the West and TCW Asia in the mid-1990s. Since 2000, he has been responsible for asset allocation for global institutional portfolios at Investment manager Selection, a role he continues. (Asian Investor)

State Capital reports 1tr dong pre-tax profit

Tuesday, May 27, 2008
The State Capital Investment Corp (SCIC) recently posted 1.15 trillion dong in revenue and 1.041 trillion dong from pre tax profit in 2007.

Last year, SCIC handed over 7.472 trillion dong of state capital for 845 enterprises. Of which, central departments and ministries transferred capital in 137 enterprises with the total capital of 4.714 trillion dong and provinces and cities was 708 enterprises with the total capital of 2.758 trillion dong.

SCIC sold the state capital part of 34 firms worth 73 billion dong and brought to the state 390 billion dong.

According to the prime minister's direction, recently SCIC bought shares in the stock market in order to stabilise the market situation. However, so far, the exact figures have not unveiled yet.