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Jun 30 2012

Vietnam’s property giant Vingroup raises $300 mln via dollar bonds

vietnam%e2%80%99s property giant vingroup raises 300 mln via dollar bonds

Vingroup JSC, Vietnam’s largest listed real estate company in terms of market value, said it has issued US$300 million worth of convertible bonds, the second largest bond sale by an Asian company so far this year.

Vingroup already raised $185 million via bonds three months ago. Another $115 million worth of five-year dollar bonds, issued at an annual coupon of 5 percent, were sold to international investors on Wednesday night, the company said. The bonds are listed on the Singaporean stock exchange.

CEO Le Thi Thu Thuy said the sale has been successful, allowing the company to secure a large amount of capital at a cheap rate. It also reflected the confidence of international investors in a Vietnamese company, she said.

Thuy said the Hanoi-based company has a large asset base and has the potential to generate high earnings.

Vingroup’s bond sale was the second highest in value this year in Asia. Malaysia’s state investment arm Khazanah Nasional issued a seven-year sukuk, or Islamic bond, worth $357.8 million, last March. 

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Jun 30 2012

Vietnam bonds rise as falling money-market rate spurs demand

vietnam bonds rise as falling money market rate spurs demand

Vietnam’s benchmark five-year bonds on Friday rose for a third day, pushing the yield to the lowest in more than a week, on speculation falling money-market rates increased demand from lenders. The dong strengthened.

The overnight interbank deposit rate fell 97 basis points to 4.41 percent on Friday, its lowest level in two weeks, according to data from banks compiled by Bloomberg. The measure has declined 199 basis points since June 26. A drop in the rates at which banks lend to each other makes returns from government debt relatively more attractive.

“That’s a buying signal,” said Tran Kieu Hung, a Hanoi- based bond trader at Bank for Investment Development of Vietnam. “Demand for bonds has increased.”

The yield on five-year bonds fell four basis points, or 0.04 percentage point, to 9.73 percent, according to a daily fixing rate from banks compiled by Bloomberg. The yield dropped eight basis points this week, the first seven-day decline since the period ending June 8. The rate has decreased 1.75 percentage points this quarter.

Interbank rates slid this week following a drop in the central bank’s repurchase rate from 10 percent on June 25 to 8 percent on Friday. The State Bank of Vietnam lowered its refinance rate on Friday to 10 percent from 11 percent and its discount rate to 8 percent from 9 percent, it said in a statement on its website. The cuts, effective July 1, were announced after the bond fixing rate was published.

The dong strengthened 0.1 percent to 20,878 per dollar as of 5:25 p.m. Friday in Hanoi, according to data compiled by Bloomberg, from Thursday. The currency has gained 1.2 percent this week, paring its quarterly decline to 0.3 percent.

The State Bank of Vietnam set its reference rate at 20,828, unchanged since Dec. 26, according to its website. The currency is allowed to trade up to 1 percent on either side of the rate.

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Jun 30 2012

Vietnam banks may increase dollar purchases: experts

vietnam banks may increase dollar purchases experts

Banks with ample funds may start hoarding US dollars again as lending money on the interbank market at cheap interest rates has become less profitable, financial experts said.

There is concern that dong interest rates on the interbank market are too low, which will drive banks toward dollar assets, a general director of a Ho Chi Minh City-based bank said. Such a trend could lead to a dollar shortage, he warned.

Industry insiders also said around VND64 trillion worth of central bank bonds will mature over the next few months. That means a large amount of money will flow back to commercial banks.

“If interbank rates stay low at 3 or 4 percent as seen recently, people may reconsider converting their dong assets into dollars,” said a financial expert who asked not to be named.

The State Bank of Vietnam said early this month that it had injected about VND180 trillion into the economy, buying US$9 million worth of dollars since the beginning of the year.

Analysts said the move helped improved the liquidity of the banking system, but at the same time could result in greenback scarcity later.

Pham Hong Hai, deputy general director of HSBC, said the exchange rate will hover around VND20,850 per dollar through September, before rising in the final months of the year when dollar demand for imports increases.

Hai noted that the exchange rate could also rise if global economic conditions worsen, causing foreign investors in Vietnam to withdraw their money.

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Jun 30 2012

More firms shut down in Vietnam as economic downturn deepens

more firms shut down in vietnam as economic downturn deepens

More than 26,300 companies shut down or halted operations in the first six months, up 5.4 percent from the same period last year, the General Statistics Office said Friday.

Of the closures, 4,100 companies have shut down permanently, an increase of 35.4 percent year-on-year, the office said in a report.

Those figures compare to 36,195 new companies that were established in the period, down 12.5 percent from the first half of last year.

Fewer new businesses and more closures are results of difficulties that local companies are facing and not able to overcome, according to the report.

Vietnam’s economic growth slowed to 4.38 percent in the first half of 2012 from 5.63 percent growth achieved over the same period last year, the General Statistics Office said.

Even though growth picked up in the second quarter, to 4.66 percent from a disappointing 4.0 percent, it still falls short of the government target of 6-6.5 petcent for this year.

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Jun 30 2012

Vietnam lowers key rates as growth holds below 5 pct this quarter

vietnam lowers key rates as growth holds below 5 pct this quarter

 
An evening view of downtown Ho Chi Minh City. Vietnam’s economy has struggled with stagnant bank lending and high inflation that crimped corporate growth and domestic demand.

Vietnam cut interest rates for a fifth time this year to spur growth after a report on Friday showed economic expansion stayed below 5 percent this quarter.

The State Bank of Vietnam lowered the refinance rate to 10 percent from 11 percent and the discount rate to 8 percent from 9 percent, it said in a statement on its website Friday, with the cuts effective July 1. Gross domestic product rose 4.66 percent in the three months ending June from a year earlier, after climbing 4 percent in the first quarter, the General Statistics Office said.

Vietnam has struggled with stagnant bank lending and high inflation that crimped corporate growth and domestic demand, with Europe’s debt crisis and China’s economic slowdown also posing risks. The government reduced its target for GDP growth of as much as 6.5 percent in 2012 to 6 percent, and Do Thuc, general director of the statistics office, said Friday full- year expansion may be 5.4 percent to 5.7 percent.

“While we expected another interest-rate cut this year, this cut comes a little earlier than we expected,” said Louis Taylor, chief executive officer for Standard Chartered Plc in Vietnam, Laos and Cambodia. In the context of the GDP number, “the cut is less surprising. With inflation having fallen further, there is still an argument that real interest rates are higher today than they were three months ago,” he said.

The benchmark VN Index rose 1 percent on Friday, the most in two weeks, while the Vietnamese dong strengthened 0.1 percent to 20,878 per dollar, according to prices from banks compiled by Bloomberg.

State spending

The Southeast Asian nation has entered a period of sluggish growth, the World Bank said in a report this month that cited the slow pace of structural reforms and inefficiencies in state- owned companies, banks and public investments.

The government will accelerate state spending and boost bank lending to bolster the economy, Deputy Prime Minister Nguyen Xuan Phuc told the National Assembly on June 15. It also plans to cut some corporate taxes, defer sales tax payments and lower lending rates for some companies, he said.

Consumer prices rose 6.9 percent this month, compared with a rate of 23.02 percent in August 2011.

“We are encouraged the government is showing itself willing again to provide whatever solutions are necessary to get the economy moving,” Kevin Snowball, the Ho Chi Minh City-based chief executive of PXP Vietnam Asset Management, wrote in a note this month, citing the creation of a fund to get non-performing loans off the balance sheets of banks and revive lending.

Vietnamese banks’ outstanding loans fell 0.59 percent from the end of 2011 through April, the central bank said on June 21.

Boost lending

The rate cut on Friday “means the central bank really wants lenders to boost lending to help businesses and bolster the economy,” said Phan Thi Chinh, deputy chief executive officer at the Bank for Investment and Development of Vietnam.

The economy expanded 4.38 percent in the first half of the year, down from 5.63 percent a year earlier. Vietnam was hit by many difficulties in 2010 and 2011, and conditions “became even more difficult in the first half of this year,” Thuc said in a briefing in Hanoi on Friday.

Industry and construction, which accounted for 40 percent of gross domestic product in the first half of the year, grew 3.81 percent in that period. The sub-category comprising only construction slipped 0.8 percent, the Statistics Office said.

Agriculture, forestry and fisheries, which made up 22 percent of gross domestic product, expanded 2.81 percent in the first half. Services, which made up 38 percent of the economy, grew 5.57 percent in the first half. The number of foreign visitors rose 14 percent in that period.

Emirates, the world’s biggest airline by international passenger traffic, began daily flights this month between Dubai and Ho Chi Minh City, and said it will raise capacity on the route in October.

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Jun 30 2012

Vietnam to raise power prices from July 1 after inflation slows

vietnam to raise power prices from july 1 after inflation slows

Vietnam will raise electricity prices by 5 percent from July 1 after inflation slowed and as the country seeks to meet growing power demand.

Power tariffs will rise to an average VND1,369 (7 cents) a kilowatt-hour from VND1,304 currently, Hoang Quoc Vuong, deputy minister of industry and trade, said Friday in a telephone interview. The increase follows a 5 percent gain in December.

Vietnam Electricity, the state-owned utility known as EVN, is allowed to raise power prices every three months based on factors including changes in fuel costs or exchange rates, according to regulations which became effective in June last year. Higher prices could help improve finances at the company, which lost VND23.5 trillion in 2010 from electricity generation and exchange-rate movements, according to finance minister Vuong Dinh Hue, and which often sells power at below the cost of supply.

“If the tariff doesn’t go up it’s difficult for EVN to catch up with losses,” Anthony J. Jude, the director of the energy division at the Asian Development Bank’s Southeast Asia department said before the announcement. “It’s important for them to have the cashflow to invest in new generation.”

Vietnam estimates it will spend VND929.7 trillion to boost its electricity generation capacity by 2020 to meet domestic demand, Pham Manh Thang, head of the energy division at the Ministry of Industry and Trade, told reporters at a briefing in Hanoi in August.

First nuclear

The country will seek to raise capacity to 75,000 megawatts by 2020, according to the seventh electricity master plan, approved by the prime minister last year. The country intends to import and produce between 194 billion and 210 billion kilowatt- hours of electricity in 2015, according to the plan. Production and imports will rise to between 330 billion and 362 billion kilowatt-hours in 2020, the same year the country is targeting the inauguration of its first nuclear power plant.

Increasing generation capacity may be necessary to help Vietnam retain its position as an attractive destination for foreign investment. Electricity shortages are among weaknesses Vietnam faces in attracting foreign investment, Minister of Planning and Investment Bui Quang Vinh said March 15.

“Vietnam’s competitiveness is under threat because power generation has not kept pace with demand,” the World Bank said in its 2012 Vietnam Development Report. Pledged foreign direct investment in Vietnam was $6.38 billion in the first half of 2012, down 28 percent from the same period a year earlier, the Foreign Investment Agency of the Ministry of Planning and Investment said June 26.

Inflation impact

The electricity tariff adjustment may help check a deceleration in inflation and create higher costs for businesses amid a slowdown in economic growth. Consumer prices rose 6.9 percent from a year earlier in June, the slowest since December 2009. Vietnam’s economy expanded 4.66 percent in the second quarter from a year earlier, after climbing 4 percent in the first three months of 2012, according to General Statistics Office data.

“Of course it will add to inflationary pressures, and companies and households will complain, but they have to do it,” said Nguyen Xuan Thanh, an economist with the Vietnam Program at the Harvard Kennedy School, said by telephone from Ho Chi Minh City before the announcement. “The longer the wait, the more difficult it will be for the government to raise prices in the future.”

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Jun 29 2012

Vietnam posts second quarterly GDP growth of less than 5pct

vietnam posts second quarterly gdp growth of less than 5pct

Vietnam’s economy expanded at less than a 5 percent pace for the second straight quarter, signaling growth may fall short of the government’s target this year.

Gross domestic product rose 4.66 percent in the three months ending June from a year earlier, after climbing 4 percent in the first quarter, the General Statistics Office in Hanoi said on Friday.

Vietnam’s economy has struggled with stagnant bank lending and high inflation that crimped corporate growth and domestic demand. With Europe’s debt crisis and China’s economic slowdown also posing risks, the government reduced its target for gross domestic product of up to 6.5 percent this year to 6 percent, and Deputy Minister of Planning and Investment Cao Viet Sinh said this month full-year expansion may be as low as 5.2 percent.

“If you look at Vietnam’s GDP numbers on a quarterly basis growth always accelerates throughout the year, but it’s not clear yet whether this second-quarter rebound is any stronger than what we’ve seen in previous years,” said Tai Hui, the Singapore-based head of Southeast Asia economics at Standard Chartered Plc.

“The rate cuts we’ve seen recently will start to move through the economy in the second half, but there are a number of moving parts to watch for,” said Hui. “Banks have been very careful, so whether the rate cuts will cause them to lend more will be crucial.”

The benchmark VN Index rose 0.3 percent as of 10:26 a.m. local time, while the Vietnamese dong was little changed.

Reviving growth

The State Bank of Vietnam has cut its key interest rates for four straight months as it focused on reviving growth amid slowing inflation. Consumer prices rose 6.9 percent this month, compared with a rate of 23.02 percent in August 2011.

The Southeast Asian nation has entered a period of sluggish growth, the World Bank said in a report this month that cited the slow pace of structural reforms and inefficiencies in state- owned companies, banks and public investments.

“The worst is behind us, but there’s still a lot of work to do to regain people’s confidence,” said Brett Ashton, the Ho Chi Minh City-based managing director for the Vietnam unit of London-based property company Savills Plc. “When you have 23 percent inflation, people get worried and stop spending, and retail sales and the property market suffer.”

The government will accelerate state spending and boost bank lending to bolster the economy, Deputy Prime Minister Nguyen Xuan Phuc told the National Assembly on June 15. It also plans to cut some corporate taxes, defer sales tax payments and lower lending rates for some companies, he said.

Providing solutions

“We are encouraged that the government is showing itself willing again to provide whatever solutions are necessary to get the economy moving,” Kevin Snowball, the Ho Chi Minh City-based chief executive of PXP Vietnam Asset Management, wrote in a note this month, citing the creation of a fund to get non-performing loans off the balance sheets of banks and revive lending.

Vietnamese banks’ outstanding loans fell 0.59 percent from the end of 2011 through April, the central bank said on June 21.

The economy expanded 4.38 percent in the first half of the year, down from 5.63 percent a year earlier, according to today’s report. Vietnam was hit by many difficulties in 2010 and 2011, and conditions “became even more difficult in the first half of this year,” Do Thuc, GSO general director, said in a briefing in Hanoi today.

Industry and construction, which accounted for 40 percent of gross domestic product in the first half of the year, grew 3.81 percent in that period. The sub-category comprising only construction slipped 0.8 percent, the Statistics Office said.

Agriculture, forestry and fisheries, which made up 22 percent of gross domestic product, expanded 2.81 percent in the first half. Services, which made up 38 percent of the economy, grew 5.57 percent in the first half. The number of foreign visitors rose 14 percent in that period.

Emirates, the world’s biggest airline by international passenger traffic, began daily flights this month between Dubai and Ho Chi Minh City, and said it will raise capacity on the route in October.

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Jun 29 2012

Vietnam to cut refinance, discount rates

vietnam to cut refinance discount rates

The State Bank of Vietnam said on Friday it will cut the refinance rate to 10 percent from 11 percent from July 1.

It will also bring the discount rate to 8 percent from 9 percent, the central bank said in a statement.

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Jun 28 2012

Exchange rate likely to increase in 4th quarter: HSBC official

exchange rate likely to increase in 4th quarter hsbc official

The dong-dollar exchange rate will probably rise in the fourth quarter when there is an increase in demand for foreign currency for debt repayment and import of goods for the Tet holidays, says Pham Hong Hai, Managing Director of HSBC Bank Vietnam Ltd.

He was speaking on “The heat of exchange rate and interest rate” at a meeting of Ho Chi Minh City CEO Club at the Renaissance Riverside Hotel Saigon on Wednesday.

“There are fluctuations in the world’s economy, several economies are in trouble with little growth while Vietnam has its own problems, making it hard for the exchange rate to be stable,” he said

Hai said it is still hard to predict what will happen to the Eurozone. If Greece, Italy and Spain withdraw from the Eurozone as they have planned, it will affect the US dollar and indirectly influence the exchange rate in Vietnam.

However he also said “there would not be much change because the State Bank of Vietnam (SBV) has recently changed its way of management.”

According to Hai, SBV previously acted when there was a 3-5 percent difference between the market price and that of the bank. Now, the central bank was reacting faster to even smaller changes.

It will immediately try to find out the major causes and deal with the problems by intervening in commercial banks or providing the market with a source of foreign currency. The problems will be solved quickly, making the market more stable, Hai said.

In addition to predicting the increase in exchange rate later this year, Hai also said people would make a move from Vietnamese dong to US dollars because of lower interest rates on dong deposits.

Another guest speaker at the meeting, economist Tran Du Lich, said the Government has kept too tight a grip on cash flow, making it hard for bad debts to be paid, which also affected economic growth.

Lich, who is a former member of the National Assembly of the 9th, 12th and 13th terms and former Director of Ho Chi Minh City Economic Institute, said, “The bad debts are like huge blood clots both in the arteries and veins of the body of the Vietnamese economy.”

The policies which have been used have been like “too many antibiotics” for the “sick” economy. Better financial policies are needed to reduce such “blood clots”, Lich said.

When asked if a major restructuring program can be implemented to help the Vietnamese economy grow better, Lich said it was like a major operation and cannot be done at the moment because the health indices are not as good as they should be.

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Jun 28 2012

Vietnam real estate market now recovering: construction minister

vietnam real estate market now recovering construction minister

The real estate market has hit its bottom and is now picking up, though at a slow pace, says Construction Minister Trinh Dinh Dung.

“The market has been sluggish for a very long time, since the second quarter of 2011 in Hanoi and since 2009 in Ho Chi Minh City. But now there are positive signs with transactions rising,” Dung said in an interview published in Thursday’s Vietnam Economic Times.

He said the market had “frozen” due to many reasons, including a squeeze on bank loans and an oversupply of housing products.

“So it is vital to ease credit access for homebuyers. At the same time, developers should focus on market segments with real demand,” Dung said.

“The market will continue to face many difficulties this year, but in the medium and long term, it will get better, meeting the housing demand of the public and contributing to economic growth,” he said, noting that the property sector is a driving force behind the steel and construction industries.

The Ho Chi Minh City Real Estate Association this week called for urgent support from the government to revive the market, requesting tax relief and easing of home ownership regulations for foreigners. 

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