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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, , , , , , , , , , ,

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, , , , , , , ,

VAM: Vietnam Market Analysis April 2012

Market Update – Read detailed  VAM Market Analysis  April 2012.

Both exchanges closed up for the month

Both markets and all three indices ended higher this month. The VN-Index closed at 473.77, up 7.4%; the HASTC closed at 79.86, up 10.6%, while the VN-30 closed at 541.20, gaining 8.2% for the month.

Year-to-date, the VN-Index continues to be one of the best performing markets worldwide, gaining 40.41% this year.

 CPI for the month lowest in 5 years

April CPI came in at 0.05%, the lowest month increase in the past 5 years. Decrease in Food and Foodstuff (making up over 32% of the index) helped offset the increase of school fees and March’s petrol price. However, May’s inflation figures should see a slight increase due to April’s petrol price increase and May’s basic salary hikes. In addition, the government’s recent approval of coal price increase makes threats of electricity price hikes loom larger in May. If realized, it will definitely have further unfavorable impact on the month’s CPI.

 April’s trade figures back in deficit

The trade surplus of USD 224mn recorded in Quarter 1 was rather short lived, as April’s trade figures show exports exceeded imports to the tune of USD 400mn. This brings the YTD trade account back into a deficit position of nearly USD 180mn. At cause for the reduced export values in April were the difficulties exporters faced with both the market and with prices. Among the declines in exports were coffee (25% decrease), textile and garments (7.3% decrease) and seafood (7.4% decrease).

 Deposit interest rates brought down to 12%

Following on the 1% rate cut in March, rates on all term deposits were again reduced 1% in early April, bringing the maximum deposit interest rates permitted to 12%. Refinancing rates are set at 13% p.a. while the discount rate is 11% p.a. Lower financing rates reduce the liquidity pressure on banks, thereby reducing the threat of increasing NPL’s.

 NPL ratios increase across all banking groups

In the division of banks into 4 groups, Group 1 being the best banks, Group 4 being the worst, the issues of NPLs have become clearer as NPLs have increased across all groups, which also include some state owned banks that are considered to be adhering to the safe lending procedures.

 Gold import & export rules to change May 2, 2012

Gold ownership will remain legal but trading, importing/exporting without a permit will not be permitted after May 2. The government is also to maintain a monopoly over future bullion production. Gold as a form of payment will also not be permitted. The rationale behind this decision is to further discourage USD demand and soften gold imports.

 Shift towards growth

The government has announced several measures to boost domestic growth, including (i) reclassification of non-productive loans which gives banks more room in lending real estate sector; (ii) SBV’s Document 2506 which asks financial institutions to work with borrowers to reach more favorable terms for borrowers’ existing loans. These measures are expected to bring assistance to struggling businesses.

Aiming to develop an economy where savings are channeled into productive investments, the Prime Minister approved New Financial Strategy, few initiatives of which, stretching to the year 2020, are: limits on government debt guarantees, limits on budget deficits, and a targeted savings rate of 33.5-35% (currently at 25%).The MoF is also considering other measures to support businesses, namely reductions in VAT, reduction or even elimination of Personal and Corporate Incomes taxes.

 Foreign reserves up, as dong remains stable

The dong continues to be stable, trading at 20,828 VND per USD while foreign exchange reserves also seem to be fairing well. The SBV did not provide exact figures but stated that reserves now approach 9 weeks of imports. Thus it can be estimated that reserves range between USD 19-20bn, approximately 25% higher than the end of 2011.

 Our ViewAs the AGM season is coming to an end, we observe that most companies suffered heavily from the 2011 global and domestic economic downturn, with Real Estate, Construction, Construction Materials and Transportation sectors getting hit the most as a result  of high interest cost, lack of available credit, frozen property market and increasing oil price. Against this gloomy picture, selective Financials and Export companies became the rare bright sparks when they announced strong earnings growth, having benefited from an opportunistically large interest spread during the year, and weaker VND against the USD, respectively. As a defensive sector, Food & Beverage held up steadily through the storm with most companies showing resilient bottom lines.

We believe that monetary policy starts to have positive impact on the economy. Looking forward, we think that with improving macro economic factors and new tax subsidies, companies with good governance and efficient management will gain further success. We continue to like F&B, Banks, Oil & Gas and are starting to go back into Property and Construction Materials.

Source: VAM, 16.05.2012

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

RTS Connects to Thailand Futures Exchange (TFEX)

Singapore/Bangkok March 8, 2012 – RTS Realtime Systems Group, a leading global trading solutions provider, today announced that the firm is now able to offer market access to the Thailand Futures Exchange plc (TFEX), a subsidiary of the Stock Exchange of Thailand (SET) Group.

Fueled especially by the interest in gold and the underlying arbitrage opportunities, the new RTS offering provides native connectivity to TFEX, giving RTS customers the ability to participate in one of Asia’s fastest growing exchanges. Volume in the TFEX Gold futures contract grew four-fold in the last two years.

Andy Woodhouse, RTS Managing Director, APAC, said, “Asia’s markets including TFEX are creating real opportunities for investors. New arbitrage opportunities across markets and easier access to the growing economies such as Thailand are all contributing to the rise in volumes in Asia. Our algorithmic trading solutions, including the RTD Tango algorithmic trading engine and the hybrid RTD Tango Trader solution, are ideally suited to detect and capture such opportunities. With customized, ready to deploy state-of-the-art algos, local and international traders can fully automate their strategies.” … read the full press release

Following the liberalization of brokerage licensing by the Thailand Securities and Exchange Commission, the Thailand Futures Exchange (TFEX) recently started accepting new members and welcoming new market makers.

Source: RTS, 08.03.2012

Filed under: Asia, Thailand, , , , ,

VAM: Vietnam Market Analysis November 2010

Market Update - November was characterized by mixed news flow. On the one hand, there were a couple of good macroeconomic developments, namely (i) the last quarter GDP growth expected at 7.24%, resulting in a full year growth of 6.7% versus 5.32% last year; (ii) capital inflows from disbursed foreign direct investment and official development assistance keeping improving; (iii) overseas remittances likely to reach US$ 7.2 billion in 2010 compared to US$ 6.6 billion in 2009; (iv) full year export growth expected to reach 23%, nearly quadrupling the governments earlier target of 6%, while imports growth will stay slower at 19% – 20%; (v) overall balance of payments expected to be $2 billion in deficit this year, down from last year’s deficit of $8.8 billion. VAM Monthly Newsletter – November ’10

On the other hand, ongoing accelerating inflation and volatile FX market continued to attract increasing concerns from policy makers as well as market participants. November CPI increased by 1.86% from October, marking the third consecutive MoM increase above 1% after six months being kept under this threshold. November number brought year-to-date figure to 9.58% and full year CPI is being forecasted to stand at 11-12%. The FX market, too, heated up during November, with the greenback being offered at 21,500 dong/dollar in the unofficial market at month end, 10.25% higher than the official ceiling band of 19,500 despite the governments announcement early in the month that it would allow the State Bank of Vietnam (SBV) to use the foreign reserves to inject dollars into the market and that the SBV had no plan to further depreciate the dong until the Lunar New Year (February 2011).

Strong rally in the local gold price in the past few months has been a major cause for the FX situation and panicky market sentiment. After the SBVs decision to allow gold import in early November, local gold prices started to cool down and got to around VND35.9 million per tael (local unit for gold, equivalent to about 1.2556 troy ounce) at the end of the month compared to its all time record high at VND38.2 million per tael at mid-November.

As GDP growth target for this year has been achieved, the governments focus now moves to curbing inflation and cooling the FX and gold markets to stabilise the macro environment. They implemented successive tightening monetary measures in November, such as (i) raising interest rates by 1% per annum (VND base interest rate to 9% p.a., refinancing interest rate to 9% p.a., discount rate to 7% p.a., and overnight rate to 9%); (ii) removing cap on both deposit and lending rates for banks. Toward month end, many banks increased the deposit rate for VND to 13-14% per year. Some smaller commercial banks even offered borrowing rates of 14.5-15% p.a. in an attempt to retaining their depositors and mobilising more capital for their increasing year-end lending demand. However, the desired effects on inflation of these tightening policies will be likely to be seen only from next year.
The VN-Index ended November at 451.59, down 1.5% on-month. During the month, we saw a divergence in the market trend, hitting the trough at mid month and then significantly picking up during the last week of the month. Additionally, the low average liquidity might indicate that retail investors were still cautious about the recovery of the equity market in the short-term.

Our View – We are not too bullish about the market in the short-term but equities have come down to the very attractive level. The negative macro situation has mostly been priced in so it might be a good time for investors to consider accumulating stocks. Nevertheless, we think the Government should be more transparent and proactive in implementing its monetary policy measures in order to restore investors confidence and to help the equity market sentiment.
We continue to like stocks in consumer staples, oil & gas, and materials. For a longer horizon we prefer materials, real estate and banking sectors. In this time of volatility, we recommend that our investors keep close tabs on macroeconomic developments for signs of recovery and stability before jumping in.
Source: VAM, 08.12.2010

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

Argentina to have its first Gold Futures Contract – on November 8, the New Gold Futures and Options Contract will begin trading In ROFEX.

As from November 8, gold futures and options will be traded for the first time in Argentina. This new hedging tool, approved by the National Securities Commission (CNV), will be listed next week and will be part of ROFEX´s Financial Derivatives Division (DDF). “The launching of the gold contract sprang from an initiative of Banco Ciudad, the main participant of the local gold market, which will also act as the product’s Market Maker, allowing traders to find a liquid market”, stated Luis Ossola, ROFEX´s president.

Taking as a reference the most important markets in the world, ROFEX will be the first local derivatives market to offer gold futures contracts, whose reduced size as compared to international contracts will offer the retail investor the possibility to participate. It will be quoted in US dollars per troy ounce (31.103 grams), in line with international trading.

Thus, this contract aims at providing smaller investors with an alternative of price coverage for domestic assets related to the metal.

“With this new contract’s trading, ROFEX will try to expand the local financial market, providing an innovative tool that generates trading records worldwide. According to estimates by the Futures Industry Association (FIA), five of the twenty most traded metal derivatives in 2009 were on gold”, emphasized Diego Fernández, ROFEX´s general manager.

Source: Mondovisione, 04.11.2010

Filed under: Argentina, Exchanges, Latin America, News, , , , , ,

SMX To List TOCOM Products

Singapore Mercantile Exchange (SMX), the first pan-Asian multi-product commodity and currency derivatives exchange, and the Tokyo Commodity Exchange, Inc. (TOCOM), Japan’s leading commodity futures exchange, today announced that they have signed a licensing agreement for SMX to list Contracts* on TOCOM products.

Building upon the Memorandum of Understanding (MoU) signed on 23 April 2010 to explore mutually beneficial partnerships, senior officials from both exchanges signed a licensing agreement which would see the listing of several SMX TOCOM Contracts for products already being traded on TOCOM. These include crude oil, gasoline, kerosene and gas oil. The agreement does not rule out the possibility of cross-listing wherein TOCOM might also list SMX products.

Agreement terms include the license for SMX to use TOCOM prices as the last settlement price, delivery price, reference price and daily settlement price and/or final settlement price for SMX TOCOM Contracts.

Mr. Thomas McMahon, Chief Executive Officer of SMX, said: “This agreement is exciting for us for several reasons. Aside from augmenting our initial MoU and being able to roll-out contracts the markets are already familiar with, our foremost aim to develop a credible pan-Asian platform is being achieved at good speed. We are encouraged by TOCOM’s enthusiasm and foresight for a united Asian derivatives marketplace, and will be announcing more of such developments in the coming months. We must embrace exchange partnerships as crucial steps to reducing fragmentation of derivatives trading during Asian business hours.”

Mr. Tadashi Ezaki, President and Chief Executive Officer of TOCOM, said: “SMX is the up-and-coming derivatives exchange in Asia, which commenced trading in August this year and grows rapidly with an increasing range of listed products. We expect that licensing SMX to use TOCOM prices for their new products to be listed shall help increase arbitrage between TOCOM and SMX increase, and accordingly enhance the convenience of the markets. We continue to work together with SMX to further develop derivatives trading in Asia.”

The listed commodities currently trading on TOCOM include futures and options contracts for gold, and futures contracts for silver, platinum, palladium, gasoline, kerosene, gas oil, crude oil, rubber and Nikkei-TOCOM Commodity Index. SMX launched live trading on 31 August 2010 with four products consisting of Futures Contracts on crude oil benchmarks Brent Crude Oil priced in Euros and West Texas Intermediate Crude Oil, Gold with physical delivery-based settlement and Euro-US Dollar Currency Futures.

In August 2010, market leaders in low latency services in Japan and Singapore – KVH Co., Ltd. (KVH) and Singapore Telecommunications (SingTel) respectively announced provision of KVH-SingTel?s low latency network solutions to market participants, enabling both exchanges to facilitate an ultra low latency and fully redundant network service between Japan and Singapore.

* Subject to regulatory approval by the Monetary Authority of Singapore (MAS)

Source:MondoVisione 15.10.2010

 

Filed under: Exchanges, Japan, News, Singapore, , , , , , , , , , , ,

SMX To Go-Live On 31 August 2010

Singapore Mercantile Exchange (SMX), the first pan-Asian multi-product commodity and currency derivatives exchange, today announced that the Exchange will go live for trading on 31 August 2010.

With rapid economic expansion in the region and Asia’s demand for commodities, SMX is strongly positioned to offer an integrated and single-platform for multiple products. It has completed conformance testing with Independent Software Vendors (ISVs) and industry- wide testing with member firms prior to its impending launch.

Mr. Jignesh Shah, Vice Chairman of SMX and Group CEO of Financial Technologies Group, said, “SMX’s platform will herald Asia?s first stand-alone and next-generation global derivatives exchange for unrestricted cross-border trading in futures, options and other derivatives across multiple asset classes. We are looking forward to our newest venture to establish a footprint for transparent electronic trading that will manifest itself as a major platform for price discovery for commodities trading in Asia. SMX is well poised to unlock the immense potential of Asia and further position the region as a leading derivatives trading hub.”

Mr. Thomas J. McMahon, CEO of SMX, said, “We are witnessing Asia?s expanding influence on the global commodities market. SMX?s launch is a step in the right direction as we leverage off Singapore?s unique position as a premier financial and commercial hub in the region. The launch will provide market players in Asia the flexibility to trade products generic to regional trade flows within the Asian business day.”

The Monetary Authority of Singapore (MAS) recently granted SMX „Approved Exchange” status to operate as a regulated and fully licensed exchange.

The first phase of product launches will include a Gold Futures Contract with physical delivery in high-security vaults in Singapore, West Texas Intermediate (WTI) Crude Oil, Brent-Euro Crude Oil and Euro-US Dollar Futures Contracts, amongst others. The first phase of product launches will be followed by multiple product launches to be introduced in the market after consultation with industry participants.

Source, MondoVisione, 17.08.2010

Filed under: Exchanges, News, Singapore, , , , , , , , , ,

ETF Securities: Commodity ETC Assets Triple Over Past 12 Months To $17bn As Demand For Gold, Energy, Agriculture And Other Hard Assets Surge

  • Record breaking year for commodity ETCs, with assets up over $11bn to $17bn
  • ETCs tracking agriculture and industrial metals show highest buy/sell ratio
  • Physically-backed precious metal holdings – gold, silver, platinum, palladium – reach historic highs
  • ETFS Copper (COPA) up 118% in 2009 to end-November, the best performing ETC, followed by ETFS Physical Palladium (PHPD) up 96% and ETFS Zinc (ZINC) up 81%
  • ETFS Industrial Metals (AIGI) best performing commodity basket in 2009, up 67% YTD
  • ETFS Forward All Commodities DJ-UBSCI-F3SM (FAIG) up 268% over the past 10 years, the top performing major asset class over the period

Commodities bounced back strongly this year following the recent credit crisis, with ETFS Forward All Commodities DJ-UBSCI-F3SM (FAIG) up 20% year-to-date and 268% over the past 10 years based on data to the end of November. ETFS Industrial Metals (AIGI) was the best performing ETC, with YTD growth of 67%. Industrial metals significantly outperformed developed market equities, outperforming the Dow Jones Euro STOXX 50 by 37 percentage points since the start of 2009. Industrial metals have also outperformed bonds, cash and real estate over the same period as the global recovery has become more entrenched and market appetite for plays on the recovery has accelerated. The precious metals sub-sector was the next best performing major sector, with ETFS Physical Silver (PHAG), ETFS Physical Platinum (PHPT) and ETFS Physical Palladium (PHPD) all returning over 60% YTD.

Commodities remain the best performing major asset class over a 10 year horizon, with ETFS Forward All Commodities DJ-UBSCI-F3SM (FAIG) registering cumulative growth of 268%, compared to a 10% rise in the Dow Jones Euro STOXX 50, a 13% rise in the FTSE 100, a 6% rise in property1 and 75% return on bonds2. This outperformance was achieved with lower average annual volatility than equities over the same period (see table below).

Asset Class Returns Compared (YTD, and Past 10 years)

YTD 10 Years Volatility3
ETFS Industrial Metals 67% 178% 23%
ETFS Forward All Commodities DJ-UBSCI-F3SM 20% 268% 15%
FTSE 100 37% 13% 23%
Dow Jones Euro STOXX 50 30% 10% 24%
US Tracker 1-10 Yrs Bond Index 0% 75% 4%
UK EPRA Real Estate Index 21% 6% 25%

Source: Bloomberg
1 Property: proxied by the UK EPRA Real Estate Index
2 Bonds: Proxied by US Tracker 1-10Yrs Bond Index
3 Calculated using the annual volatility of daily returns from 30th November 1999 to 30th November 2009

2009 has been a record breaking year for commodity inflows, with assets under management (AUM) in ETF Securities’ ETCs and ETFs rising over $11 billion to $17 billion over the past 12 months. Physical gold and long natural gas ETCs have seen the largest investment demand YTD, with inflows of $2 billion and $1 billion respectively since the start of 2009.

In terms of investor positioning, agriculture ETCs such as ETFS Agriculture DJ-UBSCISM (AIGA) had the highest buy/sell ratio of any sector in the 11 months ended November with a ratio of 3.2. This is consistent with steady inflows into agriculture ETCs in 42 of the 48 weeks to end-November. Industrial metals had the next strongest buy:sell ratio at 2.7, coinciding with the sharp rise in industrial metal prices in 2009. Although energy ETCs have seen the second largest inflows in 2009 YTD, their buy/sell ratio was one of the lowest at 1.8 as extremely strong oil inflows in the first four months of the year and the surge of inflows into natural gas ETCs since May were partially offset by outflows in May and June from ETCs tracking shorter-dated oil futures returns.

Source: ETF Securities

Industrial metals were the strongest performing sector in 2009, up 67% to the end of November. Gains were led by a 118% rise in ETFS Copper (COPA) and an 81% rise in ETFS Zinc (ZINC). ETFS Aluminium (ALUM) remained the weakest of the industrial metals, but still managed a 24% return in the 11 months ended November. Flows into industrial metals accelerated in 2009, taking industrial metal assets to almost twice their previous peak level seen in H1 2008. Robust Chinese demand, coupled with stronger manufacturing activity in developed economies, has underpinned investor interest in industrial metals.

Top 10 Long and Short ETC Performance

Top 10 Longs YTD (End November 09)
ETFS Lead* (LEED) 125.8%
ETFS Copper (COPA) 118.3%
ETFS Physical Palladium (PHPD) 95.9%
ETFS Zinc (ZINC) 80.8%
ETFS Gasoline (UGAS)
ETFS Physical Silver (PHAG)
ETFS Industrial Metals DJ-UBSCISM (AIGI)
ETFS Silver (SLVR)
ETFS Physical Platinum (PHPT)
ETFS Sugar (SUGA)
74.4%
68.1%
67.3%
62.4%
60.6%
56.5%
Top 10 Shorts YTD (End November 09)
ETFS Short Natural Gas (SNGA) 69.1%
ETFS Short Lean Hogs (SLHO) 16.1%
ETFS Short Livestock DJ-UBSCISM (SLST) 14.5%
ETFS Short Live Cattle (SLCT) 9.3%
ETFS Short Wheat (SWEA)
ETFS Short Corn (SCOR)
ETFS Short Energy DJ-UBSCISM (SNRG)
ETFS Short Grains DJ-UBSCISM (SGRA)
ETFS Short Agriculture DJ-UBSCISM (SAGR)
ETFS Short All Commodities DJ-UBSCISM (SALL)
8.6%
-2.7%
-6.9%
-9.7%
-16.3%
-19.3%

Source: ETF Securities

* ETFS Lead saw 126% growth based on simulated returns based on the underlying DJ-UBS Lead Sub-IndexSM. This product was listed in November 2009.

Within precious metals, the best performing commodities were metals tied to the industrial cycle, with ETFS Physical Palladium (PHPD) up 96%, ETFS Physical Silver (PHAG) up 68% and ETFS Physical Platinum (PHPT) up 61%. Gold prices reached fresh historic highs in 2009, breaching the $1200/oz mark by the start of December. Interest in physical gold holdings was extremely strong, up 1.9 million ounces (31 %) in the 11 months to the end of November. This marks the second year of rapid growth in physical gold holdings, which have more than doubled (up 4.2 million ounces, or $5 billion at current gold prices) since the start of 2008. Total assets in ETF Securities’ physically-backed gold ETCs stood at $9.5 billion by the end of November 2009, making them the largest ETF/ETC holdings in Europe and the second largest ETC/ETF holding in the world. Other physical precious metal ETC holdings also posted new historic highs in 2009, with physically-backed silver, platinum and palladium ETCs seeing their metal holdings (in ounces) reach the highest levels since inception by the end of November.

The energy sector saw mixed performance over 2009, with a 74% rise in ETFS Gasoline (UGAS) and a 44% gain in ETFS Brent 1mth (OILB) offset by a 57% drop in ETFS Natural Gas (NGAS). In H1 2009 sharp falls in oil prices attracted almost $1 billion of inflows into long oil ETCs between January and May. There was some profit taking on these positions subsequently, coinciding with $1.4 billion in inflows into long natural gas ETCs. These flows suggest some rotation in investor positioning within the sector as natural gas prices have underperformed their oil counterparts.

Agriculture saw a sharp divergence in returns with ETFS Softs (AIGS) up 34% in the 11 months to the end of November, compared to a 1% gain in ETFS Grains (AIGG). ETFS Softs were boosted by a 57% rise in ETFS Sugar (SUGA) and a 29% rise in ETFS Cotton (COTN). ETFS Soybeans (SOYB) was up 25% while ETFS Wheat (WEAT) was down 20% and ETFS Corn (CORN) was down 9%. Agriculture saw the most consistent and third largest inflows (behind energy and precious metals in 2009 totalling over $1 billion YTD. Historically low levels of inventories, together with a number of weather-related crop disruptions this season, have helped underpin investment demand in agriculture in 2009.

Nicholas Brooks, Head of Research and Investment Strategy, commenting on the 2009 performance numbers said: “Demand for commodity ETCs has been incredibly strong in 2009. ETF Securities assets under management nearly tripled to $17bn over the past 12 months on the back of strong and steady demand for gold and other physically-backed precious metal ETCs as well as energy, agriculture and industrial metal ETCs. Assets under management are now over 70% higher than they were in July 2008 before the financial crisis broke out. Most of the demand has been for long exposure, with investors’ building their holdings of “hard assets” both for their potential price-supportive long-term supply-demand fundamentals, as well as their potential to hedge against inflation and currency debasement risks as government finances deteriorate and central banks keep the liquidity taps open.

Source: MondoVisione, 09.12.2009

Filed under: Library, News, Risk Management, , , , , , , , , , , , , ,

Mexico produces more gold

Mexico is moving rapidly to become a gold producer power by boosting its production during the last decade, reported Stockhouse, a Canadian financial advisory firm.

Since 1998, the Mexican production Gold doubled last year, reaching a total of 45,075 kilograms, a figure that no other producer of this metal had shown.

Last year, world production of gold showed a deficit of almost 20% equivalent to 567,000 kilograms, which clearly demonstrates that, the trio of gold producers South Africa, USA and Australia are losing their luster.

The firm notes that among all nations, only Mexico gold production continue to experience an impressive growth. Production estimates predict that 2009 will be an exceptional year with another significant increase in the production of up to 54% compared to 2008 figures.

Gold in 2008 represented 16% of the total value of the country”s mining-metallurgical, breaking the one of silver which represented 15%.

This boom is due to the opening of foreign investment laws, a modern mining law, and NAFTA. These changes allow now that more than 250 foreign companies, mostly Canadian, are in Mexico working on at least 600 projects.

The Canadian company Agnico Eagle Mines opened this month a mine with a processing capacity of 4,000 tons per day of gold and silver, in which the company invested $240 million dollars.

The mine site, called Pinos Altos”, is located in the municipality of Ocampo in the northern state of Chihuahua, and is one of the most important and modern mining operations of the country.

The mine, which will be have underground and surface operations will generate about 500 direct jobs and 1, 500 indirect and has reserves of 41.8 million tons of gold and silver content.

Another project that is already succeeding is the Palmarejo, of the Canadian company Coeur d”Alene in the state of Chihuahua, which since March of this year invested $225 million dollars and generated 500 direct jobs for the production of 9 million ounces of silver and 110,000 ounces of gold.

Major domestic and foreign mining companies investing in Mexico in gold production include Grupo Mexico, Fresnillo Plc, Gold Corp Mexico, Empresas Frisco, Gammon Gold, Alamos Gold, and Silver Panamerican.

This increase in production coincided with the rise in prices gold in the last decade, a fact which helped for the first time last year the value of gold production in Mexico exceeded that of silver.

According to the Mining Chamber of Mexico (Canimex), last year gold accounted for 16% of the total value of mining and metallurgical of the country, surpassing that of silver, which represented a 15%. It also notes that the projected gold production in Mexico will grow in coming years and could place the country among the top 5 global producers of precious metal.

Stockhouse recognizes that growth of production in Mexico is enormous, since only 15% of the territory is geologically fertile.

Currently 71% of gold production at the national level is concentrated in only three states: Sonora 29% Chihuahua 26%, Durango 16%.

Source:E-mid, 26.11.2009

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

Tokyo Stock Exchange lists Indian ETF – S&P CNX Nifty linked ETF

Today, the Tokyo Stock Exchange approved the listing of the “NEXT FUNDS S&P CNX Nifty Linked Exchange Traded Fund” managed by Nomura Asset Management Co., Ltd.. The ETF is planned to be listed on Thursday, November 26, 2009.

This is the first ETF linked to Indian stocks to be listed on markets in Japan. The “S&P CNX Nifty Index” to which the ETF is linked is comprised of the 50 premier issues of the National Stock Exchange of India.

Code 1678 (ISIN JP3047100007)
Name NEXT FUNDS S&P CNX Nifty Linked Exchange Traded Fund
Fund Administrator Nomura Asset Management
Listing Date November 26, 2009
Trading Unit 100 units
Underlying Index S&P CNX Nifty Index

TSE entered into a memorandum of understanding with the National Stock Exchange of India on October 15, 2006. Through this ETF, TSE hopes to supply investors with better access to the Indian securities market and contribute to the development of the markets in both of our countries.

With this listing there will be a total of 69 ETFs listed on the Tokyo market, bringing us closer to the goal of 100 listed ETFs by fiscal year 2010, as laid out in the Medium-Term Management Plan. TSE will continue working to diversify the ETF market and improve the convenience of our market for all investors.

Additional ETF’s listed in Tokyo include Brazil’s IBOVESPA, China A Share CSI300 as well as  ETC (Exchange Trade Commodities) like Gold, Silver, Platinum and Palladium. See also TSE lists Brazilian ETF.

Tokyo Stock Exchange officel ETF site
ETFs on TSE November 2009 (.doc and .cvs)

Source: Tokyo Stock Exchange 06.11.2009

Filed under: Asia, Exchanges, India, Japan, News, , , , , , , , , , , , , , , , , , , , , , , , , ,

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