May 27, HaSTC Index loses 2.29 pts, HOSE stock trading hit by computer problem

Tuesday, May 27, 2008
The Hanoi Securities Trading Center (HaSTC) today still kept decreasing impetus on the stock market by falling another 2.29 points or 1.83% to end at 123.17 pts with the total market trade of 555,900 shares worth nearly 16 billion dong.

Amongst 137 listed shares on the northern bourse, the stock market recorded only three shares increasing while 94 others decreasing, two remained unchanged and 38 with no trades.

Three shares increasing were YBC jumped 500 dong, DHI added 300 dong and TBC up 200 dong per share.

Two shares stood still including KBC and STC.
DTC showed the strongest decrease when losing 1,600 dong and followed by ACB slipped 1,500, VSP down 1,400 dong, BVS, RCL and SCJ dropped 1,300 and NBC slashed 1,100 dong per share.

ACB reached the biggest trading volume with 71,100 shares and followed by TBC with 65,000 and VC2 with 58,300 shares being transferred.

The Ho Chi Minh City Stock Exchange (HOSE) today was started with another bearish situation. By the end of the first phase, transactions were halted due to technical problems of STC transaction system.

This problem has not still been repaired yet so today the bourse will suspend matching orders and share transactions.

HOSE will send documents or fax to membership companies to announce the situation.

Experts introduce model for boosting acquisitions abroad

Tuesday, May 27, 2008
The State Securities Commission (SSC) yesterday joined forces with three US-based financial institutions to introduce Vietnamese enterprises to a model for raising capital and engaging in acquisitions overseas.

The model, known as a Special Purpose Acquisition Corporation (SPAC), is a shell corporation formed for the purpose of consummating a business combination with another, operating business. It can also be used to raise capital through an initial public offering (IPO) abroad.

According to data from Chardan Capital Markets, the auction of SPACs has raised US$21.5 billion through 156 auctions on US stock exchanges since 2004, accounting for 23 per cent of IPOs last year.

"This model has become common and has played an effective role as a capital mobilisation channel for foreign enterprises in this market," said Kerry Propper, CEO of Chardan.

The model has worked well in China, helping Chardan raise $811 million through SPACs for investments in China.

"Vietnamese enterprises can also enter US equity markets using this model because your economy is similar to the Chinese. The most important thing is the transparency that your firms create in the overseas market," Propper said.

BBV Viet Nam SEA Acquisition Corporation is the sole SPAC created in Vietnam so far for the purposes of raising capital through an IPO or acquiring an existing business in Vietnam.

"As we know, Vietnamese firms are quite attractive to US investors thanks to the growing economy and the potential that domestic firms have not yet exploited," said Eric Zachs, managing partner of BBV-Asia LLC.

He said the model had yet to become common in Vietnam because the domestic firms had little demand to make IPOs offshore.

The director of the State Securities Commission's international co-operation department, Nguyen Ngoc Canh, said that domestic firms hoping to sell shares offshore faced challenges in terms of incompatible accounting systems and capital and disclosure regulations.

He cautioned domestic firms wanting to auction shares offshore, not only in US markets, to consider carefully the suitable target market before making an IPO.

"The firm itself has to improve its managerial, operational, and financial capacity in order to meet the high requirements of foreign securities markets," Canh said. (VNS)

Tan Binh Culture aims to hold 320,000 shares

Tuesday, May 27, 2008
Tan Binh Culture Co will continue buying back 200,000 ALT shares until June 2, when it should hold a total of 319,995 shares.

Two other companies, PetroVietnam and Thu Duc Housing Development have also decided to buy back a total 1.2 million of their shares.

Yesterday, ALT closed at VND29,700 per share.

Fisheries to list on Ha Noi Securities Trading Centre

Tuesday, May 27, 2008
The Ha Noi Securities Trading Centre (HASTC) last week announced the Bac Lieu Fisheries joint stock company (BLF) would be listed on the Ha Noi bourse with 5 million shares worth a total of VND50 billion ($3.1 million).

Banks, borrowers struggle with tighter credit

Tuesday, May 27, 2008
The recent move by the State Bank of Viet Nam to raise the prime rate to 12% means that commercial banks are allowed to charge customers up to 18% interest on individual or commercial loans.

"An 18-per-cent lending rate is unsustainable for small- and medium-sized enterprises that operate on profit margins of only around 7 or 8% per year," said chairman of the Viet Nam Association for Small- and Medium-sized Enterprises, Cao Si Kiem.

Perhaps even more alarmingly, few borrowers are getting approved, even at this high, 18-per-cent interest rate. Most banks are generally only granting loans to existing borrowers.

"We obviously have to save ourselves before supporting enterprises. If we lack capital, how can we lend to them?" said the director of one HCM City-based bank who requested to remain anonymous.

"If the central bank wants us to give loans to domestic firms, they should pump more money into the system to solve the lack of liquidity," he added. "Pumping in a certain amount of money would be okay and would not harm attempts to control inflation."

Some other commercial banks say that the structure of interest rate regulations, not a lack of liquidity, is to blame for the tightening credit picture.

They point to the need to pay deposit rates of around 15% in order to attract capital to lend, plus other costs of raising and lending capital at a margin of 1.5-2%, so that their total lending costs are about 16.5-17%.

If these same banks are limited to charging no more than 18% interest on loans, the tight profit margins may actually represent losses in some cases, factoring in risks of non-performing loans, operating costs and other considerations, including asset appraisal, obtaining security interests, and collection costs.

Add all these in, they say, and the costs of lending can easily surge to 20% in the present interest rate environment.

Accordingly, lending rates charged to borrowers had surged to as high as 22-23% per year in recent months, until the central bank recently reminded them that prime rate regulations and the nation’s Civil Code mandated that lending rates not exceed one-and-a-half times the prime rate, or 18% per year.

Limiting loans

State Bank of Viet Nam governor Nguyen Van Giau has confirmed to Viet Nam News that the State Bank would soon issue new regulations reasserting this 18-per-cent interest cap.

The commitment is part of an overall Government policy to restrain credit growth to no more than 30% per year, a policy reaffirmed last week.

In other words, banks are under official pressure not to grant credit too freely, and many have begun focusing their lending priorities

Sacombank, for instance, announced that it would priorities loans for core lines of business and production, turning down applications to finance new ventures.

Asia Commercial Bank yesterday announced a new lending policy that would prioritise and limit lending to established customers and specific industries or sectors, although they have not yet announced which would receive this priority designation.

Vietcombank, meanwhile, said it would give lending priority to importers and exporters, customers servicing international loans, and enterprises seeking to invest in overseas markets or projects. (VNS)

Viet Nam to Ensure Dong Rate as Dollar Demand Gains

Tuesday, May 27, 2008
Viet Nam's central bank said it has the ability to ensure an orderly exchange rate after a jump in demand for dollars widened the gap between the official value of the currency and the so-called free-market rate.

``The demand for U.S. dollars is accelerating,'' Nguyen Quang Huy, director of the banking-management department, said in a statement on the bank's Web site late today. The increase was caused by Viet Nam's highest inflation since 1992, Huy said.

The State Bank of Viet Nam today set the daily reference rate for the dong at 16,060 to the dollar. Still, the free-market rate, which is used by money changers, was 17,500 to the dollar, newspaper Thoi Bao Kinh Te Viet Nam reported today.

Viet Nam's inflation accelerated to 25.2% in May, driven by record rice and energy prices, according to a statement from the General Statistics Office in Hanoi today. On a monthly basis, prices rose 3.9% from April.

The ``high demand from certain people for dollars is the main cause of the rising rate in the free market,'' Huy said in the statement, which was released in a question-and-answer format. Still, the scale of the free-market was small and wouldn't disrupt the financial, monetary and business operations of the economy, Huy said.

The government planned to continue carrying out a ``stable exchange rate policy'' within a trading band, Huy said, reiterating existing policy. (Bloomberg)

Vietnam attracts US $8.1 billion worth of FDI in five months

Tuesday, May 27, 2008
Vietnam has attracted a total of US $8.1 billion worth of foreign direct investment in the first five months of this year, according to the Ministry of Planning and Investment’s Department of Foreign Investment.

This include a total of nearly US $7.5 billion worth of investment from 130 newly-licensed FDI projects during the January-May period, plus US $600 million from 132 existing FDI projects that request to increase their investment capital.

Up to 83% of the total registered capital from the newly licensed projects is invested in the service sector. Southern Ba Ria-Vung Tau province took the top position in the country in terms of FDI attraction in the January-May period with a US $4.2 billion Ho Tram tourism and entertainment project invested by Canada’s ACDL Group

Banks get ultimatum

Tuesday, May 27, 2008
The State Bank has warned commercial banks which set mobilisation interest rates “too high” could be punished. Early last week, after the State Bank released new regulations on interest rate management which allowed commercial banks to set mobilisation and lending interest rates not exceeding 150% of the State Bank’s 12% base rate, some banks raised interest rates to the 18% limit. In response, the State Bank sent warning documents to the Bank for Agriculture and Rural Development (Agribank) and Nam Viet Joint Stock bank (Navibank) asking the banks to lower their rates.

According to a State Bank official, if the mobilisation interest rate is set at 18% per year the lending rate should be around 22% to be profitable to a lender. “Thus, setting rates at 18% per year could imply that the bank is in a serious capital shortage or it would have to lend at rates higher than 18% limit,” said the official.

So far, Agribank and Navibank have reduced mobilisation rates to common levels with other peers. At the same time, almost all banks are setting mobilisation rates at around 14-15 per cent. The Southeast Asia Joint Stock Bank (SEA Bank) has offered the highest rate so far at 15.6% per year for 14-month deposits.

Last week, the State Bank also released Official Letters 4426 and 4428/NHNN-VP requesting the State Bank’s branches to strengthen its supervision of commercial banks’ mobilisation and lending services. “Any violation regarding mobilisation and lending at interest rates over 150% of the base rate should be punished and reported to the State Bank. The credit institution that violated the regulation should be investigated accordingly,” the documents stated. (Dau Tu)

HOSE informs temporary trading suspension on May 28

Wednesday, May 28, 2008
In the afternoon of May 27, Ho Chi Minh City Stock Exchange sent an urgent announcement to securities member companies, informing that trading activities will continue to be halted on May 28 session.

The southern bourse announced on its website that its decision to temporary suspend trading activities on May 28 has been approved by the chairman of the State Securities Commission.

The temporary trading suspension is needed as HOSE technicians need time to discover the cause of the technical incident that affected the trading system at 8.53 am May 27th, 2008 and solve the problem.

All transactions on May 27 session on HOSE were cancelled due to an traordinary technical incident which affected the trading system at 8.53 am, May 27th, 2008.

This is the third time the HOSE trading system has experienced technical difficulties. The other two incidents occurred in February 2, 2007 and December 8, 2006.