Wider gold option to be available

Sunday, May 18, 2008
Asia Commercial Joint Stock Bank (ACB) is in its last phase of installing a gold sheet manufacturing line, ACB’s General Director Ly Xuan Hai has said.

The line is going under experimental operation and scheduled to introduce first ACB gold sheets of 1.2 and 10 taels to the market in June.

According to Sacombank’s CEO Dang Van Thanh, the bank is about to introduce gold sheets under “Than Tai” trademark to the market in July. The bank has also planned to bring a gold services company into operation.

The World’s Gold Council said Vietnam is one of the biggest gold consumers. The volume of gold traded in Vietnam each day increased from 500kg in 2002 and then 2 tonnes by 2007.

At its hieght, up to 19 tonnes of gold are traded daily.

Rules eased for IPOs

Sunday, May 18, 2008
Decree No109/2007/ND-CP of June 26, 2007, regulating the participation of investors in the equitisation of State-owned enterprises, allows non-strategic foreign investors to take part in bidding on initial public offerings (IPOs) alongside domestic investors.

However, overall foreign ownership in a commercial bank has been capped at 30 per cent. A single institutional investor is allowed to hold no more than 15 per cent of total stake.

In the Vietcombank IPO last December, for instances, foreign investors were allowed to buy shares without State Bank permission.

Similarly, VAFI’s proposal would allow foreign investors to pick up bank shares already trading on the OTC market without any further regulatory approval, as long as the total stake were not to exceed 5%.

"This would help free up frozen bank shares on the OTC market and help dispel the heavy spirit of investors on the stock market," said Hai.

VAFI said, "We hope that state regulators will work together more closely to draft a suitable policy to help the stock market rebound." A source from the State Bank told VNS by phone yesterday that "I think the control is really necessary because the banking sector is the life blood of the economy."

Investor association calls for change to bank stock selling rules

Sunday, May 18, 2008
The Viet Nam Association of Financial Investors (VAFI) has sought the government’s approval for private banks to sell 5% stakes to foreign investors without asking for central bank approval.

The move was made in a bid to halt a slump in bank stocks, the association said.

“Share prices of banking stocks plunged dramatically,” VAFI General Secretary Nguyen Hoang Hai told.

“Many stocks nosedived close to their face value [VND10,000], some even fell below that. Many bank shares lost 70 to 80% compared with the price offered to foreign strategic partners.”

“The share price of Vietcombank, Vietnam’s third-biggest commercial bank by assets, on the over-the-counter (OTC) market is around VND32,000, half the preferential price offered to bank staff.

“Employees of state-run banks, which were equitized over the last two years, will suffer more heavy losses if the share prices fall further.”

Hai also said Prime Minister Nguyen Tan Dung had earlier ordered state-run banks to halt selling collateralized shares and encouraged private banks to follow to help stop the stock market slump.

At the outset, all state-owned banks complied with the order but some state-run banks then sold collateralized shares in listed companies through investors’ accounts and asked dealers to sell unlisted stocks shares for them as they needed to settle debts of those shares.

“So VAFI is determined to seek the prime minister’s approval for allowing commercial joint stock banks to sell 5% or less [out of the 30 percent stake that foreigners can hold] to foreign investors without asking for the central bank’s permission,” Hai said.

He also said VAFI’s petition was an ad hoc measure – to apply for the next one or two years – aimed at raising the market’s liquidity.

“If our petition is approved, private banks will be able to buy back their shares to sell to foreign investors to halt a share price slump.”

“Buying back shares will enable the private banks to support their existing shareholders, as well as raise money more easily,” the association’s general secretary said.

VAFI estimated the total value of collateralized shares on the OTC market was more than VND10 trillion (US$623 million), so buoyancy would be restored on the informal market when banks settled debts of those shares, helping to lift the main markets.

Lending squeeze

Sunday, May 18, 2008
Want a bank loan? Be prepared for costly extra fees on top of towering interest rates.

Amid the credit crunch, would-be borrowers not only have to worry about being rejected or high interest rates, they also have to worry about surprise fees like “capital arrangement” and “credit management” charges.

Phuong, from Ho Chi Minh City’s Tan Binh District, said that if she borrowed from Techcombank she would be charged 1.65% a month in interest plus a capital arrangement fee of 0.5% on the total loan amount.

If she borrowed from the Southeast Asia Joint Stock Bank, she said she would have to pay a slightly lower interest rate of 1.5% per month plus a capital arrangement fee of 1.5-4.5% and a credit management fee of 0.9-4.8% depending on loan terms.

The longer the terms, the higher the fees, Phuong said.

An employee at another commercial bank who wished to remain unnamed said if the additional fees were taken into account, the “actual” monthly interest rates on loans from these two banks might reach 1.8% to 1.9%.

Tide turns

President of Oriental Commercial Joint Stock Bank (OCB) Vo Van Chau said one year ago, commercial banks had tried to “snatch” customers from each other by offering low interest rates on loans.

But commercial banks now are calling in repayments and screening loan applicants more closely.

The president of another commercial bank who spoke on condition of anonymity said it was a general increase in demand for loans – rather than a bank cash shortage – that was pushing up loan interest rates.

“At the moment, loan interest rates are no longer tied up with deposit interest rates,” he said.

“Rather, they depend on lending supply and demand.”

Flooded with an overwhelming demand for loans, the banker said many commercial banks have stopped lending for real estate investment and consumption purposes to devote loans to businesses that need funds for production.

Meanwhile, businesses across all sectors are suffering from serious capital shortages due to rising production costs.

According to the Viet Nam Association of Financial Investors (VAFI), raw material prices have jumped 20-40% so far this year, forcing businesses to increase their cash reserves.

Bank loans are now so difficult to get that many businesses have resorted to borrowing from their own employees and other sources at bank rates.

VAFI said the central bank’s capping of commercial banks’ credit growth at 30% this year has made it hard for banks to lend to new customers as well as old ones.

Viet Nam Raises Its Benchmark Interest Rate to 12%

Saturday, May 17, 2008
Viet Nam will raise its benchmark interest rate, lifting the maximum return that commercial banks can offer depositors to 18% a year, the Southeast Asian nation's central bank said.
The State Bank of Viet Nam will increase the base rate to 12% from 8.75% on May 19, according to a statement released in Hanoi today. Under central bank regulations, banks cannot offer savers rates exceeding 150% of the base rate.
Viet Nam has sought to tame accelerating inflation by tightening credit and cutting the supply of money. Consumer prices that surged 21.4% in April, the most since at least 1992, and rate restrictions have hurt banks' ability to attract deposits.
``Today's move should help to ensure that banks have the mechanism available to them to mobilize more deposits,'' said Dominic Scriven, a director at Dragon Capital, a Ho Chi Minh City-based fund manager. ``That will help financial stability.''
The 12% cap on deposit rates before the rate rise has meant that real interest rates have been negative because of inflation, Scriven said. So-called real interest rates are returns paid on savings in excess of the inflation rate.
The State Bank of Viet Nam also said its discount rate will nearly double to 11% from 6%, while the refinance rate will be raised to 13% from 6%, according to the statement. The rates will also take effect on May 19, it said.
`Weren't Suitable'
``The rates haven't been changed since February and were not suitable with the market situation,'' Nguyen Van Giau, the central bank governor, said in a news conference today in Hanoi.
The central bank said on April 25 it didn't plan to increase its benchmark interest rate because month-on-month inflation showed recent policy measures were effective.
Viet Nam's bank lending rose 14.7% in the first four months, reaching almost half the 30% limit set by the central bank to reduce credit growth.
``Margins are decreasing with banks borrowing short at high interest rates and lending long, mostly at past lower rates,'' Vinacapital Investment Management Ltd., the Ho Chi Minh City- based manager of three U.K.-listed funds, said in a note this month posted on its Web site.
The amount commercial banks must set aside as reserves was raised in February to 11% for deposits of 12 months or less, from 10%. For dong and foreign currencies deposited for one year or more, the figure rose to 5% from 4%.
`Rising Risks'
Standard & Poor's Ratings Service this month cut its outlook on Viet Nam's credit rating to negative from stable, citing ``rising risks to macroeconomic stability from an overheating economy.''
``Given the unproven risk-management capability of domestic banks, an unexpectedly severe slowdown in economic growth could see sharply higher loan losses at many of these institutions,'' Standard & Poor's said in a May 2 report.
Viet Nam's Deputy Prime Minister Nguyen Sinh Hung said last month the government would reduce the 2008 economic growth target to 7% from a previous forecast of as much as 9%.
Gross domestic product growth slowed to 7.4% year- on-year in the first quarter. The economy expanded 8.5% in 2007, the fastest rate since 1996. (Bloomberg)

Eximbank approved to sell 25% stake to foreign investors

Saturday, May 17, 2008
The governor of the State Bank of Viet Nam has approved the Export-Import Commercial Joint Stock Bank (Eximbank) proposal to sell 25% stake to four foreign investors, the State Bank of Viet Nam (SBV) announced on its website.
Accordingly, Sumitomo Mitsui Banking Corporation (SMBC), Eximbank’s strategic investor, will buy 15% stake of Eximbank. Three other investors, VOF Investment Ltd. of Virgin Islands, Mirae Asset Exim Investment Ltd., a member of the Mirae Asset Group of the Republic of Korea and Mirae Asset Maps Opportunity Viet Nam Equity Balanced Fund 1 (OVEBF) will own 5%, 4.5% and 0.5% stake of the bank respectively.
Eximbank and SMBC signed an agreement on November 27 2007 in Tokyo in which Sumitomo Mitsui will purchase 15% of Eximbank shares worth US $225 million to become the strategic partner of Eximbank.
SMBC has pledged to support and co-operate with Eximbank in retail banking services, corporate banking services for Japanese firms operating in Viet Nam, T/F services, experience sharing in corporate governance, including risk management in conformity with international standards, etc.

From June 2, all Governments bonds be listed on HASTC

Saturday, May 17, 2008
From June 2, all government bonds listed on the Ho Chi Minh City Stock Exchange (HOSE) will be shifted to list on the Hanoi Securities Trading Centre (HaSTC).
This is under a decision dated May 16 by the State Securities Commission on shifting the listing of government bonds from Ho Chi Minh City Stock Exchange to Hanoi Securities Trading Centre.
According to the decision, the last trading day for government bonds listed on the southern bourse is May 28.
The move is to implement the project to build a special trading market for government bonds at the northern bourse approved by the Ministry of Finance in January 2008.

Stocks remain in free fall, but volumes up

Saturday, May 17, 2008
Ho Chi Minh City stocks closed the week Friday with yet another dismal day of trading after see-sawing for a while between positive and negative territories.
Panic selling at the opening caused the VN-Index of 154 listed companies to extend the weeklong fall.
But the trading volume rose in the first session to nearly 2.8 million shares, or equal to full-day volumes in recent days, as traders seemed to believe the market had bottomed out.
The high volumes helped the index regain ground somewhat in the next session, but heavy selling in the third and final session saw the VN-Index finally close at 460.04 points, or 6.63 points down.
The total trading volume topped eight million as 130 stocks lost.
Analyst Huy Nam told Thanh Nien that the recent narrowing of the daily trading band from 5% to 2% by the State Securities Commission (SSC) was the key factor behind the market’s fall.
“The cut prompted a huge investor withdrawal and drained the market of liquidity,” he said, suggesting the band should be widened again.
The band was narrowed to 1% on March 27 to halt a relentless slump in share prices.
The market regulator then increased it to 2% on the Ho Chi Minh Stock Exchange and 3% on the Hanoi Securities Trading Center on April 7.
A HCMC-based analyst, who wanted to remain unnamed, however, disagreed with Nam, saying the market had nosedived along with investor confidence.
He suggested that the regulator should calm investors’ panic by delaying imposition of capital gains tax or reducing brokers’ commission.
Foreigners still buying
As prices continued to fall, foreign investors continued to buy, pumping in VND26 billion ($1.6 million).
PetroVietnam Fertilizer and Chemicals, PetroVietnam Drilling and Well Services, Hoa Phat Group, dairy firm Vinamilk and Tan Tao Industrial Zone were among their favorite stocks.
The Hanoi market too continued to lose, with the HASTC-Index dropping 2.35 points, or 1.65%, to close at 139.74.
Of the 135 stocks listed on the market, 109 fell and just 14 rose.
Liquidity was partially restored as more than 4.4 million shares, four times the average volume in recent days, were traded.

HSBC stoic as stock market plunges

Saturday, May 17, 2008
Hong Kong Shanghai Banking Corp (HSBC) most recently announced the periodic report on the salutation and prospect of Vietnam's economy in general and forecast on Viet Nam's finance and stock market in particular, in which the foreign bank still kept optimistic on Viet Nam.
Reviewing regular reports of HSBC about Vietnamese stock market, it is easy to see that the bank's experts always consider Viet Nam to be an attractive market in long-term and proposed an increase in purchase.
In the arguable report on April 7 concerning the investment strategy in Asian market for the second quarter of 2008, HSBC assessed that Viet Nam, along with Japan, Philippines and Australia are better-avoided markets due to macroeconomic instability. The report also caused shocks as forecasting that VN Index could be down to 600 pts by the end of the year instead of the previously predicted 1,100 pts.
However, it is not for this HSBC will change its point of view on Vietnamese market because just in that report, Vietnam was still regarded as the highly potential market in long-term thanks to a reduction in share prices. In addition, HSBC proposed to increase the capital allocation ratio into Viet Nam from 0.5% to 1%.
In the latest report released on May 8, the foreign bank continues keeping optimistic about the future of Vietnamese market in long-term. Besides, it is notable that HSBC believed Viet Nam's VN Index plunged to the bottom already.
At least Vietnamese stock market stopped declining after the government offered market support measures in March, and VN Index seemed to drop to the bottom of 500 pts, cited the May 8 report. But, right after the assessment, the stock market still saw the new bottom level showing that VN Index yesterday May 14 remained at 475.5 pts.
Regarding the stock market situation last month, HSBC's statistics showed that the VN Index within April surged by 1%, much lower than the 8% growth of MSCI of Asia Pacific market excluding Japan and 14% increase of Chinese market's H shares.
About transparency, Viet Nam market's average trading value remained small at only US$21 million each day, not equalling to one third of the figure by the end of 2007.
As usual, foreign investors are active buyers as for Vietnamese shares with the net purchase of US$122 million in April against US$59 million in March.
Given predication on market prospect, like previously publicised reports, HSBC continued saying that many potential risks still exist in Vietnamese stock market in short-term once instabilities in macro-economic policies have not been solved yet.
The current inflation rising by over 21% against the same period of last year along with the increasing trade deficit, government's economic growth target will be factors making domestic investors to be on knife-edge.
In this time, HSBC's experts also concerned a new investment channel in Viet Nam as from the stock market slumped and the real estate market became less brick. That is gold investment.
According to the foreign bank, the key factor affecting to the market in some recent months is whether listed firms' profit have to suffer affects from the current economic situation.
It is supposed that EPS of 2008 and in the following year only could grow 20% while price to earning (P/E) ratio of STC listed firms over next 12 months will be 11.8 times, representing a cheap share price in the market in long-term. These figures were announced in the April 7 report.
Written in the latest report, Dragon Capital forecasted EPS growth could be 3% only this year and 7% in 2009. If the growth rate declines, above assessments on Vietnamese stock market will not be exact any more.
At present, most of 15 largest capitalisation companies excepting securities brokerages all reported a high profit growth during the first quarter of this year, led by HPG with the EPS growth of 451%, followed by energy sector shares especially DPM with EPS growth of 77% and VSH 72%. The biggest loser was SSI with the EPS of—75%, according to HSBC's May 8 report.
Once again HSBC advised foreign investors to gather Vietnamese shares for long-term reserve. Notably, listed firms namely Vinpearl and Vinamilk with good quality are that focus on their key sectors and do not expand to other fields such as banking or gold business, which are emerging to become attractive shares.
Especially, in the latest report, HSBC did not give any forecast on VN Index. Perhaps, the bank's experts still maintained the 600 pts forecast level. (TBKTVN)

SAFI transport firm targets 24b dong profit

Saturday, May 17, 2008
Sea and Air Freight International Co, or SAFI recently announced this year's business plan with 103 billion dong in revenue, 24 billion dong from after tax profit and dividend of 12%.
This year, the company continues carrying out project of expanding its warehouse in HCM City's Dist 7, the project to build storehouse and branch office in Da Nang and the office building project in HCM City's Dist 1.
In addition, this year the company also invest capital to set up joint ventures with some foreign partners and set up Dung Quat Port Development Joint Stock Co and establish a warehouse area building company in Hanoi's environs with the total investment capital of 47.7 billion dong.