Vietnam macroeconomics and equity investment

1. VIETNAM MACRO ECONOMICS
AND EQUITY INVESTMENT
YOUR TRUST, OUR COMMITMENT
Thanh Le, Acting Head of Research
Dec 22th, 2011
HO CHI MINH CITY BRANCH

2. Agenda
• Government actions bring marginal changes
• Betting on surprises
• Sectors’ performance and investment
opportunity
2

3. Government actions bring
marginal changes
• Monetary policy
• Fiscal policy
3

4. Monetary policy
• Monetary supply contraction
• Credit growth control
• Ceiling deposit interest rate inspection
• Administrative FX rate control
• Restructuring banking system
4

5. Chart book
Exchange rate movements Credit growth
VND/USD 3,000,000
23000 2,500,000
22000
Billion dongs
2,000,000
21000
1,500,000
20000
1,000,000
19000
500,000
18000
-
17000
VCB rate SBV rate Parallel rate
(Source: SBV, VCB, BVSC)
5

6. 0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
%
Mar-05
Aug-05
Jan-06
Jun-06
Nov-06
Apr-07
Sep-07
Feb-08
(Source: GSO, SBV, BVSC)
Jul-08
Dec-08
May-09
Oct-09
Mar-10
Aug-10
Quarterly GDP growth
Jan-11
Jun-11
0
5
10
15
20
25
30
%
Jan-08
Apr-08
Jul-08
Oct-08
Chart book
Jan-09
Apr-09
CPI MoM
Jul-09
Lending rate
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
CPI YoY
Jul-11
Deposit rate
Oct-11
Inflation vs Interest rates
Jan-12
0
1
2
3
4
5
%
-1
6

7. Fiscal policy
• Reduce the public investment under the
directive No. 11
• Plans to restructure state owned enterprises
(divesting non-core business subsidiaries)
• Proposal for a stimulus package of
government such as tax reduction, interest
expense subsidy
7

8. Surprises
• Successfulness of SBV to create special
purpose vehicles to dispose toxic assets of bad
banks
• Ownership transfer of property and shares of
state owned enterprises to public and foreign
investors
• Stimulus package to support local enterprises
8

9. Downside risks
• The overhauling process in banking sector
does not work
• Delays in SOE restructuring
• Public trust erosion due to high
inflation, business failure, high unemployment
rate
• Lacking the interest of both local and foreign
investors
9

10. Sector performance by ROE
35.0%
30.0%
25.0%
20.0% Q3.2010
15.0% Q4.2010
10.0%
Q3.2011
5.0%
0.0%
10

11. Market Valuation
3.00 22.0%
21.0%
2.50
20.0%
P/B and ROE Rel
19.0%
2.00
18.0% P/B
1.50 ROE
17.0%
16.0%
1.00
15.0%
0.50 14.0%
Q3.2010 Q4.2010 Q3.2011
11

12. Investment opportunities
• Top of the pack
• Bottom fish
12

13. Top of the pack
Oil and gas sector Consumer goods
2.00 20.0% 4.20 29.0%
19.5% 4.00
P/B and ROE Rel
1.50 28.5%
P/B and ROE rel
19.0% 3.80
1.00 28.0%
18.5% 3.60
0.50 27.5%
18.0% 3.40
- 17.5% 3.20 27.0%
Q3.2010 Q4.2010 Q3.2011 Q3.2010 Q4.2010 Q3.2011
P/B ROE
P/B ROE
13

14. Bottom fishing
P/B from Q3Y2010 - Q3Y2011
4.50 Oil & gas
4.00 Basis material
3.50 Industrials
3.00 Consumer Goods
2.50 Health Care
2.00
Consumer Services
1.50
Telecommunications
1.00
Utilities
0.50
Financials
-
Banks
Q3.2010 Q4.2010 Q3.2011
14

15. Thanks for your attention
HCMC research team Hanoi research team
• Thanh Le, Head of Research • Linh Pham, Head of Research
• Phuong Le, Senior Analyst, Consumer • Luong Luu, Deputy Head of
• Vy Nguyen, Senior Analyst, Real Estate Research, Industrial sector
• Khoa Nguyen, Analyst, Banking, Oil and • Binh Nguyen, Deputy Head of
Gas, Steel Research, Technical Analysis
• Phuong • Hung Nguyen: Senior Analyst, Real
Nguyen, Analyst, Seafood, Rubber estate
• Huong Nguyen, Analyst, Consumer • Mai Nguyen, Senior
products Analyst, Consumer, Utility.
• Hang Ha, Economist. • Hung Pham: Analyst, Technology
• Thanh Ngo, Data Mining Analyst • Qui Nguyen: Analyst, Consumer
• Yen Tran: Economist
15

16. 16

17. BẢNG TÊN – CỜ ĐỂ BÀN – HUY HIỆU
Thank you!
Ho Chi Minh City Branch:
8 Fl, Bao Viet Tower, No. 233 Dong Khoi Str., Dist.1, HCM City
Tel: (+84 8) 3914 6888Fax: (+84 8) 3914 7999
Transaction office:
No. 11 Nguyen Cong Tru, Dist.1, HCM City
Tel: (+84 8) 3821 8564Fax: (+84 8) 3914 1435
17
www.bvsc.com.vn