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VAM: Vietnam Equity Market – May 2014

Market Updates – After tumbling as much as 11% in the first 2 weeks of May, to a new low of 513.9 on May 13th, due to the tension with China in Vietnam’s East Sea, the market rebounded in the second half of the month and closed down 2.8% (VNIndex) and 2.3% (VN30). The HNX lost 5.1%.

View full market analysis VAM Monthly Newsletter – May ’14.

Inflation advanced slightly in May, backed by moderate improvement in demand and supply.

May inflation was recorded at 0.2% MoM, down from April’s 0.33%. Consequently, the CPI increased only 1.08% YTD. Moderate improvement continued to be recorded in both demand and supply sides. 5M2014 real retail sales advanced 6% YoY, surpassing the same period last year’s growth rate of 4.6%, whilst the index-industry products (IIP) increased 5.6% YoY, higher than the rate of 4.8% of 5M2013.

Sustained YTD trade surplus driven by FDI sector

GSO estimated that 5M2014 trade surplus reached USD 1.6bn, a slight drop from the historic high of USD 2bn recorded for 4M 2014 in April, due to a trade deficit of USD 400mn in May. FDI continued to be the biggest contributor to the economy as the sector generated a trade surplus of USD 7bn in 5M2014 whilst the domestic sector made a trade deficit of USD 5.3bn. FDI disbursement remained steady with 5M2014 disbursed FDI recorded at USD 4.6bn, up 0.4% YoY.

FDI sector’s confidence largely restored through appropriate compensation and strong determination of the Vietnamese Government to prevent recurrence of riots

The PM has requested urgent support and compensation for businesses affected by anti-China protests and riots, including tax cuts, workers’ salary subsidy and land rental reduction etc. to offset against damages suffered. These prompt incentives and the Government’s affirmative measures to punish rioters and to avoid recurrence of such events have more or less calmed the public’s and FDI sector’s sentiment, as well as restored investors’ confidence.

Rumor about another round of currency depreciation was denied by the SBV

As the USD/VND rate has been increasing, amidst the tension with China, to 21,140 – 21,190 (official bank rates) in May, the highest level since the beginning of the year, concern about another depreciation of the Dong has again emerged. However, the SBV denied the rumor, given (1) sustained YTD trade surplus; (2) historic high FX reserves; and (3) the wide gap between deposit rates of the Dong and the USD. The SBV also affirmed that the depreciation (if any) will not exceed 1% in 2014 (down from the 2% stated at the beginning of the year) to show their confidence in maintaining the Dong’s stability.

Vietnam consumer confidence once again improving

Vietnam Consumer Confidence Index reached 99 points in 1Q2014 in the global survey of Nielsen, the highest level since Q4/2011. Consumers were found to be more willing to spend after 2 years of consumption tightening as 56% of respondents across the country had positive perception of their personal finances for the year ahead. Although saving still remained the top priority, consumers channeled more spare cash into tourism, house renovation and stock investment.

Our view The sell-off due to the political tension with China was fairly short-lived as by month end, the VNIndex was almost back to where it started for the month. We think although the tension may not go away very soon, it will not have significant long-term downside impact on Vietnam’s economy. In fact, economic stability has been maintained on the broad base since the beginning of the year with inflation under control, relatively stable exchange rate and sustained trade surplus. Discussion on amendments of the Law of Investment and a comprehensive legal framework for Public – Private Partnership (PPP) in the ongoing 7th cabinet meeting will provide investors with uniform guidance and regulations in PPP to encourage more private investment in infrastructure. This will also help to improve the administrative process in getting investment project approval to make the investment environment in Vietnam more favorable. The Government’s prompt support rendered to affected businesses in the anti-China riots has shown that FDI is still a top priority for Vietnam. We think the market will likely remain volatile in the coming weeks and we will continue to monitor it closely for buying opportunities.

Source: VAM, 13.06.2014

 

Filed under: Asia, News, Vietnam, , , , , , ,

Mexico: Investment News Letter 14 March 2013

Mexican Peso Gains for Fifth Day on Export Outlook; Bonds Rally

Why you should be excited about Mexico

Group Of Investors Acquires Important Stake In Aeromexico

Mexico eyes telecoms revolution

The Mexican government on Monday announced a sweeping proposal to limit the reach of telecoms tycoon Carlos Slim and broadcasting giant Televisa as part of efforts to boost competition in Latin America’s second-biggest economy. The bill, which forms part of the most ambitious economic reform agenda in a generation, seeks to establish a powerful industry regulator armed with an array of tools to curb companies’ control of markets, while opening up space for new investors.

Bold reforms of president buoy Mexico

If every government has a defining moment, that of Mexico’s new administration may have come this month when authorities arrested the head of the teachers’ union and put her behind bars without bail.

Mexico, among the lagged to do business

The study Doing Business 2012 locates the country in the 53rd place of 183 countries. Among the states with the best regulations are Colima and Aguascalientes.

Beer, tomato and avocado are among the most exported

U.S. is the main destination of the Agrifood exports of Mexico, with 74.2% but they also arrive to new markets, such as the Japanese.

Mexico will remain tied to the U.S.

The country exported almost 80% of their goods and for 2030 is expected that the neighbor to the north will capture 70% of Mexican exports.

For Mexican Insurers, Solvency II Reforms are all about the Details

As the global insurance industry prepares for the implementation in 2014 of the new risk-based capital requirements, known as Solvency II, many discussions about how new regulations will be written have been taking place in both local and international forums. Among the countries preparing for Solvency II is Mexico, where recently its Congress passed a new law that essentially sets the scaffolding for implementing Solvency II and merges current laws for the country’s insurance business. The new law’s primary objective is to strengthen the procedures for reserves calculation and defines levels of capital requirement according to each company’s risk profile. In contrast to what the current law required, the new one allows for a more precise distinction between capital and reserve requirements for different business lines under Pillar I of Solvency II, for strengthening corporate governance under Pillar II, and for adding more transparency under Pillar III.

Filed under: Latin America, Mexico, News, , , , , , , , , , , , , ,

Latin America: Investors News Letter 14 March 2013

Top Ranking Banks in Latin America
After a decade of unusual success, the LatAm banking sector has slowed its growth
The year 2011 closed with disturbing news. Banco Santander decided to sell its subsidiary in Colombia, which finally Chile’s Corp Group bought for US$1.225 million. At the time, the chairman of Santander, Emilio Botin, said the measure was taken to “strengthen the balance sheet” of the crestfallen Spanish giants. As he explained, “Our market share in commercial banking in Colombia is far from the 10% which we aspired to get in the markets where we operate.” …

LatAm Hedge Fund Experts Weigh In
On the Current Political and Economic Context
Though 2011 and 2012 have been strong years for LatAm hedge funds, particularly relative to other regions, the political and Workings macroeconomic context in which local managers are investing has been fraught with complicated developments.  For instance, the slowdown in China has affected commodities markets, the lifeblood of many of the region …

Investors Ditch Brazil For Mexico, Colombia

Gramercy Adds to Latin America Private Equity Investment Team

IFC Invests $100M in Energy for Caribbean, Latin America

Brazil

2013 Oil & Gas Industry Perspectives  Brazil
Brazil is heralded as the largest and most significant new oil and gas prospect of the last few decades. However, there is still a long way to go to realize the promise of a new non-OPEC stable source of supply in the top 5 world oil producers by 2020. Progress toward this ambitious target has been slow in the last year, as project development, execution and political risks have taken their toll …

Brazil Real Drops on Speculation Credit Rating May Be Lowered

First meetings on Guyana-Brazil infrastructure project begins

Paraná green lights process to start Paranaguá port infrastructure works in Brazil

ETF investors avoid Brazil

Brazil Seeks Recipe to Attract Investors at Lower Cost

Brazil May Be Next Health-Care Frontier for Global Investors

Troubled Brazil fund Laep to sell 40 mln new shares-filing

BTG Pactual shuts macro hedge fund to new money

Argentina

Argentina Is Replaying Another Inflationary Collapse

Mining investment in Argentina grows 72% despite risky business climate

Fernandez Angers Investors While Ducking Argentine Austerity

Colombia

Foreign direct investment in Colombia seen down in 2013

Chile

Top LatAm selector on working Chile’s red tape

Banchile builds with Fidessa’s sell-side trading platform and connectivity network

Costa Rica

Costa Rica Constructing $96M Oil Terminal

Peru
Peru announces major upgrade to Lima’s water infrastructure

Peru’s Private Pension Funds Want Higher External Investment Limit

Qatar “looks favorably upon” investment-friendly Peru

Peru’s Private Pension Funds Want Higher External Investment Limit

Velarde Says Peru May Allow Pension Funds to Invest More Abroa

Venezuela

Venezuela to Create New Parallel Exchange Rate, Ramirez Says

Venezuela will establish a new parallel exchange rate as it seeks to crack down on a black market in which the dollar is worth about four times more than the official rate, Oil Minister Rafael Ramirez said.

Filed under: Argentina, Banking, Brazil, Central America, Chile, Colombia, Latin America, Mexico, Peru, Venezuela, , , , , , , , , , , , , , , , , , , , ,

VAM: Vietnam Market Analysis – February 2013

After a long Tet holiday, rumors about financial policy changes and further arrests of top bank leaders emerged and eroded all the stock market’s gains from the beginning of February. Consequently,  the VN-Index closed the month with a 0.52% loss, whilst HNX shed 1.05%. With a 3.05% fall, the VN30 seemed to be even more sensitive to the panic.
 
Inflation subdued in the month of Tet
Thanks to the phasing out of pharmaceutical products price increases, inflation slowed somewhat in February as the consumer price index climbed 7.02 percent YoY (versus 7.07 percent YoY in January). The concerns about the “traditional” consumer price hikes during the Tet holiday did not materialize, partly due to weaker festive demand than usual. The government also decided not to raise retail prices of petroleum products including gasoline to ensure economic stability and keep inflation under control. However,  Ministry of Finance did not provide the information on price stabilization fund balance for petroleum products, so it remains unclear on how the gasoline price control will transpire in the coming time.
 
Trade surplus continued, foreign reserves given a boost
According to GSO, the trade balance in February continued to show a surplus, reaching USD900mn, the highest monthly level ever and the ninth month of surplus in a row. With this result, following the USD700mn in Jan, the YTD trade surplus is now around USD1.6bn, a comfortable level which should lend healthy support to the already strong foreign reserve (by Vietnam standard) and consequently the value of the Dong. However, exchange rate showed unexpected volatility in the first two weeks after Tet, possibly due to brisk actions in the gold market and the upsetting rumours. To comfort the market, a Central bank spokesman has stated that no depreciation is being planned for the foreseeable future.
 
Newly released NPLs figure eased concerns on banking system reform.
While the Prime Minister requested to establish the AMC in 1Q 2013, the new NPLs figure released by the Governor was encouraging. Accordingly, bad debt on banking system has come down from 8% in June 2012 to 6% as banks wrote off non-performing loan balance at the end of last year. As the Government set credit growth target of 12% in 2013 to boost economic growth and implement the “dual-targets”, the destination for credit flow is still at stagnation point. Whilst total liquidity (M2) increased 3.31% YTD, the credit growth up to 21 Feb was till in negative territory at – 0.16% YTD.
 
Business environment still appears challenging
In line with stagnation on the supply side, demand remained weak with retail sales increasing only 3.6% in Jan-Feb period, which is not different from Dec 2012’s level. While the inventory level hiked 19.9% Y-o-Y, industrial production showed no improvement. In a related note, the government released that by February, the number of enterprises going out of business was 8,600, which exceeded the figure of 8,000 newly created enterprises, implying the fact that the business environment is still very difficult.
 
A bumpy recovery progress reflected by a drop in the PMI.
After adjusting for seasonal factors, including the Tet holidays, the HSBC Vietnam Manufacturing PMI posted 48.3 in February, down from 50.1 in January. This has been the largest dip since last August. Notably, in February, the survey showed a first drop in four months of manufacturing output; a decline in the level of new order received and a sixth time in seven months increase in average input prices.
 
Our ViewAfter a long Tet holiday, the stock market was hit by negative rumors about possible currency devaluation, financial policy changes and further arrests of banking officials. Although these rumours were addressed and corrected in a timely manner by the relevant authorities, the stock market and economy in general showed its uncertainty and vulnerability. In 2013, the story will be mainly about boosting production and restructuring the economy. Fortunately, Vietnam’s leaders’ determination is supported by a relatively stable currency and a healthy trade balance.
We remain cautious and will carefully watch development in the political space and changes in macro economy as that will definitely affect the stock market. We are generally comfortable with our equity position but may look to selectively acquire more stocks if the macro environment becomes more favourable.

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

VAM: Vietnam Market Analysis – January 2013

All indices recorded strong gains in January as investors’ sentiment improved
The VN-Index surged 15.5% to close at 479.8 while the HNX jumped 9.7% to 62.62. The VN30, after reaching its all time high at 577, eased back to 564.01 at the end of the month, gaining 16%.
 
Timely measures to give market a boost
With effect from15th January 2013, the trading band on HSX and HNX have been loosened to 7% and 10%, from 5% and 7%, respectively. Besides, SSC also introduced other measures to support the stock market such as tax incentives, allowing to issue stocks below par value, increasing margin ratio and most importantly, increasing foreign ownership limit by non-voting rights in some selective industries (namely at weak banks to over 30%, and at securities companies to 100%).
Furthermore, SBV also intends to participate in domestic gold trading to stabilize domestic gold price, closing the gap with global price, thus discouraging people from holding too much gold. Those measures to boost the stock market, especially the possibility on increasing foreign ownership and the proposal to tighten gold control have somewhat created the wave of optimistic buying in January.
 
A wave of Japanese FDI and record remittances to welcome Tet
According to the Ministry of Planning and Investment, FDI disbursement in January reached USD420mn in total, up 5% YoY. Total newly registered and top-up capital grew 74% YoY, of which newly approved projects registered USD257mn, a 293% YoY increase, and top-up capital touched USD24.3mn, rising 25.2% YoY. Japanese became the biggest investor making up 57.6% total newly approved projects so far this year.
Thanks to the surge before Tet holiday, total remittances this year are estimated at a record USD10 billion. The total foreign reserve has increased to USD26bn, equivalent to 2.3 months of imports, a historical high and an 8.3% increase from USD24bn as at the end of 2012. The healthier FX reserve helps to safeguard the value of the Dong.
 
Tet, on the other hand, narrows trade surplus
Januaryrecorded a smaller trade surplus as demand for imports increased before Tet holiday. Exports exceeded imports by only USD200 million in January, after a revised trade surplus of USD498 million in December. From the previous month, export value decreased 2.5% while the import value edged up about 0.4%, although both of them showed huge improvement, more than 40%, compared to the same period last year. Foreign invested enterprises continue to be the leading sector with 66% and 55% of total export and import value, respectively. They also outperform domestic sector in terms of more import growth and less export reduction during the first month of 2013.
 
Credit drop and CPI jump surprise market.
The industrial production index (IIP) decreased 3.2% from December amid pessimistic outlook for stagnation on retail sales. Indeed, consumers continued to reduce spending at the prospect of lower income and no year-end bonus. The retail sales edged up just 2.2% MoM in Jan, the month before a long Tet holiday. As a result, credit dropped 1.06% YTD, according to the press release from a government meeting.
In contrast, January’s PMI moved in a different direction with the IIP since it increased to 50.1 from 49.3, thanks to modest improvement in new order volumes from domestic market and marginal job growth. Amidst stagnation of industrial production and credit growth, a solid increase in average input prices, a component of PMI basket, after a marginal reduction in December, suggests that SBV should be more cautious about further easing as inflation risk came back from the beginning of a new year. Jumps in health care (9.5% MoM) and foodstuff (1.96% MoM) items led CPI to soar 1.25% MoM (7.07% YoY) in January, exceeding market expectation. Accordingly, inflation risk puts any rate cut rumors on hold until at least after Tet holiday.
 
Government charts out tasks for banking sector with focuses on inflation control and bad debt resolution
Main objectives of SBV in 2013 continue to be curbing inflation, stabilizing macro economy alongside with restructuring banking sector and tackling NPL issues. For 2013, the SBV targets to keep credit growth at 12%. Importantly, SBV has submitted to government the plan that allows AMC to purchase bad debts based on book value (after provision) and pay by bonds to the bank. Banks could use AMC bonds as collateral to get cheap fund from SBV at a discount rate. Commercial banks with NPLs higher than 3% will be forced to bring down their NPLs to 3%.
On the other hand, as there are many linkages between real estate market and NPL problems in banking system, government also issued the Resolution No.2, which introduces several tax incentives, credit line for low income individuals to purchase social houses and transferring commercial housing projects into social housing. However since social housing only accounts for a small portion of property sector, we think these solutions are not effective enough to rescue the whole troubled real estate market.
 
Our ViewBullish momentum remained in the first month of 2013 thanks to good round of macroeconomic indicators release. While capital inflow continued being positive, actions of authorities looked effective in boosting the market. However, as stocks ran too high and too fast during the last two months, we start to be skeptical about the strength of this momentum. A month before Tet, inflation risk seems to be coming back and industrial stagnation looks a bit tense. We maintain a cautiously optimistic view and relatively high equity holding, particularly stocks with strong fundamentals in consumers, pharmaceuticals and materials sectors. As Government is showing more and more determination to improve the economy and clean up the banking sector, stickers with strong cash flow, low debt and high beta are also in our consideration to pick up to ride the market’s uptrend.

Filed under: Exchanges, News, Vietnam, Wealth Management, , , , , , , , , , ,

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, , , , , , , , ,

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: Investors Newsletter 15 June 2012

Petrobras Is Worst Big Oil Investment on Deepwater Disappointments: Energy   Petroleo Brasileiro SA is the worst investment among the world’s biggest oil companies this year as Brazil’s state-controlled producer suffers delays and cost overruns developing the largest oil finds in more than a decade.

Iusacell, Telefonica to challenge Mexico’s Slim America Movil  – Iusacell and Spain’s Telefonica said on Wednesday they have reached a deal to share their infrastructure in Mexico as they seek to mount a

FX swings may stir debt investors in Mexico, Peru  Mexico, Peru debt mkts most vulnerable to outflows in Latam. * Peru acting to curb FX, Mexico avoiding intervention.

Mexico’s Slim family (Grupo Carso) takes stake in Argentina YPF nationalized enegy company Mexican tycoon Carlos Slim and his family have taken a stake in Argentina’s recently renationalized energy company YPF in lieu of a loan guarantee, ..

Filed under: Argentina, Brazil, Energy & Environment, Latin America, Mexico, News, Risk Management, Venezuela, , , , , , , , , , , , , , , , , , , , , , ,

Emerging Markets: Energy or Enigma? Mexico, Brazil & China – Dan Watkins

Emerging market trading strategies should remain closely aligned with inter-country trade relations, or so one would think.

A professional stock investor’s interest in a company, after all, coincides with that company’s vision and operational policies. Would such a metric be appropriate in trading an entire economy? Interestingly, popular opinion leans toward headlines rather than fundamentals as being the key determining factor.

That raises a question: Can a market investor be expected to trade a country’s equity, commodity or currency without being able to derive its true value on a balance sheet?

One would gather from the latest international finance journals that China and its markets dominate the emerging markets dialogue. Sure, China and the U.S. have strong trade programs in place but there are issues such as currency valuation headaches that must be considered.

The BRIC (Brazil, Russia, India and China) countries all have exponential growth potential both short-term and long-term and can be considered underdeveloped vs. their population participation. Capital market returns usually delineate the leader of the pack so among the “fantastic-four” BRIC countries, Brazil reigns supreme.

Brazil has had unrelenting stamina in moving high-energy, high-value energy companies’ stocks higher over the last half decade. One reason for Brazil’s success is its massive capital markets restructuring in policy, participation and innovation. Of course the first thing Brazil had to do was stabilize its currency from its inflation plague so that the Real could sustain itself against economic and political monetary fatigue.

Brazil is on top of asset manager and retirement account lists in equity, equity options, futures contracts and fixed income because of the basis of its economic stability and strong natural resources. So while Brazil has brought equilibrium to its markets, Russia, India and China deal with inflation. But trading Brazil can also be worrisome due to inter-country trade relations with the U.S. being less-than-favorable.

Those issues raise an interesting question: What market doesn’t make the news but is hot, has been hot and continues to sizzle like fajitas-picante?   MEXICO

News stories on Mexico cover drug war violence, immigration and tourism, but is that the end of the story? Washington – and therefore public discourse – has focused on the $100 billion in trade to China over the last year. What most don’t hear is that the U.S. has exported nearly $400 billion to Mexico during the same time period. Compare all BRIC countries with Mexico and Mexico tops them all collectively.

Mexico reached 4 percent annual GDP growth rate last year, helped by direct investments from the U.S. and China. On the day the U.S. Federal Reserve announced that it would maintain its low interest rate policy through 2014, the Mexican peso rose 0.6 percent, marking a 7 percent climb for the month of January. How many other markets can be traded as strongly in response to a U.S. Treasury policy announcement?

If Mexico were to equitize or make public its oil production industry as Brazil has, by publicly trading leading oil company Petroleos Mexicanos, also known as Pemex, for example, a major trade explosion in Mexico’s capital markets would quickly follow. Pemex is a Mexican state-owned company worth over $415 billion – that’s $100 billion in assets more than Brazil’s giant Petrobras.

Mexico worth more than Brazil and China long term? Mexico reaches higher ground four times that in trade over the entire BRIC countries. One of Mexico’s oil companies is four times the size in assets over Brazil’s all-star Petrobras. What’s more, Mexico’s inflation is under 5 percent while Brazil, Russia, India and China all have inflation rates closer to 7 percent.

A reflection of U.S. involvement and stabilizing influence in Mexico can be seen in the Mexican stock market with more than 1,000 symbols, many of which are high value and liquid ADRs from the New York Stock Exchange and Nasdaq OMX.

Why not follow the money? Taking a look at the presence of Wall Street on La Reforma in Mexico City, where the Bolsa Mexicana de Valores (the Mexican Stock Exchange) is, you’ll find BMV members such a Citigroup, JPMC, Credit Suisse, Barclays, Deutsche Bank, Merrill Lynch, HSBC, Scotia, ING and UBS. No small potatoes there.

The top players and astute institutional investors are solidly positioned in Mexico. They monitor and believe they can best forecast movement in the market by keeping an eye on U.S. and Chinese import/exports with Mexico. A closer eye is kept on the cash equity ADRs and the Mexican bond markets. Many investors tend to believe that Mexico is just undervalued and other emerging markets are overvalued. But one more thing to remember, the U.S./Mexico trade policy should provide Mexico with lots of energy to outlast the steam of the emerging markets chatter.

Perhaps we should start thinking about MBRICs?

By Dan  Watkins, CC-Speed (dwatkins@cc-speed.com)

Sourc: TABB Forum, 07.03.2012

Filed under: BM&FBOVESPA, BMV - Mexico, Brazil, China, Exchanges, Mexico, , , , , , , , , , , , , , , , , , ,

Alternative Latin Investor: Investing in Mexcio Issue 14

The Alternative Latin Investor Issue #14 is focusing on Investing in Mexico.  Below some of the other content of issue #14. LAWEA pronounces 2012 ‘The Year of Wind,’ we explain how investors can publicly trade private equity in Mexico, as well as an in-depth update of foreign land regulation in Brazil and Argentina.

Special Issue: Investing in Mexico

    • Finding the Value in Mexican Real Estate
    • Understanding the Mexican Mortgage
    • The  Mexican Investment Environment
    • Investment Opportunities in Business Hotels and Affordable Tourism
    • Mexico City: Car Addiction
    • Improving Mexico’s Housing Finance Infrastructure
    • Private Equity in Mexico: Capitalizing on the Growing Middle Class
    • CKDs: The Marriage of Wealth and Growth
    • Mexico’s Outlook for 2012 and Beyond
    • What We Talk About When We Talk About  Infrastructure

Renewabale Energy:  2012: LatAm’s Year of Wind Energy
Agriculture Business:Red Roses, Blue Skies: A glimpse at the LatAm flower industry
HF:  What Hedge Funds Association (HFA) members have to say about LatAm
Emerging Markets: How Will European Banks’ problems affect  Latin America
Profiles:Investing in Argentina: A legal  Perspective
Forex:Trading LatAm currencies in 2012
Real Estate

  • 40  years of residential and commercial  Development in Colombia
  • Unconstitutional regulation in Brazil
  • Argentina’s Rural Land Law

Private Equity CKD: Public Private Equity
Latin American Art
Philanthropy
Regulation: Rural Land Laws – Brazil and Argentina

Please view and access Issue 14 in the following formats

Virtual Viewer   www.alternativelatininvestor.com/issue14-sample.htm

PDF   www.alternativelatininvestor.com/issue14-sample.pdf

For more details and information please view http://www.alternativelatininvestor.com

Source: AlternativeLatinInvestor 24.02.2012

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

Alternative Latin Investor: Latam Family Office January 2012 Issue Nr 13

The Alternative Latin Investor Issue #13 is focusing on family offices.  With some great content this issue, from maverick economist Doug Casey, estimates on the effect of climate change in the region, and of course with premium focus looking at the needs, attitudes and opinions of family offices in LatAm. Below some of the other content of issue #13.

 Renewable Energy 

  • Electric Energy Storage in Latin America: Smart Grid Technologies.

Funds 

  • Top Ten LatAm Hedge Funds
  • Mutual Funds in Argentina
  • Latin America fund assets to exceed $3 trillion by 2020

Emerging Markets

  • 2012 Should Be Better: A wasted year for LatAm Stock Markets
  • Investors Beware of Brazilian FIDCs (ABS) Backed by Consumer Credit

Agribusiness

  • Gauging the Effects of Climate Change on Brazilian Agri Output
  • 2011 Agribusiness Round Up

Forex

  • SPOT-trade’s Facundo Molina on Forex and CDFs
  • Mitigating Currency Risk when investing in LatAm

Private Equity 

  • A Primer on Colombian Taxes for the PE Investor

Art

  • Meso-American Remix
  • LatAm auction recap: Sotheby’s and Christie’s

Issue Focus: LatAm Family Business

 Please view and access Issue 13 in the following formats

Virtual Viewer
http://www.alternativelatininvestor.com/issue13.html
PDF
http://www.alternativelatininvestor.com/issue13.pdf 

For more details and information please view http://www.alternativelatininvestor.com

Source: AlternativeLatinInvestor 23.12.2012

Filed under: Argentina, Brazil, Central America, Chile, Colombia, Energy & Environment, Events, Latin America, Mexico, News, Peru, Services, Wealth Management, , , , , , , , , , , , , , , , , , , , , , , , , ,

Alternative Latin Investor: Latam Fund & Investment Trends- December 2011 Issue Nr 12

Latin America fund assets to exceed $3 trillion by 2020
-Driven by appetite for Asia – U.S. and European asset managers benefit most

While still smaller than other global regions in terms of aggregate assets – around US$1.4 trillion in mutual fund assets and about $710 billion in pension assets – fast growth in Latin America as a region is capturing the imagination of investors, distributors and asset managers alike, with tactical and strategic opportunities prompting resource allocations and investments.

Subscribe to the free issue of  at http://www.alternativelatininvestor.com/index.html.

Source: Alternative Latin Investor, 06.12.2011

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

Alternative Latin Investor: Premium Launch Issue Nr 11.

Alternative Latin Investor August 2011 – Issue 11 Premium Launch Issue

 News

Political Moves: brought to you by Latinnews.com

Emerging Markets

Growing M&A Activity between Asia and Latin America?

Latin American Venture Capital: Lessons Learned from China

Be careful What You Wish For- A Brazilian Cautionary Tale

Philanthropy

Cuipo: Saving the Rainforest One Meter at a Time

Nuts: Crops that Grow Well in LatAm

Entering The Brazilian Agribusiness Sector (Premium)

Infrastructure

Mezzanine Financing for LatAm’s Infrastructure

Energy

Investing in Brazilian Oil (Premium)

Art

Fine Art Funds: Taking the Soul Out of Art Investing?

Hedge Funds

MILA Integration

LatAm Fund Due Diligence: What Managers Need to Know (Premium)

Institutional Investing in LatAm: A Contrarian’s View (Premium)

Attracting US Institutional Investors to LatAm Funds (Premium)

Quant Funds in LatAm (Premium)

How HNWI in LatAm View Alternative Assets (Premium)

Forex

Spotting Opportunities in LatAm Forex Trading

Regulation

Tax Incentives: Software Development in Argentina

Ventures

Mercatrade: Inter-emerging Market Trade

QuickStart Global: Have an Office Anywhere

Real Estate

Airlift Encourages Latin America to reach for the skies

Read the content  at www.alternativelatininvestor.com/issue11.html 

To subscribe please click on the corner tabs within the above magazines or click directly to www.alternativelatininvestor.com/signup.php If your firm is interested in multiple licenses we can provide corporate discounts.

Please feel free email me directly with comments or questions regarding our current content or with suggestions for future stories. I can be reached at editor@alternativelatininvestor.com or 202-905-0378.

 http://www.alternativelatininvestor.com/registration.html

Register for free to gain access to new feature article

Filed under: Argentina, Banking, Brazil, Chile, China, Colombia, Mexico, News, Peru, Risk Management, Wealth Management, , , , , , , , , , , , , , , , , , , , , , ,

ETF Landscape: Industry Review – Q1 2011 – BlackRock

At the end of Q1 2011, the global ETF industry had 2,605 ETFs with 5,905 listings and assets of US$1,399.4 Bn  from 142 providers on 48 exchanges around the world. This compared to 2,131 ETFs with 4,133 listings and assets of  US$1,081.9 Bn from 123 providers on 42 exchanges at the end of Q1 2010.  ETF Industry Review_Q1-2011

Additionally, there were 1,119 other ETPs with 1,835 listings and assets of US$183.7 Bn from 58 providers on 23 exchanges. This compared to 718 ETPs with 1,025 listings and assets of US$153.6 Bn from 42 providers on 18 exchanges at the end of Q1 2010.

Combined, there were 3,724 products with 7,740 listings, assets of US$1,583.2 Bn from 178 providers on 52 exchanges around the world at the end of Q1 2011. This compared to 2,849 products with 5,158 listings, assets of US$1,235.4 Bn from 147 providers on 44 exchanges at the end of Q1 2010.

Below is a list of some upcoming events where we will be presenting:

Asia Trader and Investor Convention 2011, Singapore 07-08 May 2011
Complimentary passes are available
www.theatic.net

2nd Annual Inside ETFs – Europe Conference, Amsterdam, 05–06 May 2011
Complimentary passes are available for institutional investors.
www.indexuniverse.eu

Turkey Investment Summit, Istanbul, 09–11 May 2011
www.terrapinn.com

iShares Investment Konferenz, Frankfurt, 11 May 2011
www.ishares-events.com

22nd Annual Conference on Globalisation of Investment Funds, Boston,
15–18 May 2011
www.int-bar.org

ETF & Indexing Investments, New York, 16–18 May 2011
www.terrapinn.com

Factset Investment Process Symposium, Monaco, 23–25 May 2011
www.cvent.com

ASX ETF Institutional Conference, Sydney, 02 June 2011
www.asx.com.au

The 10th Annual Canada Cup of Investment Management, Toronto,
07–08 June 2011
Complimentary passes are being offered by IMN to attend this event to investment professionals at Pensions, Foundations, Endowments, Hedge Funds, Insurance Companies as well as for Registered Investment Advisors. Please contact Jackie Rubbo at jrubbo@imn.org.
www.imn.org

ETF & Indexing Investments, Madrid, 15–16 June 2011
www.terrapinn.com

The Mondo Visione Exchange Forum, London, 15–16 June 2011
www.mvexchangeforum.com

Africa Investment Summit, Johannesburg, South Africa 20–23 June 2011
www.terrapinn.com

European Cup of ETFs and Investment Management, London,
19–20 September 2011
Complimentary passes are being offered by IMN to attend this event to investment professionals at Pensions, Foundations, Endowments, Hedge Funds, Insurance Companies as well as for Registered Investment Advisors. Please contact Jackie Rubbo at jrubbo@imn.org.
www.imn.org

ETF & Indexing Investments, London, 17–19 October 2011
www.terrapinn.com

Please join ETF Network on Linkedin at www.linkedin.com.

Source: BlackRock, 06.05.2011

Filed under: Banking, News, Services, Wealth Management, , , , , , , , , , , , , , , , , , ,

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