How much gold kept among Vietnamese people?

Last update 10/11/2010 09:00:00 AM (GMT+7) 

How much gold kept among Vietnamese people?

VietNamNet Bridge – Newly released information that Vietnam has imported 1000 tons of gold in the last 20 years has stirred up the public. Experts now try to guest how many tons of gold are being kept among Vietnamese people and what Vietnam should do to use the huge capital in the most effective way.

The information about the 1000 tons of gold imported in the last 20 years was released by Le Duc Thuy, former Governor of the State Bank of Vietnam, now Chair of the National Finance Supervision Council. The head of the council did not confirm the existence of 1000 tons of gold among the public, but he said: “I am sure that a large volume of gold is being kept in people’s homes”.

Thuy commented that Vietnam should not make a hasty move to prohibit the transactions in gold. The prohibition can only put gold out of the official circulation, while the gold will still exist in the society. Meanwhile, gold should be seen as an important source of capital, and if gold cannot be put into official circulation, it will be “sitting idle”, not making profit, or will be traded on the black market. i.e out of the control of the management agencies. Thuy believes that it would be better to attract the huge capital (gold) into banks instead of prohibiting transactions in the gold.

While the national economy needs more and more capital from different sources for its development and investment, gold trading floors have been shut down and the gold prices have been continuously climbing to new highs. One week ago the State Bank issued a legal document to scale down the activities of mobilizing capital in gold and lending gold.

However, a senior official of the State Bank of Vietnam has denied the fact that 1000 tons of gold is now lying under people’s pillows. “To date, no one can say for sure how much gold is being kept among people,” he said. 

The figure cited by the former Governor of the State Bank is sourced from the World Gold Council and the figure does not include the illegal imports and the import volume through other unofficial channels that the organization still cannot reckon up.

Meanwhile, the general director of a famous gold trading company guesses that people are only keeping 200 tons of gold because when the world’s gold prices were higher than the domestic prices, a substantial volume of gold was illegally exported,. However, he stressed that 200 tons of gold would also be a large volume of capital, worth $10 billion and the capital should be put into business rather than sitting idle.
Meanwhile, VnExpress newspaper quoted a director of a big bank in Hanoi as saying that the management agency needs to consider the specific characteristics of the market in Vietnam. In other countries, gold is considered as a type of good and not a tool of payment. Therefore, the volume of gold kept among people is not very big. Meanwhile, in Vietnam, gold is not only used as a kind of good (jewelry products), but also as a kind of asset (people store gold instead of cash)

If the management agency tries to weed out gold from the official channel, even though people still want to keep gold as their assets, this is really a kind of the management agency’s “voluntarism” which wastes a large amount of capital.

“It will be not the right time to weed out gold from the official channel until gold is no longer favored by people,” he said.

Meanwhile, the central bank, while trying to protect its view that it is necessary to prohibit transactions in gold, said that the massive mobilization and lending in gold have been making the dollarization in the national economy more serious and encouraging speculation.

Governor of the State Bank of Vietnam once declared that in case the market has gold in excess, the central bank may spend money to purchase gold to increase gold reserves.

P.V

Vietnam: Gold and dollar prices escalating, no one benefits

Last update 09/11/2010 04:59:02 PM (GMT+7)

Gold and dollar prices escalating, no one benefits

VietNamNet Bridge – The gold and dollar prices have been increasing continuously, threatening businesses. Especially, the weaker dong does not benefit exporters, even making their business worse.

At 9:45 am of November 9, the gold price jumped to 38.2 million dong per tael, increasing by 2.5 million dong per tael compared with the opening prices (one tael is equal to 1.2 oz). Meanwhile the dollar price soared to 21,250 dong per dollar, the highest level so far.

The dollar prices quoted by commercial banks have been stable, at 19,495-19,500 dong per dollar at Vietcombank, and 19,470-19,500 dong per dollar at Eximbank.

The Japanese yen has also appreciated against the dong. At 8:20 am, the yen price was quoted at 246.63 – 253.99 dong per yen, an increase of three dong per yen in comparison with the week’s opening price. The euro is now trading at 28,101.00 dong per euro.

In principle, the dollar appreciation will benefit exporters, because the weak local currency will make domestic products cheaper, thus more competitive in the world market. But in fact, export companies are now like cats on hot bricks. 

Tran Quoc Manh, Chair and General Director of Sadaco, said the dollar price increases have pushed the prices of input materials, transport fees and labour costs high up.

Manh admitted that the company has earned more money thanks to the dollar appreciation, but the profit is not big enough to cover the higher production costs. Especially, Sadaco, like many other producers in Vietnam, have to import input materials to make final? products in Vietnam. Therefore, they now have to pay more money for the import materials due to the more expensive dollar. Manh stressed that when policy makers think of the monetary solutions to encourage exports, they should consider of the fact that Vietnamese producers have to pay for imported input materials in dollars.

Besides, export companies complain that though they sell foreign currencies to banks, when they need money to make payment for material imports, they cannot buy foreign currencies from banks at the prices at which they had sold themto banks before.

Nguyen Thi Cuc, Deputy General Director of Phu Nhuan Jewellery Company (PNJ) said in September, her company earned $300 million from gold exports and sold the sum to banks. However, her company now cannot buy dollars from banks at the quoted prices.

“The banks, though admitting that PNJ is a loyal client who should get priority in dollar purchases, still refuse to sell dollars to us, saying that they cannot sellat such low prices,” Cuc complained.

In fact, banks still have dollars to sell, but at the prices set by banks, not the prices quoted by clients. 

Le Dang Minh, Managing Director of Gimeno, a fashion company, said that he has just bought dollars from a bank. Though the quoted price was 19,500 dong per dollar, in fact, Minh had to pay 20,100 dong per dollar. Minh said that he still does not know how to “legalise” the gap of 600 dong per dollar. As the input materials cost 70 percent of the values of his products, the dollar price increases have made the company suffer losses.

However, Minh believes that those who suffer the most now are labourers, whose salaries do not increase in proportion with increases in the goods prices.

Minh does not think that export companies deliberately refuse to sell dollars to banks, thus causing the dollar shortage. He said that only the companies which have profuse capital can keep dollars on their accounts. Meanwhile, small companies like his have to sell dollars to banks right after they earn the money, because they need money to continue production.

Thanh Van

http://english.vietnamnet.vn/en/business/1282/gold-and-dollar-prices-escalating--no-one-benefits.html

Vietnam: High bank interest rates, high production costs for businesses

Last update 12/11/2010 05:29:56 PM (GMT+7)

High bank interest rates, high production costs for businesses

VietNamNet Bridge – Higher dollar, higher loan interest rates, higher prices of input materials and weak purchasing power all have made businesses worried.
In an effort to curb the inflation, the Government is making efforts to reduce money supply to ease the pressure on prices. However, analysts have warned that this will hurt production companies which are normally dependent on credit.

Businessmen have also said that any measure adopted by the central bank to cope with high inflation will result in an increase in both deposit and lending interest rates.

The lending interest rate hike will put manufacturers and traders in a difficult position, in terms of their expenses including the import of raw materials 

Doanh Anh Tuan, Deputy General Director of ITC, an investment and trade company, said that the demand for borrowing capital from ITC in particular and Vietnamese businesses in general is now very high, because they are now making products for Tet sale season. Meanwhile, the lending interest rates are on the rise, thus putting hard pressure on production.

According to Tuan, ITC has to import input materials in big quantities to serve the local production, therefore, it has a high demand for dollars. Tuan said that since the beginning of the year, ITC has lost $2.5 million after two dong/dollar exchange rate adjustments.

ITC now has 300 billion dong of working capital, 30 percent of which comes from bank loans. Therefore, the interest the company has to pay for the loans will be a big burden.

Representative from a fibre export company in Da Nang said that anticipating the possible cotton price increases in the world market, his company plans to import a big volume of cotton for the upcoming production season. However, the company still cannot borrow dollars from banks, while the cotton price is escalating every day.
Secoin, which specializes in making and trading construction materials, has decided to delay some investment projects, because it does not want to risk borrowing too much when the lending interest rates are overly high.

Garment companies said that though there are many orders from foreign partners and the export prices have increased by 15-20 percent, they are still facing a lot of difficulties due to the higher production costs. Ho Le Hung, Deputy General Director of Hanosimex, said that even when export companies can enjoy higher export prices, they cannot pocket much money, because they have to pay for import materials.

In 2010, Hanosimex plans to export over $30 million worth of products. However, in order to obtain the export turnover, the company will have to import nearly $30 million worth of input materials.

Hung complained that it is now a very difficult period for businesses, and that Hanosimex despite getting privileged treatment at banks as their loyal customer has to think carefully before deciding to borrow money, , because the current interets rates are toohigh.

Source: Dau tu

http://english.vietnamnet.vn/en/business/1416/high-bank-interest-rates--high-production-costs-for-businesses.html

Vietnam: When a securities company leaves the market

Last update 29/10/2010 06:00:48 PM 

When a securities company leaves the market

VietNamNet Bridge – The news that Vincom Securities Company (VincomSC) has announced the plan to withdraw from the market has immediately caused a stir-up in the market. Analysts believe that many other securities companies would follow the move, especially when the stock market is getting cool.

VincomSC on October 26 announced the close down of its trading floor in the north to focus on the headquarter in the south. The move is part of the economic group’s plan to give up securities trading.

The leave of someone would be the opportunity for others

The withdrawal of VincomSC, a company with 18,000 securities accounts, is believed to create opportunities to other operational securities companies.

Just one day after VincomSC released the announcement, on October 27, a lot of securities investors came to VincomSC’s trading floor in Hanoi to listen to the news and make necessary procedures to close accounts there. An officer of the trading floor said many investors came to place orders to sell securities, withdraw money from their accounts, or open accounts at other securities companies.

An investor told VietNamNet that the first thing he had to do after hearing about the close down is to withdraw all the money from his account. He said that he would open an account at a company headquartered in the north, rather than a one in HCM City.

Long, another securities investor, also said that he and some of his friends have also closed the accounts at VincomSC. They are planning to open accounts at big securities companies belonging to commercial banks, because they believe once the companies are backed by banks, they would get support from the parent banks.

Long even believes that the market would witness another withdrawal , and that it would be better to open accounts at big companies than small ones.

VincomSC has said that the current clients of VincomSC in the north will have three choices, either to maintain their accounts at the company which would then be transferred to the trading floor in HCM City, or to close the accounts at VincomSC, or transfer the accounts to VPBank’s Securities Company.

It seems that most investors choose the latter option.

Having realized that a big number of investors are looking for suitable service providers, securities companies have been rushing to approach the investors and persuade them to become their clients\. Some of the companies have sent staff to VincomSC’s trading floor to meet and persuade new clients.

A broker from a securities company has revealed that at this moment, when the market is gloomy, it is the right time for securities companies to develop the scope of?? services. Therefore, it would be a very important task to seek more clients now. His company not only tries to access individual investors, but also VIP clients, and institutional investors.

When the stock market becomes gloomy

In fact, many securities companies have narrowed their business scope after a lot of ups and downs in the market. The first thing they did was to shut down branches in small areas with few investors. Some even had to stop providing the services which require high chartered capital. Some others have been trying to transfer capital to foreign partners.

Three years ago, when the stock market was scorching hot, securities companies were mushrooming. There are about 100 operational securities companies now. However, in fact, securities investors only know 20 biggest companies, while the other companies are all small and less known. The top 10 companies alone are holding 50 percent of the market share, while the other 90 companies have share the other 50 percent.

Previously, when the market was hot, small companies still did well by trading securities themselves. However, as the market has become gloomy, the companies cannot live solely on services.

It is clear that the small stock market in Vietnam is not a big cake which can be divided into enough pieces to all securities companies. Therefore, analysts have said that it would be not a surprise if other companies follow VincomSC’s move and decide to leave the market.

Le Khac Hiep, Chair of Vincom, the parent company of VincomSC, admitted that the company has not been doing well, failing to meet the business targets.

Le Khac

http://english.vietnamnet.vn/en/business/904/when-a-securities-company-leaves-the-market.html

Vietnam: Big shareholders turn their backs to bank shares

Last update 01/11/2010 02:47:46 PM (GMT+7)

Big shareholders turn their backs to bank shares

VietNamNet Bridge – State shareholders, i.e. the economic institutions, where the state holds controlling stakes, now turn their backs to bank shares, which they had never done before.
To date, the State Bank of Vietnam has approved the plans to increase chartered capital to three trillion dong by 16 domestic joint stock banks. As required, banks must have the chartered capital of three trillion dong at minimum by the end of 2010. However, a lot of banks are reportedly facing big difficulties in increasing capital, because state shareholders do not intend to inject more money in the banks.

Turning a deaf ear to banks’ share issues

Since state shareholders do not havea demand for more bank shares, they have aucioned the shares additionally issued by banks. Most recently, the HCM City State Financial Investment Company (HFIC) auctioned nearly 15 million options on HD Bank’s shares at the starting price of 110 dong per option.

The company has also auctioned 3.82 million options on Viet A Bank’s shares. Meanwhile, VOSCO, a shipping firm, has auctioned 4.15 million options on Military Bank’s shares.

Being a small bank, Navibank is thought to face many difficulties when trying to increase chartered capital. The Vietnam Textile and Garment Group (Vinatex) does not intend to maintain the ownership ratio at the bank.

In January 2009, the Vietnam National Oil and Gas Group (PetroVietnam) became a shareholder and strategic partner of Ocean Bank. The bank plans to increase its chartered capital to 3000-4000 billion dong in 2010 and to five trillion dong in 2013. However, a serious problem has arisen when Deputy Prime Minister Nguyen Sinh Hung instructed PetroVietnam not aim for20 percent of Ocean Bank’s shares since the group has capital difficulties.

Vietcombank, which turned from a state-owned bank into a joint stock banks three years ago, is now holding 19 percent of stakes of Gia Dinh Bank. Vietcombank is still considering whether to pour more money into Gia Dinh Bank to maintain the current ownership ratio of 19 percent or to withdraw its capital altogether.
Orient Bank has got the approval from the State Bank for its plan to increase the chartered capital from two trillion dong to 3.1 trillion dong in 2010 by issuing more shares, including to existing shareholders. Ben Thanh Corporation, the biggest shareholder of the bank, now holding 10.6 percent of stakes of the bank, has agreed to increase capital, but it is still unclear if it try to keep the current ownership ratio at the bank or not. Ben Thanh said it will still have to ask for the permission from the HCM City People’s Committee.

Banks still have opportunities

Under the current laws, banks must implement the capital increase within 12 months since the day they get the permission from the central bank.

Cao Sy Kiem, former Governor of the State Bank said that if state shareholders do not spend money to buy the shares to be additionally issued by banks, this would create a great challenge for the banks in trying to increase their capital. However, Kiem said banks still have many other measures availablerather than relying on state shareholders.

“There are two solutions. First, they can issue shares to the public. Second, they can look for foreign partners,” Kiem said, adding that no matter who their buyers are, banks need to set up reasonable sale prices and set reasonable requirements. “Especially, they may have to make compromises in negotiations on some matters,” he said

Doanh Nhan

http://english.vietnamnet.vn/en/business/976/big-shareholders-turn-their-backs-to-bank-shares.html

Vietnam: Goods prices escalating, people have to tighten their belts

Last update 10/11/2010 02:36:18 PM (GMT+7)

Goods prices escalating, people have to tighten their belts

VietNamNet Bridge – The prices of essential goods have been increasing sharply by 10-20 percent, or even 100 percent just over the past few weeks. But the actual income of regular employees does not increase.

Prices on the rise

Nguyen Thi Theu in Ngoc Thuy ward, Long Bien District, said that previously, she spent about 100,000 dong a day for the meals for five members of the family. she now has to spend no less than 130,000 dong a day for the same ingredients. Several hundreds of thousand dong would suffice for some essential goods.

Theu joked that sometimes she thought she must have dropped the money somewhere, because it ran out so quickly. “The problem is the prices have been increasing so rapidly,” she said.

Kim Oanh, 60, a housewife in the central district of Hoan Kiem in Hanoi, said that the prices have been increasing every day. Previously, Oanh regularly went to the small market near her house, where the prices were a little higher than the prices in other places. However, since the prices have been increasing so sharply, Oanh has decided to go farther to Ngo Sy Lien market which offers lower prices.

“I am now living with my son and his family. My son gives me three million dong more a month after he realized that the prices were on the increase. However, even with the additional money, I still have to tighten my belt,” she complained.

The prices of fresh food and vegetables have been rapidly increasing at all markets in Hanoi. Vegetables have become 20-50 percent more expensive, while the meat and fish prices have increased by 5-10 percent due to the short supply caused by the epidemics in the central region.

Big supermarkets in Hanoi such as Co-op Mart, Intimex, have increased the prices of many products since November, including sweets, cosmetics, clothes and household goods, after suppliers announced the 5-10 percent increases in October.

Meanwhile, many big stores on Hang Ma, Kham Thien and Nguyen Thai Hoc streets have warned customers about the price increases of 20-30 percent in days to come.

Traders on a knife-edge

Director of Minh Anh company, a big importer and distributor of sweets, and drinks, said the company had to raise the sale prices by 10-20 percent, after the euro increased to 28,000 dong per euro from 25,000 dong one month ago.

“The imports from Europe have become terribly expensive because producers have raised prices and the euro has appreciated. The Belgian partner has informed us of the 28 percent price increase,” the director said.

Analysts say despite the increase in the prices of sweets and drinks, the demand will not fall, because people will still have to purchase these products as the New Year 2011 and Lunar New Year are nearing, the time to give gifts to bosses and partners.

Meanwhile, the distributors of non-food products complain that the purchasing power is very weak.

The salesman of DigiWorld Shop on Hang Bai street, specializing in trading digital products, said since the dollar price has exceeded the 20,000 dong per dollar threshold, the purchasing power has dropped by 50 percent.

The sharp CPI increase of 1.05 percent in October has raised worries among the public. Dr Vu Dinh Anh, Deputy Head of the Ministry of Finance’s Market and Price Research Institute, said that if Vietnam cannot restrain the CPI in the last two months of the year, the CPI increase in the whole year 2010 would be at two-digit levels, 11 or 12 percent.

Nguyen Nga

http://english.vietnamnet.vn/en/business/1315/goods-prices-escalating--people-have-to-tighten-their-belts.html

Vietnamese rushed to purchase gold, but shops only sold gold in dribs and drabs.

Last update 10/11/2010 02:43:36 PM (GMT+7)

Gold prices dancing, shops sell gold in dribs and drabs

VietNamNet Bridge – The gold market was burning yesterday with the price increasing in waves. People rushed to purchase gold, but shops only sold gold in dribs and drabs.

Gold and dollar prices escalating, no one benefits

Gold prices fluctuating

In the afternoon of November 9, the gold shops on Tran Nhan Tong street in Hanoi were less crowded than in the morning of the same day. Explaining this, some people told VietNamNet’s reporter that many people purchased gold in the morning already, and they did not have to go to gold shops any more.

At Bao Tin Minh Chau shop, only a limited volume of bar gold was seen on display. Those people, who wanted to purchase gold in big quantities, were told to come back the next day to get deliveries.

The gold prices in the afternoon saw slight decreases from the prices in the morning. However, VietNamNet’s reporter found out that the prices are still fluctuating.

At 4 pm, the price of Rong Thang Long brand gold of Bao Tin Minh Chau was quoted at 36.7-37.3 million dong per tael (purchasing and selling prices) (a tael is equal to 1.2 oz). At 5 pm, the purchasing price increased by 200,000 dong per tael to 36.9 million dong per tael, while the selling price dropped by 100,000 dong to 37.2 million dong.

Rong Thang Long brand gold’s closing prices were 36.9-37.45 million dong per tael (purchasing and selling prices) which meant that the purchasing price remained unchanged while the selling price increased by 250,000 dong per tael.

The prices SJC brand gold, sold by Phu Quy Company, also fluctuated. At 5 pm, the price of SJC brand gold was quoted at 37-37.5 million dong per tael, an increase of 100,000 dong per tael in purchasing price in comparison with the price in mid afternoon, and 300,000 dong in selling price.

Ha Van, a gold investor told VietNamNet that the domestic gold price is 3-4 million dong per tael higher than the world price. He said that this is the most serious price increase in the history of Vietnam’s gold market

People panic

A lot of people whom VietNamNet’s reporter met yesterday said that they cannot predict the gold price.

Kim Thao, who lives in Hoang Mai District, told VietNamNet late yesterday afternoon that she came to the gold shop at 9 am but she still could not buy anything.

Thao said that she has sold $10,000 at 19,500 dong per dollar and planned to buy gold. She decided not to buy gold when the price was 32.5 million dong per tael, thinking that the price would go down in some more days. However, contrary to her prediction, the price increased to 32.7 million dong, and then to 35.85 million dong on November 8. 

“Now I really dare not purchase gold, because the price has jumped to 38.15 million dong per tael,” she complained.

“I do not understand, especially if the Government can intervene the market to force the prices down,” she added.

Binh, another gold buyer, told VietNamNet that he had to spend a whole morning to queue up to purchase gold, but the shop only sold gold in dribs and drabs. “The gold price escalated every minute this morning. The price soared by 200,000 dong per tael just within a short time, from the time you placed order to the time you got delivery,” he said.

While people panicked with the price increases, financial experts said the price increases are predictable. Tran Dung, an analyst, said: “People do not have much information about the gold price performance in the world market. But I know that experts have forecasted the gold price will continue rising to $1650 per oz from the current price of $1410.

“If the world price increases, the domestic price would go up accordingly, and go up more sharply, because the dong is losing its value against the dollar,” he said.

Pham Huyen

http://english.vietnamnet.vn/en/business/1317/gold-prices-dancing--shops-sell-gold-in-dribs-and-drabs.html