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VAM: Vietnam Market Analysis – December 2012

Improved economic conditions somewhat buoyed the stock market in the last month of the year as all three indices moved up
The VN-index closed at 413.7, gaining 11.23% while VN30 closed at 485.4, picking up 9.42%. HNX was the best performer of three indices, increasing 11.83% to close the month at 57.09.
 
Macro indicators showed joyful December
Market confidence was regained thanks to better-than-expected CPI, trade balance, interest rates cut and detail implementation of the Government on spurring the economy. For the first time in four months CPI slowed in December, with consumer prices rising 6.81% from a year earlier after climbing 7.08% Y-o-Y in November. Consequently, the State Bank cut benchmark interest rates for a sixth time to help companies cope with difficulties in production and business. The trade balance posted a first year of surplus (of US$284mn) since 1993. Despite a gloomy year, FDI disbursement reached USD10.5bn, dropping a marginal 5% YoY. As a result, foreign reserves are significantly improved, reaching US$24 billion, equivalent to 12 weeks of import. The Dong remains unchanged.
 
However, stability was achieved at the cost of growth
Vietnam’s economy expanded at the slowest pace in 13 years in 2012 as a slump in bank lending dampened domestic demand. GDP grew 5.03%, down from 5.89% in 2011, and the lowest since 1999. Bad debt and the gloomy business environment hampered credit growth, which ended 2012 at 6.45% YoY while total liquidity growth and deposit growth were 19.85% and 20.29% YoY, respectively.As the lenders’ liquidity position becomes comfortable and full-year inflation was a lower-than-expected 6.81%, the central bank decided to cut all policy rates and deposit cap rate by 1%, effective on December 24, in an attempt to make banks lend more. But as the real interest rate is still positive, some are speculating on another rate cut, even as the World Bank warned against easing too soon.
On the other front, the HSBC’s Vietnam PMI index fell back to deterioration in December, down to 49.3 from 50.5 last month, as a result of reduction in order inflows, disinvestment of inventory holdings and stagnating production volumes.
 
Government details its determination to spur the economy
To spur the economy and resolve the financial system, the Government started implementing a detailed action plan. Businesses may enjoy lower corporate income tax rate in 2013, i.e. 23% for large enterprises and 20% for SMEs (down from 25% earlier); real estate will receive more support based on a newly approved proposal by MoF, which includes a 50% VAT reduction, 2-year extension on the deadline of land use fees payment and the establishment of AMC aiming to solve rising NPLs. Moreover, USD300mn from Asian Development Bank in a 25-year loan package will help to restructure SOEs in 2013.
 
Authority changes rules to push the capital market
On the capital market, SSC submitted its proposal in support of the stock market to the Ministry, in which key measures might include tax incentives, allowing to issue stocks below par, increasing margin ratio and trading band and most importantly, increasing foreign ownership limit. Otherwise, SBV governor also announced that they are working on revising the Decree 69/2007, wherein special cases, i.e for restructuring commercial banks, the foreign ownership ratio might be allowed to exceed 30%. Since 10th January, the number of gold bar shops will decline from 8,000 to 2,400 including around 900 in Ho Chi Minh City and 400 in Hanoi, after SBV completes the licensing procedures. 
 
Our ViewOn the background of good macro economic indicators coming out in December and improved investor sentiments after seeing the Government’s determination to spur the economy being detailed into action plans, the stock market had a good run in the last month of 2012. We are cautiously optimistic and have started to mobilize cash into Vietnam Dong to be ready for deployment toward increasing equity level for the Fund. We are keen to buy stocks of strong companies with sound cash flow and healthy balance sheets in fundamental industries such as consumers and materials.

Filed under: Banking, Exchanges, News, Risk Management, Services, Vietnam, Wealth Management, , , , , , , , , , , ,

VAM: Vietnam Market Analysis – November 2012

Whilst SBV is still struggling to tackle bad debt, additional banking scandal has fanned market concerns about banking system instability
Coming as another shock that made the market drop 3.27% in one day was the resignation of Mr. Dang Van Thanh as Chairman of Sacombank following his wife’s resignation from Sugar Bourbon Tay Ninh. Though there are many rumors spread around this news, the market is looking at it as uncertainty still exists in the banking system. Fortunately, depositors’ reaction seemed to be calmer this time as there was no sign of “bank run” after the resignation. In the meantime, decision on the SBV’s initiative in setting up company to own and manage bad debt for banks has not been reached.
 
Stability continues to be the priority for next year
The government ended the National Assembly meeting with a good showing of strong determination to restructure the banking system at the lowest cost possible, and preventing any systemic collapse. Since the peak in August last year, inflation has been successfully controlled, at the cost of slowest GDP growth in 13 years. The national CPI growth rate posted a modest increase of 0.47% M-o-M in November, a deceleration from 0.85% in the last month and 2.2% in September when one-off adjustments were made to pharmaceutical and health care items. The government forecasts that 2012 CPI would be around 7.5% Y-o-Y and a decade low target of 6% is set for next year as well.
 
Lower inflation adding pressure on rate cuts
Lower expected FY2012 inflation of 7.5% and healthy liquidity condition of lenders are adding more pressure on rate cuts. By Nov 20, total deposit also increased 15.98% YTD while credit growth including trust investment and corporate bond investment was only 4.15% YTD. Banks now turn to bonds to put excess cash to work, which consequently causes the yield to drop. Under this circumstance, the Government has made known their contemplation of cutting deposit rate or putting a ceiling for lending, with a view to creating better environment to spur economy in 2013. The Government expects the economy will expand at 5.5% next year.
 
Dong confidence is strengthened
Despite the gloomy condition, FDI sector is doing well. Foreign companies’ export turnover rose 30% in eleven months through November, accounting for about two-thirds of total exports. The YTD FDI disbursement has reached USD9.9bn up to November 2012. This amount was down just slightly from USD10.05bn in 11M2011. The negligible decline showed that the foreign capital flow into Vietnam was still stable, helping the balance of payment to remain in surplus this year. The YTD trade balance is also a surplus despite a small deficit in November. And it is likely that Vietnam will record the first year of trade surplus since 1995. The deficit if any, will be lower than USD1bn. The export gains have reinforced Vietnam’s foreign-exchange reserves, expected to reach the equivalent of about 12 weeks of imports by the end of the year, which in turn would support the value of Dong.
 
PMI data signals recovery
The seasonally adjusted HSBC Vietnam Manufacturing PMI posted an increment to 50.5 from 48.7, which is above the neutral 50.0 value for the first time since September 2011. Although the index showed only a marginal improvement, it reflected returns to growth in both production levels and new orders during November. The increase in November’s PMI underscores optimism the economy is recovering after 14 month slowdown, which is in line with the situation in China and U.S. 
 
All three indices moved lower over November with low liquidity
The Vn-Index closed at 377.82, losing 2.64%. The HN exchange tumbled 3.36% to 51.05, whilst the VN30 dropped 3.19% to 443.68.
 
Our ViewWe are hopeful that the worst may be over. The market is waiting for clearer signs of economic turnaround while the Government is showing its determination in solving its problems. The trade-off between stable economy and growth requires consistency in policy setting. The stability of Dong and low inflation target level next year make Vietnam’s business environment more attractive. Fortunately, on the bottom-out journey, Vietnam would be helped by the data signaling a recovery in U.S. and China.

Filed under: News, Risk Management, Vietnam, , , , , , , , ,

Nyse Technologies expands SFTI network in Asia

Nyse Technologies, the commercial technology division of Nyse Euronext, today announced the continuing expansion of its Secure Financial Transaction Infrastructure (SFTI) in Asia with the introduction of two access centres located in Hong Kong.

Customers now, for the first time, have direct access to the SFTI network, allowing them to connect from Hong Kong to services offered by NYSE Technologies through SFTI, including access to Hong Kong Exchanges & Clearing (HKEx), all major international trading venues, market data solutions, plus the NYSE Euronext capital markets community.

As part of the expansion of the SFTI network to include Hong Kong, NYSE has also extended SFTI to the new HKEx Data Centre colocation facility, giving customers there access to all the services available on SFTI through a simple cross connect to their colo racks. NYSE Technologies also plans to expand SFTI in the region to connect other markets like Australia and Korea.

NYSE Technologies’ Secure Financial Transaction Infrastructure provides access to a comprehensive range of capital markets products through a single point of access and offers low-latency trading access to the NYSE Liffe and NYSE Euronext markets. SFTI Asia is the most recent extension of the global backbone, enabling Asian firms to receive market data and trade on multiple markets. Designed to be the industry’s most secure and resilient network, SFTI is specifically built for electronic trading and market data traffic thus enabling firms to reduce their time-to-market, improve their performance and significantly lower the cost of their trading infrastructure. Furthermore, the global backbone allows customers to connect to their trading infrastructure distributed in financial centres around the world using a SFTI connection on the other side of the world.

“The addition of these important access centres in Hong Kong is a further step in the expansion of NYSE Technologies’ footprint and reach of the SFTI Asia network and adds to our established presence in Singapore and Tokyo.” Daniel Burgin, Head of Asia Pacific, NYSE Technologies, commented. “Offering multiple access centres in the Asia Pacific region allows them to use SFTI Asia to connect to regional and global exchanges and markets in a cost effective way through a single connection at each of the client’s locations around the region. This eliminates the overheads and costs associated with maintaining separate network connections in each location to multiple trading venues.”

Source: NYSE Technology 06.12.2012

Filed under: Australia, China, Data Management, Data Vendor, Exchanges, Hong Kong, Japan, Korea, Market Data, News, Singapore, , , , , , , , , , , , , ,

HKEx completes LME acquisition

Hong Kong Exchanges and Clearing Limited (HKEx) and LME Holdings Limited (LME Holdings), the parent company of The London Metal Exchange Limited (LME), are pleased to announce that the acquisition of the entire issued ordinary share capital of LME Holdings by HKEx has completed today.

Completion was effected by the delivery of the relevant court orders to the Registrar of Companies for England and Wales.

The transaction brings together the leading operator of exchanges and clearing houses in Asia, with the world’s leading non-ferrous base metals trading venue.

Charles Li, Chief Executive of HKEx said, “We are delighted that, as of today, the LME is formally part of the HKEx group. We are confident that this partnership will deliver enormous benefits over time as we leverage our relationships and knowledge to build on LME’s strong global position.”

Martin Abbott, Chief Executive of the LME said, “The LME will remain the world’s foremost base metals exchange thanks to HKEx’s position in Asia, its infrastructure and resources. We begin a new chapter today but the LME is more secure than at any point in its 135-year history.”

Source: Finextra, 06.12.2012

Filed under: Exchanges, Hong Kong, Services, , , , , , , ,

Latin America: Investor News Letter 17 November 2012

Mexico

Slim Acquires Controlling Stake in Real Oviedo, El Pais Reports

Billionaire Carlos Slim agreed to invest 2 million euros ($2.5 million) to acquire a controlling stake in Spain’s soccer team Real Oviedo, newspaper El Pais reported today.

Mexico lawmaker introduces bill to legalize marijuana
Sherwin-Williams to buy Mexico’s Comex for $2.34 billion
Mexico Third-Quarter GDP Rose at Slowest Pace in Over Year
Cemex Latam Falls in Bogota After $1.14 Billion Initial Sale
Mexican banks invest domestically
Mexico: Investors’ New China
TransCanada to build, operate Mexican natural gas pipeline; will invest US$1B

 

Brazil

Top names drop off list of Thyssen Americas bidders

FRANKFURT – Several top steelmakers are sitting out ThyssenKrupp’s auction of its U.S. and Brazilian mills and there appears little interest in the latter, suggesting the German firm may fall well short of its $9 billion asking price.

Eletrobras to take over bankrupt Brazil power utility
Cuba opens sugar sector to foreign management
Microsoft’s investment in Brazil to spur Rio research boom-execs
Telecom Italia looking at GVT, other opportunities
Wuhan Steel shelves plans to build Brazil mill
A new wave of Brazilian infrastructure investment
Brazil’s Itaqui port plans $3.2 billion upgrade
Rio Olympics, World Cup at risk with royalty bill, governor warns

 

Latin America

Paving the Way  High-­Tech Financial Infrastructure Hits LatAm

Foreign market leaders such as Fidessa, Direct Edge and Navatar are challenging local providers in the race to meet the booming region’s needs. The growth in size and sophistication of LatAm capital markets has both fueled and been fueled by the implementation of high-tech financial infrastructure in the region, as the hardware and software that have  been the foundation …

 Latin American yields fall further in a warning to bond investors
Impoverished Iberians, booming Latin America eye new relations
Africa and Latin America Still Fight Vulture Funds
More LatAm ETFs Your Broker Forgot to Mention
UN asks LatAm firms to grow with social responsibility
Private Equity Lures Pensioners as Bond Yields Sink
Argentina’s Debt Restructuring Argument Could Be Very Significant For The Global Economy
Argentina’s YPF 3rd-Quarter Profit Down 51% on Year at $159 Million
Bolivia Returns to the Global Bond Market
Chile pension fund-ordered estimate lowers Endesa Latam asset value
Chilean regulator to put new limits on pension fund investments
Germany’s Solarstrom enters Latin America with 2MW in Chile
Colombia opens criminal probe into Interbolsa collapse
Colombia’s Interbolsa brokerage to be liquidated
Public-Private Partnerships in Colombia: Scaling-up Results
Paraguay, Worst LatAm Economic Result of 2012
Peru May Invest About $5.2 Billion in Water, Wastewater Projects
Aeropuertos del Peru mulling over opportunities in Brazil and Chile
Overseeing Peru’s international appeal at ProInversión

Filed under: Argentina, Banking, Brazil, Chile, China, Colombia, Energy & Environment, Latin America, Mexico, Peru, Risk Management, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

VAM: Vietnam Market Analysis – October 2012

Another down month for the 2 main bourses

Read detailed VAM monthly  Monthly Market Analysis and Chart October 2012

The month of October saw the VN index close at 388.2, losing 0.47% whilst the HNX index fell 4.42% to close at 53.02. The VN30 somehow managed to move the opposite direction, gaining 0.82% to close at 458.56 and was again the best performer of the 3 indices.
 
CPI slowed down as price increases for healthcare and education were nearly completed
The Consumer Price Index rose 0.8% MoM in October, after jumping 2.2% the previous month due to one-off price adjustments in two major government-controlled sectors. Consequently, the YTD inflation appeared to be calmer at 6.02% as the healthcare and pharmaceutical component of the CPI basket decelerated from 17.02% to 5.94% and the education component decelerated from 10.54% to 1.88%. Although pricing pressure from food and foodstuff is seasonally higher in the last quarter, we think the one-digit inflation target of FY2012 is likely to be met. In addition, there is positive news for inflation, as the Ministry of Industry and Trade announced that input price for electricity production has declined in the last three months, and no price adjustment would be scheduled in November.
 
PMI weakened in October
The seasonally adjusted HSBC Manufacturing PMI posted 48.7 in October, down from 49.2 in September. As such, the headline PMI has remained below the critical 50.0 mark for seven months running. Partly, stocks of purchases fell further in October, as the downturn in the manufacturing sector led companies to empty out their inventory holdings. A number of firms also linked lower stocks to reduced levels of input purchasing. Weaker global demand led to a further solid reduction in new export business during October as well. Incoming new export orders have fallen in each of the past six months; subsequently, the latest decline in new export orders was the steepest in the 19-month survey history. In which, companies reported reduced inflows of new business from China, Japan and Taiwan.
 
SBV serious in solving bad debt
According to the latest SBV estimates, the level of NPLs at the end of June stood at 8.82%, which is even higher than that at the end of March (8.6%). As such, the SBV has submitted a proposal to the Prime Minister to set up an asset management company to take over the VND100 trillion (US$6 billion) worth of bad debt. Two options are: (i) to expand the role of the existing Debt Asset Trading Company under the MoF, or (ii) to set up an entirely new entity under the SBV. However it will take time to make any proposal a reality as it will need National Assembly approval which will push it to Q2 2013 at the earliest. In the meantime, banks are required to revalue their loan collaterals, and we believe this process will weigh down financial performance of lenders in the upcoming period.
 
Deadline for closing gold position extended to 30th June, 2013
After declaring the widened gap between domestic and world gold prices is primarily due to banks rushing to cover their gold positions before 25th Nov, SBV has extended the deadline to 30th June, 2013. Total gold mobilization until the new deadline must not exceed the gold needed to settle gold accounts. Since there are still 20 tons of gold needed to repay depositors and banks are not allowed to import gold, the extended deadline is meant to ease pressure on domestic gold price and help banks avoid sizable losses that would occur if they were to buy gold at peak price just to meet the deadline on 25th Nov.
 
Budget deficit in 10M2012 exceeds the whole year target
The YTD budget deficit in October rose to VND155.2 trillion from VND138 trillion last month, exceeding the VND140 trillion full-year target. As of 31st Oct, total tax revenue amounted to VND523.4 trillion, equivalent to 71% of the yearly plan. On the other hand, government spending approached VND 678.6 trillion, or 75% of the yearly plan. The budget deficit equals to 6.9% of GDP, far higher than the target of 4.8%-4.9% for the year, suggesting that room for fiscal policy to stimulate domestic growth is quite limited.
 
Trade balances returned to deficit in October. FDI disbursement unchanged year on year
The trade deficit is USD 500 million in October as imports increased 12% MoM to US$10.4 billion, whilst exports only increased 4% MoM to US$9.9 billion. With a large deficit in October, the trade balance has returned to deficit of US$357 million from a surplus of US$143 million in September. Since demand for import tends to be seasonally high in the last two months of the year, we think the trade balance by year end will likely be a larger deficit. However, the news that FDI disbursement in October reached US$900 million, unchanged year-on-year has provided some comfort that foreign investors still see investment opportunities in Vietnam. In fact, it is heart-warming that the FDI disbursement year to date (US$9 billion) has almost tracked the level achieved over the same period last year (US$9.1 billion), despite tougher economic conditions.
 
Our ViewOur view has hardly changed since last month. As Vietnam’s top leaders are debating on critical issues including proposed amendments to the Constitution and several laws, we see little clarity on the economy or stock market until all that is settled. As such, we prefer to be conservative at this time, holding high cash and only retaining our core equity holdings; companies with strong fundamentals which we have high conviction in and believe will stand the test of change. We take this opportunity to screen the market for resilient companies with little or no debt, strong market position, high growth potential, good cash flow and savvy management with integrity, for possible immediate action when the market turns.
Source: VAM, 16.11.2012

Filed under: News, Risk Management, Vietnam, , , , , , , , , , ,

Latin America: Investor News Letter 2 November 2012

MEXICO

Mexico 2013 inflation view steady despite price spike
Credit Suisse Raises $420 Million to Create Mexico Fund
Mexico: Big investment for citrus producers
Indigenous Groups Protest Mexico’s Biggest Wind-Energy Project
FOX BUSINESS – Mexican fishermen and indigenous groups from the southern state of Oaxaca protested Wednesday in front of the Mexico City offices of participants in a wind-energy project that would be one of the largest ever in Latin America, targeting Coca-Cola bottler and convenience-store operator Femsa (FMX), the Inter-American Development Bank and the Danish government, among others.

BRAZIL

The Brazilian Law on Money Laundering
Precautions Investors Must Take when Investing in Brazil. Brazil has recently altered its money laundering law. The new bill has tightened the government’s grip on most of the investment operations and has significantly broadened financial institutions’ and investment brokers’ duties to report suspicious activities …

ThyssenKrupp Brazil mill fined for pollution, could face closure
The long, brutal haul from farm to port in Brazil
Brazil hit by new blackout, infrastructure in spotlight
Brazil Gives Tax Exemption to Foreign Mortgage Investors
Brazil Power Generators Ask to Renew 106 of 123 Concessions

LATIN AMERICA

Private Aviation takes off in Latin America
The growth of private wealth in LatAm has led to a rise in demand for private aircraft and private aviation services. For the region’s mounting numbers of high-net-worth and ultra-high-net-worth individuals, a plane can be purely a luxury item, of course; but for increasingly global and mobile professionals and business owners, it meets a demand unsatisfied by local transportation alternatives, as well .

Colombia Regulators Seize Interbolsa Brokerage on Funding

Colombia’s financial regulators seized Interbolsa SA’s brokerage, the country’s largest, after the company said it faces a “temporary” funding shortage.

 Latin America stocks rise on China, U.S. data
20 Latin American in the World’s 200 Richest People
Argentina bonds close lower after S&P downgrade
Argentina Plans Regulatory Overhaul to Spur Investments
Increase in pension fund investments makes for headwinds in Andean market
Colombia Equity Fund targets European countries for distribution
Protests in Peru Scaring Off Mining Investment, Government Responds With Social Programs
Honduran supreme court rejects idea of building independently governed ‘model cities’
CAF and OFIC ink agreement to promote energy efficiency projects in Latin America
Modern airport terminal to be opened in Bogota
IDB approves $200m financing for Latin America hydro plant

Filed under: Argentina, Asia, Banking, Brazil, Central America, Chile, Colombia, Latin America, Mexico, News, Peru, Risk Management, Wealth Management, , , , , , , , , , , , , , , , , , , , , , ,

Latin America: Investor News Letter 19.October 2012

Mexico

Elektra to offer No-Fee Banking and Long Term loans to US low income population
Billionaire Ricardo Salinas said he wants to offer no-fee banking deposits and longer-term loans to low-income U.S. consumers, aiming to export his Mexico business model, successful in 8 Latin American countries to the world’s biggest economy.

Mexico’s market shines as reforms, confidence take hold
NYSE Technologies, Bolsa Mexicana and ATG build Mexican trading infrastructure
Slim-backed Mexican firm plans IPO, new cement company
Alsea to invest $110 million in Mexico, Argentina Starbucks cafes
Mexico passes law to combat cartel money laundering

Brazil

Itau Sinks as Rousseff Plan Hurts Bank Profits: Corporate Brazil

Brazil’s push to drive down consumer borrowing costs is eroding the value of its biggest banks.

Brazil wants to restrict strikes in public sector
Monsanto suspends collection of royalties in Brazil following state court ruling
Brazil M&A hits five-year low on turmoil, state intervention
Brazil and South Africa Form Partnership On Future Investment Promotion Initiatives
Brazil’s Water Sector Benefits From Investment Ahead of World Cup, Olympics

Latin America

Cencosud of Chile to Acquire Carrefour Colombia Division

Cencosud SA agreed to buy Carrefour SA’s Colombian unit for 2 billion euros ($2.6 billion) as it taps rising consumer spending in Latin America and the world’s second-largest retailer retreats from markets it can’t dominate.

Venezuela/Paraguay rift spoils Brazil’s plans for a ‘normal’ Mercosur summit
Singapore, the fastest growing market for Latin America
CAF Encourages Singapore to Invest in Latin America
Cuba Praises China-Latin America Ties
Latin America can produce double-digit investment returns over next decade
Arab and Latin American leaders agree to investment bank
LatAm’s Largest Solar Power Plant  in Peru receiving 40 MW of Solar PV Modules from China
Arab and LatAm leaders agree to investment bank
Peru central bank could allow more pension funds invested abroad
Latin American Ratings Strong Enough to Weather a Commodity-Cycle Downturn
Latin American gold rush brings riches, conflict
Latin lithium output mired in controversy

Source: Various 19.10.2012

Filed under: Argentina, Banking, Brazil, Chile, China, Colombia, Energy & Environment, Mexico, Peru, Singapore, Venezuela, , , , , , , , , , , , , , , , , , , , , , ,

Nyse Technologies, Bolsa Mexicana and ATG build Mexican trading infrastructure

Nyse Technologies, the commercial technology division of Nyse Euronext (NYX: NYX) today announced that in collaboration with Bolsa Mexicana de Valores (BMV) and Americas Trading Group (ATG) it has built and deployed a state-of-the-art trading infrastructure complete with global connectivity, risk management functionality and direct market data distribution for customers trading in Mexican markets.

Designed to support the launch of Bolsa Mexicana’s new matching engine and midpoint hidden order book, this solution incorporates advanced technology developed specifically for every part of the trade cycle to provide unprecedented accessibility, performance and risk management for trading on Bolsa Mexicana’s exchanges with the aim of establishing Mexico as a premier Latin American investment destination.

Initially, this collaboration will provide:
• A new co-location model for access to cash and derivatives markets (through ATG directly at the KIO Data Center)
• Global connectivity for buy side, sell side and vendors from the US, Europe, Asia and also other Latin American markets such as Brazil and Chile.
• Sophisticated risk management functionality for international order routing (solution implemented by NYSE Technologies)
• Low touch order stamping by Bolsa Mexicana’s members to settle orders
• Global Market Data distribution via NYSE Technologies Secure Financial Transaction Infrastructure (SFTI) with direct contracting with BMV

“We are excited to again work with one of Latin America’s leading market operators in Bolsa Mexicana and market participants in ATG to deliver dramatic improvements across critical elements of the trade cycle,” said Dominique Cerruti, NYSE Technologies. “By continuing to improve access to key Latin American exchanges and customers, we continue to realize our vision of creating a global capital markets community with cutting-edge connectivity, performance and risk management.”

“Today’s announcement with NYSE Technologies and ATG demonstrates our ongoing commitment to grow and enhance our markets in Mexico to deliver highly flexible multi-market, multi-asset trading,” said Jorge Alegria, Head of Market Operations, Bolsa Mexicana de Valores. “We look forward to extending our relationship and cooperation with NYSE Technologies in several important areas that will f further expand that growth and performance in the near future.”

Source: FinExtra, 18.10.2012

Filed under: Asia, BMV - Mexico, Chile, Colombia, Data Management, Data Vendor, Latin America, Market Data, Mexico, Risk Management, Trading Technology, , , , , , , , , , , , , , ,

VAM: Vietnam Market Analysis – September 2012

Markets declined in September
September was characterized by sideways market movements for the VN-Index, with the largest gap between the month’s high and low being approximately only 15 points. Closing the month at 392.57, the index gave up 0.87% for the month. The Hanoi exchange moved quite differently – a near downward trajectory to close the month at 55.47, down 9.7%. The VN30′s performance more closely resembled the VN-Index, with only narrow swings during the month, to close at 456.48, down 1.89% from August.
 
Market reacted to ACB resignations as developments troubled investors
In an unexpected announcement, ACB accepted the resignation of its BOD Chairman and two Vice Chairmen, this month. The resignations were initially claimed to be for personal and health reasons, yet were later announced to be connected to the arrest of ACB’s founder and the former CEO for economic violations (one of which being permission granted for approximately USD 34million to be deposited into competing banks at rates above the stipulated cap). A former BOD member of ACB, now on the Board of Eximbank, also resigned and is also to be prosecuted together with all the resigned ACB executives. Upon the dissemination of this information, the markets dropped, however only temporarily, as the news was widely expected.
 
Credit mobilization vastly exceeds credit growth
Credit growth from January to September 20, of this year, reached only 2.53%, much below the 8-10% target for 2012. While some banks have posted relatively high growth figures, such as BIDV and Military Commercial Jt Stock Bank, whose growth reached 13.5% and 10% respectively in the first 8 months; most of their credit growth however was for commercial bond lending. Removing commercial bond lending, loans outstanding to institutions and individuals decreased. In another example, VCB grew their credit 7.2% in the first 8 months, however savings growth was 13%. In efforts to ensure liquidity and being bound by the 9% deposit rate cap, many banks have begun to offer 13% interest for 13-month deposit terms. With dong lending rates now ranging between 13-15%, profits will come under pressure.
 
Health care and Education lead September’s CPI increase
In August, YoY inflation continued to abate to 5.04%, this month however, inflation rose to 6.48% YoY. September’s CPI rose 2.2% MoM, the highest MoM increase since May 2011. The increase is largely due to Healthcare, pharmaceutical items (17.02% increase), Education items (10.54% increase), and Transport and Telecoms (3.83%) increases. While Education’s increase was mostly due to seasonal factors, a series of rising petroleum prices played a notable role in the increase of one-off items.
 
GDP in first 9 months grew 4.73% over same period 2011
2012′s GDP growth is now expected to be 5.2%, thus requiring Q4 growth rate of 6.6%  fairly optimistic as Q3 growth was 5.35% and Q4, 2011 growth reached only 5.98%. GDP has however, been steadily improving from Q1 and Q2. Low credit growth, declining exports and slow retail sales, combine to make up slow domestic growth. Export value declined an estimated 5.8% in September, according to GSO; however, import value also dropped 4.4%, bringing the Q3 trade balance to a USD 531 million surplus. Retail revenue growth in September increased 1.08% for the month, improved over the 0.7% growth recorded in August.  For the first 9 months of 2012, nominal retail sales growth was 17% however; it reached only 6.4% in real terms. The Index of Industrial production also showed some signs of improvement, increasing 4.5% on month with increases in the manufacturing index being the largest contributor to the improved index.
   
FDI disbursement level paces 2011′s levels
Vietnam attracted approximately 73% of 2011′s January – September FDI, for a total of USD 9.52 billion. While overall attraction had declined, FDI disbursed reached USD8.1 billion, totaling 98.8% of YoY’s disbursed FDI. The Foreign Investment Agency expects disbursed FDI to reach USD 10 billion by year-end. Strong FDI disbursements have bolstered the FX reserves nearly USD 23 billion and contributed to S&P’s upgraded economic outlook and Fitch Rating’s affirmed B+ status of the dong.
 
Moody’s adjust government bond rating on banking sector weakness
At nearly the month’s end, Moody’s Investors Service downgraded Vietnam’s credit rating one notch to B2, with a stable outlook. At cause for the downgrade are the country’s banks and the risk that the government will need to partially recapitalize them given the lack of private sector solutions. The rating agency also downgraded all 8 of the Vietnamese banks it assesses due to deteriorating asset quality and profitability pressure.
 
Our ViewWith uncertainty regarding economic and banking reform still lingering around, we prefer to be conservative at this time, holding high cash and only retaining our core equity holdings; companies which we have high conviction in and believe will stand the test of change.
We take this opportunity to do our homework well, combing the market carefully for resilient companies with little or no debt, strong growth potential, good cash flow and earnest management. Although valuations of certain companies and sectors have become quite attractive, we are not rushing in just yet. Too much change is happening or expected to be happening. So we need a little more certainty before getting back into the market.

Source: VAM Vietnam Asset Management, 15.10.2012

Filed under: Asia, Banking, Exchanges, News, Risk Management, Vietnam, , , , , , , ,

Latin America: Investor News Letter 21.September 2012

Mexico

Analysis: China worries spur Mexico stock market flows

MEXICO CITY – Mexico has been on the wrong side of China’s economic boom for the last decade, but is now seeing an upturn in its fortunes as the Asian powerhouse’s economy slows and international stock pickers look to hedge their bets.

Can Mexico live up to its investment potential?
Deutsche Bank Downbeat On Brazil In Wake of Intervention; Mexico Retail Sales Up

Mexico, the “Forgotten” Emerging Market


Brazil

Brazil mulls raising Mexico car trade quota – sources

Brazil is considering raising a three-year bilateral auto trade pact quota it agreed to with Mexico in March, potentially allowing Mexican exporters to sell around $350 million worth of additional vehicles to the Brazilian market annually.

Brazil: PE cools in Brazil, warmes in Mexico and Andes

US urges Brazil in “clear terms’ not to hike tariffs

Brazil reacts to US stimuli saying it will keep the Real ‘devalued’ and competitive

Brazil ethanol returns to US as biofuel rules pave way

Goldman Sachs Plans Private-Equity Comeback in Brazil


Latin America

Colombia rapidly becoming another “positive surprise” from Latinamerica

Uruguay’s economy suffers slight deceleration in 2Q but on track to the 4% target

IMF calls on Argentina to implement measures on the quality of official data

Moody’s changes Argentina rating outlook to negative from stable

Deal Analysis: Panama City Metro Line 1

Gazprom in talks with Argentina’s YPF on LNG supplies

Private equity in LatAm: less new money, more deals

Shadow banking to dominate in LatAm projects

Cuba struggles with foreign investment, growth

China Steps Up Push Into Latin America

Korean Art fair highlights Latin American art

Filed under: Argentina, Banking, Brazil, Central America, Chile, China, Colombia, Energy & Environment, Events, Latin America, Mexico, Peru, Risk Management, Wealth Management, , , , , , , , , , , , , , , , , , , , , , ,

VAM: Vietnam Market Analysis- August 2012

Markets declined in August
In August, the market’s ascent topped above the 437 level, but on the 21st of the month the market began a six trading day descent to a low of 385.78. After making a slight correction in the final days of the month, the VN-index closed at 396.02, losing 4.5% over the month. The Hanoi exchange faired significantly worse, closing the month at 61.43, to lose 11.2%, while the VN30 gave up 5.4% to close at 465.29.
 
Markets reacted to news and rumors, presenting some good buying opportunities
Upsetting market activity this month was the arrest of a key figure in the banking system and Vietnam football, for alleged illegal business activities in his 3 private companies. Days later, the arrest of ACB’s CEO for “economic violations” caused the SBV to add VND 23.31 trillion in liquidity to the banking sector to support the market and help ACB as its customers rushed to withdraw funds. Rumors of Masan Group’s Chairman’s arrest, while unfounded, added to the turmoil the market was undergoing as investors wondered who’s next and what are the repercussions. Also adding to market jitters was talk of a 3rd petroleum price hike of the month, for a total increase of 15% in 40 days. As sellers outnumbered buyers, the market lost USD 3.85 billion in 3 days, providing a buying opportunity which foreign investors rushed to take advantage of. 
 
Credit growth to remain at 6-8% for 2012, notwithstanding ceiling increased for some
23 of the nation’s 62 credit institutions applied to have credit growth ceilings increased, of which 10 were approved. The increased target encourages banks to spur lending to struggling enterprises dealing with high inventories and low demand. Considering growth in the first 8 months is a meagre 2%, the entire banking sector credit growth is expected to remain at 6-8% for 2012, according to the Central bank.
 
Deflation fears allayed as Inflation rises
Having recorded two consecutive month of negative inflation, deflation was concerning to some. In August however, CPI rose 0.63%, contributed by petroleum price hikes, along with increases in healthcare and pharmaceutical items, which registered the largest increase of 5.44% MoM. Despite August’s increase, inflation continues to slow from its peak of 23% in 2011 to 5.04% YoY.
 
Trade balance reflects increased demand
Reflecting increasing demand, internal and external, the positive trade balance once again turned negative for the first time in 3 months. August’s trade deficit of USD150million, combined with an average monthly export revenue increase of 17.8% YoY for the January to August period, suggests that easing of monetary policy may be reversing domestic contraction. At the same time though, an ICAEW report forecasts GDP growth for 2012 to be only 5.1%.
 
FDI disbursement level paces 2011′s levels
Vietnam attracted 66.1% of total 2011 FDI, for a total of USD 8.47 billion in the first 8 months of the year.  While overall attraction had declined, FDI disbursed reached USD 7.28 billion, totaling 99.7% of 2011′s disbursed FDI. Strong FDI disbursements have bolstered the FX reserves to nearly USD 20 billion and contributed to S&P’s upgraded economic outlook and Fitch Ratings’ affirmed B+ status of the dong.
 
Our ViewWhile the circulated rumors, both founded and unfounded, created some turmoil in the market, investor reaction was more sentiment driven rather than fundamentals driven, and as such, a buying opportunity was presented. The chain of events in August suggests that uncertainty still remains; however, we can get comfort that given some of the encouraging economic signs lately, it is probably that the eased monetary policies have begun to stimulate domestic demand. We continue to shy away from property and related sectors but are selectively adding stocks in basic industries such as Materials, Utilities and Consumers.

Source: VAM Vietnam Asset Management, 20.09.2012

Filed under: News, Risk Management, Services, Vietnam, Wealth Management, , , , , ,

Luxury Spending in China – Are the wealthy disappearing? Wealth Management Research – KapronAsia

Earlier this week, Burberry announced lower than expected earnings which largely disappointed and somewhat scared markets. Their slowdown is global, but a key challenge was declining luxury spend from Chinese consumers – which is seen by many as a bellwether for the rest of a general industry slowdown. We’ve talked about luxury spending in China in the past, but it’s worth considering the implications of a potential slowdown in the luxury industry and the implications if the slowdown is indeed an indicator of a shift in the habits of China’s wealthy.

The origins of money

If you look at the development of China’s wealthy, it really started in the late 70s with the opening up of China’s economy and then picked up speed again in the 1990s through today as China’s inclusion in the WTO gradually brought the country to become known as the ‘factory of the world’. Although cost and quality questions have arisen again recently, the ability of chinese factories to produce low-cost and medium to high quality products drove incredible revenues and profits for small and medium enterprises and, at the same time, made their owners tremendously wealthy. Due to a somewhat challenged national transport network, many of these factories were by necessity concentrated on or near the east coast of the country in order to decrease the complexity of actually exporting the goods; mainly near the port city of Shenzhen or further up the eastern seaboard near Shanghai or Beijing.

But factory owners weren’t the only ones to benefit. As China’s insatiable appetite for natural resources has increased, companies and individuals have benefited greatly as commodity prices have increased rapidly. Mine owners and processors as well anything energy related has driven another level of wealth that is not just located near the coast, but often much further in-land either to the west in Xinjiang or to the North in Inner Mongolia. Finally, although a civil service job in the west typically means ok pay, but high stability, government officials in China do quite well so many of officials and families of officials are known to be quite well off.

Show me what you got

I don’t want to make any suggestion as to whether it’s right or wrong or the meaning behind it, but the wealthy Chinese, in general, like to show off their wealth. Carrying the right bag, driving the right car or telling time with the right watch is important in both a personal and or a business context. At large dinners, people (typically the men) will fight over who pays for the bill as not paying can often mean a ‘loss of face’ (similar to respect) in the eyes of others.

This need for showing off wealth has driven the growth of the luxury industry in China. What it has also done is created another layer of what you might call ‘wealthy aspirants’, who while not necessarily wealthy themselves, are keen to give the appearance of being wealthy or at least hip to the latest trends. For the extremely wealthy, the sign that you’ve made it is the BMW 7-series or Bentley that you pulled up in, for the rest, it’s an iphone. An iphone is a sign that you’ve made it

The iphone is a great insight into wealth or lack thereof in China: although there are iphone knock-offs out there, most of what you see when you walk around the big cities are real iphones whether bought directly from Apple, a mobile network operator, or off the grey market (HK imports). When you consider that a new iphone in China from Apple costs about US$800, even if you look at the GDP per capita in Shanghai, one of the wealthier parts of China, which is about US$13,000, that still represents about 7% of the average yearly salary for a phone. So some people are spending up to, and in many cases over, a month’s salary to have the latest and greatest from Apple.

Built into relationships

We’ll get into the implications for wealth management shortly, but one last illustration of how important wealth is in China, and again, this is changing slowly, but typically before a Chinese woman will accept a marriage proposal from a man, the man needs to have an apartment for the couple to move into. With housing prices in the major Chinese cities reaching that of London or NY, but with salaries hovering at about 15% or less of London/NYC salaries, this can be a daunting prospect. A son will often need to rely on his parents and potentially even grandparents to be able to afford a place.

So what now

So with that context in mind, what will happen with China’s wealthy? Well, there is a certain segment of wealthy customers that are unaffected by economic downturn. These are simply the ones that have accumulated enough wealth to maintain their lifestyle at the same level regardless of the economic conditions. The wealthy aspirants that we mentioned above however will likely be more negatively affected as they have less disposable income or built-up wealth, so what could we reasonably expect see if that demand for ultra luxury products (think a Hubolt watch or a Bentley) will be unaffected, but the demand for lower luxury products such as handbags and phones will likely drop – already we’re seeing increased indications of the slowdown in hiring, which would put a squeeze on the middle-class market segments.

Implications for the wealth management industry

read full article at KapronAsia WealthManagement

Source: KapronAsia, 12.09.2012

Filed under: Asia, China, Wealth Management, , , , ,

Latin America: Investors Newsletter 19 August 2012

Mexico

Diageo May Buy Jose Cuervo for $3 Billion, Sunday Times Reports
Mexico Ousts Brazil as Investors’ Top Choice in Latin America
Santander Bank’s Mexican unit files for U.S. IPO

Brazil

Overpriced Brazil to Be Profitable for Latam

Latin America and Asia

LatAm and Asia form bright spots for CitiIndia seeks to deepen trade ties with LatAm, Caribbean nationsChina to boost ties with Latin AmericaSpanish Companies Need Latin America For Economic ExpansionNo substitute for domestic strength in Latin AmericaIndia’s trade with Latin America may touch $50 billion by 2014

See also LIQ Latin America Infrastructure ALI Alternative Latin Investor  or MercoPress more information about Latin America.

Filed under: Argentina, Brazil, Chile, China, Colombia, India, Japan, Latin America, Mexico, News, Peru, , , , , , , , , , , , ,

China relaxes QFII rules to attract overseas investment

BEIJING — China has eased its grip on its control on investments made by qualified foreign institutional investors (QFIIs), according to a revised QFII regulation released by the nation’s securities regulator.

Compared with previous rules, the regulation published by the China Securities Regulatory Commission (CSRC) on July 27 lowers the QFII threshold and allows QFIIs to invest in the nation’s capital market through more than one securities dealer.

The regulation also allows QFIIs to invest in the interbank bond market and private placement bonds issued by small and medium-sized enterprises and hold up to a 30% stake in a listed company, up from the previous 20% stake cap.

The move aims to make it easier for QFIIs to invest in China’s capital market, part of the nation’s efforts to free up capital flows and accelerate the opening of domestic capital markets.

 The CSRC said it received 28 submissions after opening draft rules to solicit public opinion from June 20 to July 5, and the commission has made adjustments accordingly.

The CSRC said it will continue to speed up the approval of QFIIs, facilitate the operation of the QFII scheme with related authorities and strengthen supervision to attract more long-term overseas investments.

            The CSRC has quickened QFII approvals lately, granting 5.62 billion U.S. dollars in quotas to 51 QFIIs since December 2011.

The State Council, China’s Cabinet, in April increased total QFII quotas to 80 billion U.S. dollars from the previous 30 billion U.S. dollars.

The CSRC has granted QFII licenses to 172 foreign investors since the program started in 2002.

Foreign investment under the QFII program accounts for 1.1 % of the total market value of the country’s A-shares. (CM)

Source: China Money, Xinhua News, Citic NewEdge, 28.07.2012

Filed under: China, Services, , , ,

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