Vincom drops most in two months on $50 mln investment plan

VNStockNews.com - Shares for Vincom Joint Stock Co experienced their biggest drop in two months on the company’s plans to spend US$50 million increasing its stake in a major property firm.

Hanoi-based Vincom, Vietnam’s second-largest listed property developer, will buy 88.5 million shares, worth VND885 billion, to increase its holding in Hoang Gia Property Investment & Development Joint Stock Co. to 102 million shares, or 51 percent, Vincom said in a statement after the market closed on Tuesday.

“An investment of $50 million is large especially now given that the property sector still holds a lot of risks,” said Giang Trung Kien, head analyst at Hanoi-based FPT

Securities Joint Stock Co. “This spending will affect Vincom’s earnings this year.”

Vincom’s net income declined 74 percent in the first quarter to VND10 billion because of higher spending on new projects, the company said April 23. >>Full Story...

Vietnam to outperform much of Asia: ANZ report

VNStockNews.com - ANZ’s economic and market research team said in a latest report on Asia that Vietnam would outperform much of Asia, with gross domestic product (GDP) this year forecast to grow 4.5%.

The Asia research team posted the expectation about Vietnam in correlation with other Asian economies in its mid-year macro review named “Emerging Asia mid-year 2009: The Shape of Things to Come”.

“We forecast Vietnam growth to increase steadily in 2009 with a year average of 4.5%,” the report says. “The risks around this forecast strike us as broadly balanced. Continued strong FDI inflows will be key for financing the trade deficit and as a vehicle to transfer both technology and best practices.”

Vietnam’s growth reached a decade low of 3.1% year-on-year in the first quarter of this year on weaker industrial and construction activity, but bounced back in the second quarter, at 4.5%.

Vietnam’s GDP expanded 3.9% year-on-year in January-June, with agriculture, forestry, and aquiculture growing 1.25%, industry and construction 3.48%, and services 5.5%, according to the General Statistics Office.

“While 2009 will be a sub-par year, we expect Vietnam to outperform much of Asia. This reflects lower levels of trade and financial integration with the rest of the world as well as a China-like command structure, which is relatively well-suited to implementing a short-term stimulus plan,” the report says.

ANZ forecast Vietnam’s GDP growth of 6.3% in 2010 while Asia’s growth is expected at 3.9% this year and 6.5% next year. Asia growth excluding China and India will decline 1.8% in 2009 and then rise 3.7% in 2010, according to the report.

On the regional front, according to the report, events have played out largely as envisaged in the year of the bootstrap framework. The GDP growth split between the Newly Industrialized Economies (NIEs) and the ASEAN group (Indonesia, Vietnam, Thailand, Malaysia and the Philippines) persists, although the overall GDP decline in the region has been larger than expected.

China and India will continue to lead growth in the region, but the early success of China’s recovery has been a surprise. Most of the new momentum has been either out of the NIEs or led by fiscal stimulus plans; however, the level of activity remains well below the third quarter of last year, when the crisis hit Asia, says the report.

The research team said, “Green shoots are critical for an Asian recovery reflecting the region’s inability to decouple from the rest of the world. But these will take time and we are not losing any sleep waiting for them.

“In particular, Asia needs a pick-up in discretionary consumption in the U.S. and Europe, spending on the types of goods that the region produces and exports.”

The ASEAN group has fared somewhat better than the NIEs. Growth declined 2.5% year-on-year in the first quarter, although performance varied widely. Momentum is positive in Indonesia and Vietnam, while the pace of activity has slowed sharply in Thailand due largely to political reasons and Malaysia owing largely to a sizeable inventory drawdown. On average, the ASEAN group is less export-dependant and less financially integrated with the rest of the world than the NIEs, which has helped to support growth.

But as the crisis has worn on, consumption’s contribution to growth has steadily declined as confidence weakened, says the report.

“The worst may be over, but this strikes us as the wrong focus. A more relevant question is when and how the recovery will evolve and how long it will take the region to get back to potential growth. China’s stimulus plan will have only a limited effect on the rest of the region. Fiscal spending elsewhere can help alleviate the downturn, but cannot generate a broad-based recovery.”

For emerging Asia, the hope for a recovery therefore hinges on external demand, says the report. (SGT) >>Full Story...

Gov’t tackles outstanding economic issues

VNStockNews.com - The Government’s monthly meeting for June reviewed its performance in the first six months of the year and looked into how the local socio-economic situation would be like in months to come.

Minister and chairman of the Government Office Nguyen Xuan Phuc told reporters in Hanoi on Tuesday that the Government had over the past few months taken appropriate measures to cope with the downturn and the risk of inflation coming back.

The Government plans to hold an international seminar late next week to garner opinions on how to improve management and cushion the impact of the economic downturn.

Minister of Planning and Investment Cao Viet Sinh said the economic slump had bottomed out with gross domestic product (GDP) growth reaching 4.51% in the second quarter. GDP growth was earlier expected at 3.8%. The industrial production, construction, and agriculture sectors have shown signs of recovery.

However, Sinh said it would be too early to talk about the growth curve, ‘V’ or ‘L’, until the end of the third quarter of this year. He warned the Government and relevant ministries will have to resort to a host of solutions to keep the consumer price index, or CPI, at below 10% as regulated by the National Assembly.

CPI in June increased 2.68% against the previous month and the 2009’s CPI may exceed the target, he explained. He suggested monitoring the index to have timely solutions to prevent inflation. (SGT) >>Full Story...

An Binh Bank exceeds expectations

VNStockNews.com - An Binh Commercial Joint Stock Bank (ABBank) made VND172 billion ($31 million) in pre-tax profit in the first half of the year, representing 6% of the target set for the period.

At the end of June, the bank had a mobilised capital of VND11.7 trillion ($6.6 billion) and an outstanding loan of VND8.6 trillion ($4.8 billion). ABBank has 77 branches in 29 provinces and cities nationwide. >>Full Story...

Eximbank hits profit target

VNStockNews.com - Eximbank made VND813 billion (US$45 million) pre-tax profit for the first half of this year compared with the year’s target of VND1.5 trillion ($84.3 million).

The company has total assets of VND55 trillion ($3.1 billion) and outstanding loans of more than VND6 trillion ($337.1 million).

Eximbank now has 121 transaction bureaus nationwide, a figure expected to reach 140 by the end of 2009. >>Full Story...

Dip in trading volume shouldn’t cause alarm

VNStockNews.com - Recent downward adjustments for the domestic stock market were accompanied by significant trading volume slumps, and now investors are concerned with whether money flows will stay in the market. Nguyen Viet Duc, deputy director of Sai Gon-Ha Noi Fund Management Co’s research and analysis department, spoke withViet Nam News reporter Nguyen Ngoc Duy about capital flows on the market.

How do you assess the capital flows that circulated in the stock market during the last phase of the downward adjustment, when trading volumes fell sharply?

Trading volumes declined sharply over the last few weeks due to the following factors:

First, the State Securities Commission took drastic measures to require securities firms to stop implementing new repo contracts. The commission’s intervention was an important factor that helped cleanse the market and restrict hot money flows and financial levels, which could have created a bubble stock market.

(Repo – a repurchase agreement – is a sale of securities under an agreement to repurchase those securities at a specified date with a payment of interest.)

Second, volume declines could be because of temporary withdrawals by major investment organisations such as PetroVietnam Finance and Dragon Capital. The average size of selling orders has always been larger than those of buying orders for over a fortnight, since the market reached its peak in mid-June. Many companies and institutions unloaded their holdings due to the pressure of having to materialise profits after a 2008 of business losses. They also wanted to avoid a possible situation where the market could rapidly reverse its direction, like it did at the beginning of last September. Significant parts of money flows are awaiting investment opportunities in convertible bonds, or in shares from banks’ equity-increased issuances in 2009.

Third, we witnessed sales by many firms and major shareholders, as well as inside shareholders. Sacombank sold 18 million shares, and Song Da Urban-Industrial Zone Investment and Development registered to unload 2.5 million shares of Viet Nam-Italy Steel. Money from inside stakeholders, after being diverted from the market, will be pumped into production and business activities, and there’s little chance that the money will return to the market any time soon.

Finally, some capital flows were withdrawn from the market by individual investors, after they reaped significant profits from market growth of over 100 per cent during the last two quarters. A warmed up property market and an extraordinary increase in import turnover of such luxury goods as cars are proof of this possibility. However, wise investors won’t accept high property prices, as the real estate market has increased too fast over the past months. In fact, high-end dwellings in HCM City witnessed insignificant changes over the past weeks. So these money flows may soon come back to the stock market when it becomes more attractive.

In the short term, we haven’t seen any chance that the market can break records in trading volumes like it did in mid-June, as the market has lost a part of its "unreal capital" (from securities repo). But it may be excessive to worry that stock market capital inflows will become exhausted. The average trading volume over the past few weeks was still higher than that of April by 30 per cent, and the VN-Index by about 35 per cent, while the average trading value was higher than that of May and double that of April.

How has credit growth, especially in securities lending, affected the market over the last few months? Is there any credit risk for the market now?

There was a similar-direction relationship between the growth of stock indices and the growth of credits and money supplies. In the first half of this year, money supplies grew 16.36%, while it increased only 4.25 per cent over the same period last year. During May and early June, when securities trading volumes continuously hit record highs, outstanding loans and money supplies also experienced their strongest growth since the beginning of the year.

Currently, many people have expressed worries that money from credits has flown into the stock market. But the State Bank of Viet Nam recently announced that the growth rates of stock collateral and consumer lending were all lower than rates in other credits. Close supervision by the State Bank will also help restrict hot money flows into the stock market, which can cause a bubble market and negatively affect economic recovery. The State Bank is also considering narrowing beneficiaries of the interest subsidy programme as well as implementing anti-shock measures for enterprises when the programme ends.

By July 4, as much as 75% of the total value of the (Government) demand stimulus package was disbursed. As there are concerns about hot credit growth, growth in money supplies and outstanding loans is expected to be slowed down in the third quarter before increasing more strongly in the fourth to meet the credit growth target of 30% projected for this year.

What are the prospects for the VN-Index by the end of the year?

The world economy is seeing signs of stabilisation. It will take a long time for it to recover, but the bottom of the economic crisis happened in the first quarter. Domestically, the effectiveness of demand stimulus and interest subsidy programmes will prove clearer during the rest of the year, with exports expected to increase thanks to rallies in the world economy. As an economic cycle, the third and fourth quarters are often periods where the economy grows the most. Economic growth will create conditions for satisfactory company turnover and profit growth. With analysis on economic cycles during recent years, the GDP in the second half of the year is expected to increase about 20% over the first half. On this basis, I think stock indices can expand 20% during the rest of the year.

At present, what factors most affect market trends?

In the short term, second-quarter corporate results will play an important role in helping prop up the market, especially results for banking, finance and property sectors, which represent major market ratios and determine trends of the VN-Index. News about banks’ performances has been announced and met investors expectations. And now investors are paying a lot of attention to real estate companies, with the property market recently warming up. (VNS) >>Full Story...