US Markets sold off into the close yesterday after Stocks rose to fresh
three-month highs, extending last week’s rally on the hope for more European
Central Bank assistance for the troubled euro zone.
The S&P 500 rose to its
highest point since early May and approached 1,400, a psychologically important
level that could spur further buying if convincingly breached. The S&P
hasn’t closed above that level since May 2.
Vietnam
The VN Index is the third-best
performer in Asia this year, rebounding from a 27 percent loss in 2011 amid
speculation the central bank would ease monetary policy to bolster growth. The
gauge is valued at 9.9 times estimated profit, from a record low of 7 times in
January. The MSCI Emerging Markets Index traded for 10.4 times on Aug. 3.
The government said on July 24
that it will lift from Sept. 15 the amount of registered capital companies must
have to list on Vietnam’s exchanges in a bid to improve the quality and size of
publicly traded equities.
The combined value of stock
changing hands climbed 65 percent this year through Aug. 1 from the same period
last year. The total slumped to 14 trillion dong ($671 million) last month on
the Ho Chi Minh City Stock Exchange, from 23.45 trillion dong in June,
according to data from the bourse.
The VN Index has fallen 14
percent from a May 8 peak as data on June 29 showed Vietnam’s gross domestic
product grew 4.38 percent in the first half, compared with 5.63 percent a year
earlier. The government’s Deputy Minister of Planning and Investment Cao Viet
Sinh said in June that full-year expansion may be as low as 5.2 percent.
A strong account surplus and the
complimentary effect by the better performing members in the Association of
Southeast Asian Nations (ASEAN) on the rest of the bloc could cushion the
impact of the Eurozone economic crisis, said an economist.
Malaysia’s Maybank regional head
of research and economics, PK Basu told Xinhua in an interview recently that
ASEAN has been progressing well with the old ASEAN six, composed of Indonesia,
Malaysia, Thailand, Singapore, Brunei and the Philippines, recording large
account surpluses that complimented the financially weaker countries in the
region to overcome extreme volatility in the global economic environment.
“Within ASEAN, there were a few
countries, such as the Philippines which traditionally has current account
deficits but even the Philippines now has structural account surpluses so the
old ASEAN six economies now have current account surpluses which have cushioned
them from the impact of the global financial crisis, ” Basu said.
“There are some new ASEAN
economies like Vietnam which has current account deficits still but there is a
nice complementarity between old ASEAN and new ASEAN. The old ASEAN countries
have excess capital that increasingly flows to ASEAN economies. That is
creating a symbiotic relationship that is driving ASEAN forward. There have
been a few countries like Vietnam, Cambodia that have suffered some imbalances
during this global financial crisis and some macroeconomic challenges but they
have largely overcome them,” he added.
ASEAN groups Brunei, Cambodia,
Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand,
Vietnam.
Vietnam’s inflation rate
moderated to 14 percent in March from a peak of 23 percent last August while
its trade deficit narrowed significantly from last year, signaling an
improvement in the more vulnerable economies that are now on a more stable path
with the stronger economies in the bloc.
The International Monetary Fund
had earlier cut its growth projection for ASEAN to between 5.2 and 5.6 percent
next year, down from the previous forecast of 5.6 to 5.8 percent before it
bounces back at 6.5 percent in 2013.
ASEAN’s partners — China, Japan
and South Korea — have contributed to ASEAN’s growth, particularly in helping
the bloc achieve its target by 2015 to become an integrated, single economy.
“China has become ASEAN’s largest
single trading partner as it has become the largest trading partner for most
countries in the world. There is good two-way trade between ASEAN and China,”
Basu said. “Chinese investments have been heavily focused on countries like
Indonesia, there are some interests in Malaysia as well and some growing
interest in Thailand. Singapore has a long- established relationship with China
as lots of Singapore corporates have invested heavily in China in the past.
China is continuing to show interest in not only the old ASEAN but also some of
the new ASEAN economies,” he said.
Although the amount of foreign
direct investment was relatively small — less than 1 percent of the GDP on
either side, it is growing given the substantial projects introduced from
either side recently.
Statistics showed China’s
investment in ASEAN countries totalled 3.5 billion U.S. dollars in 2010, a
13-fold increase from 2003.
ASEAN’s investment in China
reached 6.3 billion U.S. dollars, up 35.2 percent over the same period last
year.
On average, investment ratio in
2010 of three emerging ASEAN economies — Thailand, Malaysia and Indonesia — are
about 10 percent of GDP, below the 90?s pre-crisis levels, according to the
International Monetary Fund.
Basu predicted Malaysia’s economy
growth at 4.5-5.5 percent in the second half of the year after the central bank
put its first quarter’s GDP at 4.7 percent.
He said interest rate in Malaysia
is likely to maintain at 3 percent, where it had been kept by the bank for the
11th time since May last year, providing a leeway for the bank to cut the rate
should the Eurozone breaks up or its crisis deteriorates.
Market Vectors Vietnam ETF.
(NYSEARCA:VNM)
VNM only holds 32 companies and
is highly focused on three sectors which make up almost 65% of the fund’s total
assets; financials, energy, and industrial materials. This is achieved by
tracking the Market Vectors Vietnam Index, which provides exposure to publicly
traded companies that, predominantly, are domiciled and primarily listed in
Vietnam and which generate at least 50% of their revenues from Vietnam.
The Index comprises:
A diversified group of many of
the largest and most liquid companies in the investable universe
Companies eligible for inclusion
in Index:
Predominantly*, companies
domiciled and primarily listed in Vietnam, or generating at least 50% of
revenues from Vietnam
To a lesser extent*,
non-Vietnamese companies that generate, or are expected to generate, at least
50% of revenues from Vietnam or that demonstrate a significant and/or dominant
position in the Vietnamese market and are expected to grow
Market cap exceeding $150 million
Three-month average daily
turnover greater than $1 million
Trade on recognized domestic or
international stock exchanges
*Currently, approximately 70% of
the market capitalization of the Index; this percentage is expected to increase
in the future.
Holding
Shares
Market Value (USD)
% of net assets
VINCOM JSC VIC VN 5,078,450
24,811,581
7.91%
SAIGON THUONG TIN COMMERCIAL STB
VN 18,778,380 22,955,354
7.32%
VIETIN BANK CTG VN 22,442,962
22,776,981
7.27%
BAOVIET HOLDINGS BVH VN 8,824,836
22,578,907
7.20%
JSC BANK FOR FOR VCB VN 15,134,288
22,200,825
7.08%
PETROVIETNAM FER DPM VN
10,966,210 19,770,685
6.31%
CHAROEN POK-NVDR CPF-R TB
12,374,100 14,709,566
4.69%
GAMUDA BHD GAM MK 11,417,491
12,369,495
3.95%
OIL & NATURAL GA ONGC IN
2,629,298 12,173,293
3.88%
PREMIER OIL PLC PMO LN 2,249,788
11,673,025
3.72%
Trai Thien USA Inc (PINK:TRTH)
Trai Thien USA is a fast-growing
Vietnam-based dry bulk shipping company operating a 21,990 DWT fleet comprised
of six geared bulk vessels specializing in providing ocean transportation
services for raw material input items such as coal, ore, grain, lumber, cement,
steel and fertilizer throughout the Southeast Asia region.
After China, the primary sources
of future bulk demand are India, Brazil and Vietnam. The region contains three
of the four global BRICs (Brazil, Russia, India, China), seen by economists as
the future growth leaders in the world economy.
The Asia Pacific region accounts
for 60% of the world’s population and almost 70% of world sea-borne trade in
bulk commodities.
In order to meet anticipated
continued growth in demand from an expanding base of overseas and domestic
Vietnamese customers, as well as to expand the geographic regions that it can
service to include potentially more profitable routes in East and South Asia.
The Company’s Vietnam-based
operations are located in Ho Chi Minh City, which together with the surrounding
areas, accounts for more than seventy percent of Vietnam’s total annual cargo
traffic.
Pink Sheets TRTH
Current Price $0.51
Current PE 4.19
Revenue Growth 148%
Target Price 2013 $3.40
HCM Rating Strong Buy
Financial Highlights
The emerging economies of the
Asia Pacific (ASEAN) region will continue their growth pattern despite the
continuing financial crisis in Europe according to the Asian Development Bank.
Free Trade Agreements including
ASEAN, AFTA, CAFTA, ASEAN +3 will more than triple regional trade.
· Year-end 2011 revenues
increased over 20.9% as compared to the previous fiscal year, from $12,232,991
in 2010 to $14,794,939 in 2011.
· Income from Operations
increased over 148% from 2010 to 2011, from $1,051,543 to $2,615,000
· Net Income increased from a
loss of $539,452 in fiscal 2010 to a positive $1,377,391 in 2011.
· The Company is operating a
21,990 DWT fleet comprised of six geared bulk vessels specialized in providing
ocean transportation services for raw material input items such as coal, ore,
grain, lumber, cement, steel and fertilizer throughout the Southeast Asia
region.
The HCM Trade Forecast is
predicting that world trade will grow by 73% in the next 15 years, with
merchandise trade volumes in 2025 hitting $43.6trillion compared to today’s
$27.2trillion.
Investing in Tra Thien
ASEAN +3 is the Association of
Southeast Asian Nations (ASEAN), the People’s Republic of China (including Hong
Kong), Japan, and South Korea. Home to 600 million people, ASEAN has a combined
gross domestic product (GDP) of US$1.8 trillion with total trade valued at $2
trillion among the countries.
ASEAN is set to explode as an
economic force in 2015 as financial, trade and investment rules become
integrated and seamless. ASEAN last year secured $78.5 billion in investments.
Regional trade also increased by 32.9 percent to more than $2 trillion and Trai
Thien is well positioned to capitalize on the growing Inter-ASEAN +3 trade.
ASEAN is beefing up various
frameworks for cooperation and development within the region and with its
trading partners, in preparation for regional economic integration by 2015.
The changing trade barriers have
seen fast paced growth in agricultural and mineral exports around the region,
these changes have already reflected themselves on the books at Trai Thien USA
as revenue has almost tripled in the last year.
The Trai Thien fleet has the
distinct advantage of having been designed to suit the region, while huge Dry
Bulk Carriers service many areas. Most of the trade in agriculture and minerals
is done from ports in ASEAN that cannot accommodate the large ships, nor can
the large ships be loaded and unloaded at these smaller ports due to the lack
of stevedoring infrastructure.
Trai Thien smaller fleet can
service these ports directly, removing the additional costs of trans-shipping
and adding savings in terms of cash and time to purchasers.
Based on corporate and market
growth and given a conservative set of ratios in our financial model, we see
Trai Thien trading over $3.40 in 2013.
The Fleet
• Fleet of highly versatile
geared bulkers with average capacity of 3,700 DWT and average age of 3 years.
• Optimal payload capacity for
growing small and medium production sector that dominates economic activity
throughout the region.
• Focus on dry bulk commodities
such as forestry products, grains, cement, steel, ore and coal.
• Vessels equipped with deck-side
cranes which provide flexibility in cargo handling and accessing and servicing
underdeveloped, lower cost secondary ports throughout the region.
• Draft efficiency and deck-side
gears reduce dependency on major ports and reduce risk exposure to growing
operational inefficiencies affecting them.
• In order to meet anticipated
continued growth in demand from an expanding base of overseas and domestic
Vietnamese customers, as well as to expand the geographic regions that it can
service to include potentially more profitable routes in East and South Asia,
Trai Thien has made deposits to acquire six larger 7600 DWT capacity
new-buildings, which depending on the company’s ability to meet additional
capital resource requirements, are expected to be delivered in 2011 and 2012.
• Depending on the ability to
raise approximately $50m in external funding required to cover outstanding
balances due on vessels in construction, for which there is no assurance, the
Company will focus on what it believes to be more profitable 7000-8000 DWT
vessels in order to meet growing demand for larger payload capacities while
still maintaining an ability to broadly access the secondary coastal and river
ports that characterize the trade.
• Located in Ho Chi Minh City,
the economic heart of Vietnam’s trade and transportation activity.
• ASEAN satellite market benefits
from geographic proximity to major world economic activity drivers China and
India.
Trai Thien and China
Our research indicates that
rising trade in ASEAN +3 will propel the ASEAN trade bloc of Southeast Asia
nations to become China’s largest trading partner by 2015.
The China Council for the
Promotion of International Trade said the 2010 ASEAN-China Free Trade Agreement
removed trade barriers, and that the value of imports and exports between China
and ASEAN states could surpass $500 billion within three years.
As China moves away from its
dependency on export markets and encourages more trade with countries with
which it has signed FTAs, the value of goods moving between the ASEAN bloc and
China is forecast to increase at a faster rate than imports and exports between
China and its more established trade partners.
“Thanks to zero tariffs,
preferential trade policies and geographic advantages, both the increasing
speed and scale of that trade will be in the forefront globally and ASEAN will
become China’s No. 1 trading partner by 2015,” said Zhang Wei, vice chairman of
the China Council for the Promotion of International Trade.
First quarter 2012 trade between
China and the ASEAN nations — Brunei, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, the Philippines, Singapore, Thailand and Vietnam — increased 9.2
percent year-over-year. That is compared with a 2.6 percent gain in trade
between China and the U.S. and a 1.6 percent decline in trade between China and
the EU.
That growth followed the 24
percent increase in trade between ASEAN and China last year when the ASEAN bloc
surpassed Japan to become China’s third-largest trade partner after the EU and
the U.S.
Trai Thien is located at the
geographic centre of ASEAN +3 and is perfectly placed to capture increasing
market share in a rapidly growing market.
VINACAPITAL VIETNAM O/FD
(PINK:VCVOF)
VinaCapital is the leading
investment management and real estate development firm focused on Vietnam, with
a diversified portfolio of almost USD2 billion in assets under management.
VinaCapital was founded in 2003 and boasts a team of managing directors who
bring extensive international finance and investment experience to the firm.
VinaCapital believes the energy,
creativity and entrepreneurial spirit of the people of Vietnam make it the
world’s top emerging market investment opportunity. Our mission is to produce
superior returns for investors by using our experience and knowledge to
identify the key trends and opportunities that emerge as Vietnam continues to
develop its economy. To achieve this, VinaCapital has industry-leading asset
class teams covering capital markets, private equity, fixed income, venture
capital, real estate and infrastructure.
VinaCapital’s core business is
VinaCapital Investment Management Ltd, which manages three closed-end funds
trading on the AIM Market of the London Stock Exchange. These funds, at a
combined net asset value (NAV) of USD1.6 billion as of December 2011, make
VinaCapital the largest asset manager focused on Vietnam and its neighbouring
countries. The funds are:
VinaCapital Vietnam Opportunity
Fund Limited (VOF), a diversified fund that invests in all asset classes,
including listed and private equities, real estate, and bonds.
VinaLand Limited (VNL), a real
estate fund that makes direct investments in residential, retail, hospitality
and office sectors.
Vietnam Infrastructure Limited
(VNI), a fund that invests in infrastructure sectors including transport and
logistics, power, telecommunications, and the environment.
VinaCapital Investment Management
Ltd also co-manages the USD32 million DFJ VinaCapital L.P. technology venture
capital fund with Draper Fisher Jurvetson.
VinaCapital also holds stakes in
VinaProjects, a specialist real estate services company encompassing project
management, construction management and urban planning; and in VinaSecurities
JSC, a full-service securities company offering a range of brokerage and
investment banking products and corporate financial services.
VinaCapital has offices in Ho Chi
Minh City, Hanoi, Danang, Nha Trang, Phnom Penh (Cambodia) and Singapore.
Singapore
Noble Group advanced 2.8 per cent
to S$1.105, Wilmar International ended 0.9 per cent higher at S$3.27, Olam
International rose 0.8 per cent to S$1.89, while Golden Agri-Resources gained
0.7 per cent to S$0.73.
CapitaMalls Asia rose 1.8 per
cent to S$1.70 while City Developments also climbed 1.8 per cent to S$11.94.
Neptune Orient Lines climbed 3.4
per cent to S$1.21, Fraser & Neave was up 0.86 per cent at S$8.22, while
DBS Bank rose 1.0 per cent to S$14.90.
Among other stocks, SingTel
declined 2.5 per cent to S$3.45 while Singapore Technologies Engineering fell
1.2 per cent to S$3.25.
Malaysia
The FBM KLCI index gained 4.39
points or 0.27% on Monday. The Finance Index increased 0.05% to 14712.77
points, the Properties Index up 0.37% to 1057.86 points and the Plantation
Index down 0.06% to 8700.81 points. The market traded within a range of 6.53
points between an intra-day high of 1641.03 and a low of 1634.50 during the
session.
Actively traded stocks include
ESCERAM, GPRO, IHH, NICORP, AGLOBAL, AXIATA, PATIMAS , MTRONIC, LUSTER and
PERMAJU. Trading volume increased to 1077.59 mil shares worth RM1535.81 mil as
compared to Friday’s 950.49 mil shares worth RM1528.42 mil.
Leading Movers were AXIATA (+10
sen to RM6.00), DIGI (+7 sen to RM4.68), BAT (+242 sen to RM62.72), YTL (+6 sen
to RM1.82) and TM (+8 sen to RM5.83). Lagging Movers were GENTING (-9 sen to
RM8.96), IOICORP (-5 sen to RM5.13), CIMB (-4 sen to RM7.88), PPB (-24 sen to
RM14.22) and AMMB (-4 sen to RM6.36). Market breadth was positive with 402
gainers as compared to 328 losers.
Thailand
The Thai economy has performed
admirably since disastrous floods disrupted the country’s export sector last
year. Since then massive capital expenditures by the government have powered
Thailand through the financial crisis.
However, like with South Korea
(EWY, quote), weak external demand may start to take a toll on the economy. As
the Bank of Thailand indicated this week, second and third quarter growth will
remain stable, but a return to strong growth won’t likely occur until the
fourth quarter this year.
That said, downward revisions by
the Bank of Thailand may indicate the worst is not yet over. With second
quarter numbers due out in a few weeks, it remains to be seen if they will
belie increased weakness in the Thai economy. Some also fear a liquidity crisis
could materialize, although that would require a much steeper downturn in the
global economy.
Economist Shayne Heffernan of
www.livetradingnews.com Market Outlook
Live Asia Markets
Philippines
The country’s leading financial
institution Banco de Oro Unibank is raising up to $2 billion from an overseas
debt facility to boost funds for long-term relending, including funding for
big-ticket infrastructure projects under the government’s public-private
partnership (PPP) program.
In a disclosure to the Philippine
Stock Exchange on Monday, the bank unveiled plans to set up a $2-billion Euro
Medium Term Note (EMTN) program and retire P10 billion in tier 2 debt by
November this year.
“These are part of the bank’s
liability management initiatives to tap longer-term funding sources and lower
funding costs,” the disclosure said.
The EMTN program is a medium-term
foreign currency funding facility that gives flexibility to issue foreign
currency-denominated notes in the international capital markets. These are
offered on a continuing basis rather than a one-time deal like a bond issue,
thus making it easier for an issuer like BDO to tap offshore capital markets.
EMTNs, which are issued and
traded outside of Canada and the United States, are sold directly to the market
with maturities of less than five years. The issuer maintains a standardized
document and usually sells through preselected buyers.
“Setting up the EMTN program is a
preparatory move on the part of BDO as this will enhance the bank’s ability to
access longer-term funding for relending to projects like infrastructure under
the government’s PPP program,” the disclosure said.
BDO also plans to exercise the
early redemption option on its series 1 Tier 2 notes by November 21.
“Part of the proceeds from BDO’s
recent stock rights offer has already been earmarked for the redemption of
these higher-cost notes, which carry a coupon rate of 7 percent. The retirement
of these notes will reduce the bank’s cost of funding as well as improve its
capital structure in favor or higher quality core or tier 1 capital,” the
disclosure said.
Yesterday in Asia
Tokyo rose 2.0 percent, or
171.18 points, to 8,726.29, Seoul climbed 2.01 percent, or 37.20 points, to
1,885.88 and Sydney closed 1.21 percent, or 51.1 points, higher at 4,272.6.
Hong Kong jumped 1.69
percent, or 332.54 points, to 19,998.72 while Shanghai added 1.04 percent, or
22.12 points, to close at 2,154.92.
Singapore advanced 0.67
percent, or 20.49 points, to 3,071.82.
Fraser & Neave was up 0.86
percent at Sg$8.22 after its board of directors on Friday accepted an offer by
Dutch brewer Heineken to buy its 41.9 percent stake in Asia Pacific Breweries
(APB), which makes Tiger beer.
APB fell 1.31 percent to
Sg$48.85, below Heineken’s offer of Sg$50 a share for the F&N stakes. DBS
Bank rose 1.0 percent to Sg$14.90.
Taipei rose 0.95 percent,
or 68.82 points, to 7,286.33.
Hon Hai Precision was up by its
7.0 percent daily limit at Tw$87.3 while Taiwan Semiconductor Manufacturing Co.
was 1.38 percent higher at Tw$80.9.
Manila ended flat, dipping
0.03 percent, or 1.75 points, to 5,284.16.
Philippine Long Distance
Telephone fell 1.02 percent to 2,730 pesos while Ayala Land rose 1.34 percent
to 22.70 pesos.
Wellington closed 0.43
percent higher, adding 15.21 points to 3,563.20.
Telecom Corp. was up 1.12 percent
to NZ$2.71, while Fletcher Building gained 1.62 percent to NZ$6.27.
Kuala Lumpur gained 0.27
percent, or 4.39 points, to 1,639.43.
UMW Holdings closed 1.3 percent
higher at 9.89 ringgit and PBB Group lost 1.7 percent to end at 14.22 ringgit.
Jakarta rose 0.14 percent, or
5.69 points, to 4,105.50.
Coal miner Adaro rose 4.6 percent
to 1,590 rupiah, gold and nickel miner Antam gained 2.4 percent to 1,260 rupiah
and Telkom fell 1.1 percent to 8,850 rupiah.
Bangkok rose 0.88 percent,
or 10.48 points, to 1,208.01.
Banpu gained 4.00 percent to 416
baht, while PTT added 1.56 percent to 325 baht.
Mumbai gained 1.25 percent,
or 215.03 points, to 17,412.96.
Reliance Industries rose 5.71
percent to 785.3 rupees and the country’s only listed microlender, SKS
Microfinance, jumped 9.54 percent to 98.75 rupees after it said Friday its
losses in the first quarter narrowed sharply.
Business & Investment Opportunities
YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Healthcare and Life Science with expertise in ASEAN. We also propose Higher Education, as a bridge between educational structures and industries, by supporting international programmes. Many thanks for visiting www.yourvietnamexpert.com and/or contacting us at contact@yourvietnamexpert.com
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