Large banks focus on corporate bonds

HA NOI (VNS)— The total value of corporate bonds sold during the first six months of this year has reached VND15 trillion (US$707.5 million), equivalent to 88 per cent of last year’s total, according to a report from the Bank for Investment and Development of Viet Nam (BIDV).

Property developer VIDP Group issued VND7.6 trillion ($358.4 million) in corporate bonds, mineral giant Vinacomin raised VND2.5 trillion ($117.9 million) and HCM City Infrastructure Investment (CII) issued VND1 trillion ($47.1 million) worth of bonds.

The BIDV report recorded small scale issuance of under VND100 billion ($4.7 million) from other companies. “Most of the bonds belonged to real estate firms,” the report said.

Corporate bonds were favoured by commercial banks. BIDV and Techcombank bought VND500 billion ($23.8 million) and VND3 trillion ($141.5 million) worth of bonds in VIDP Group, while all the bonds issued by CII, totalling VND1 trillion ($47.6 million), were sold to Vietcombank (VCB).

“Attractive yields have brought banks with large cash reserves to corporate bonds,” the report said. “Despite the gloomy economic situation that made it for bond issuance more difficult, large corporations are still alluring to investors.”

The supply of corporate bonds is expected to continue to rise as companies take advantage of low interest rates to raise capital. “Along with increasing supply, demand will be large, especially for bonds from reputable businesses,” the report said.

Bond yields for three to five-year terms range from 13-15 per cent.

Meanwhile, Government bonds were less attractive, according to Viet Dragon Securities Co. Government bonds during the first six months yielded about 6-9 per cent. Declining yields discouraged investors, especially banks.

In June and the beginning of this month, foreign investors sold Government bonds with a net value of VND7.2 trillion ($339.6 million). — VNS


Deposits and loans increase

Deposit and loans at major commercial banks have continued to climb over the first half of this year, industry officials say. Grant Knuckey, chief executive officer of ANZ Royal Bank, said yesterday that ANZ continues to see strong growth in trade finance led by the agricultural sector. He added that from January until the end of June, loans and deposits at ANZ Royal were up 13 per cent compared with the same period a year ago. “The commercial banking sector has had continued strong volume growth in the first half of 2013, but there has certainly been margin compression.” Knuckey said, referring to the fact that while the volume is up, profit margins have been smaller due to competition and the need to lower rates. Knuckey said he expects “a pick-up in activity towards the last quarter of 2013 based on both seasonality and post-election expenditure and re-stocking.” Acleda, the leading bank in Cambodia, disbursed $1.39 billion in loans at the end of June this year, up 22.6 per cent from the first half of last year. Deposits at the bank grew 20 per cent year-on-year to reach $1.59 billion at the end of June. So Phonnary, executive vice president of Acleda Bank, said that loans to micro, small and medium enterprises (MSME) are major contributors to the growth, followed by loans in agricultural activities, which increased 34.6 per cent at the first half of this year compared with the same period in 2011. “Acleda Bank loans and deposits are growing and the market trend is still good for the second semester,” Phonnary said. Union Commercial Bank (UCB), is also seeing increases in the first six months of 2013. According to Yum Sui Sang, general manger of UCB, at the end of June, loans $200 million and deposits stood at $271 million, representing a 44 per cent bump and a 24 per cent bump, respectively, from the first six months of 2012. “We see more and more people are coming to invest in Cambodia. We have not only Cambodian clients but also foreign investors,” Yum said yesterday. The most recent data from the National Bank of Cambodia (NBC) revealed that loans provided by all Cambodian commercial banks reached about $6.14 billion, and deposits made at all commercial banks reached about $6.39 billion at the end of March this year versus the same period in 2012.

Tue, 16 July 2013 – Hor Kimsay

Bank to join growing group from Taiwan

Taiwan-based Shanghai Commercial & Savings Bank Ltd plans to open a representative office in Cambodia, joining an increasing number of Taiwanese banks and garment industry investors in the Kingdom.

National Bank of Cambodia director-general Nguon Sokha said yesterday that the Taipei-based privately held bank had preliminary or “in-principle” approval on May 31.

Some banks establish representative offices to test the waters before making a decision on opening an actual branch. The point is to “gather information about the Cambodian economy . . . they observe the performance, [but it is] for their own use”, she said.

Shanghai Commercial & Savings would enter a crowded sector, behind other Taiwanese-based financial intuitions. Hua Nan Commercial Bank said last month that it would open a branch in Cambodia, hoping to capitalise on the country’s high number of Taiwanese investors and high interest rates.

Cambodia has “many Taiwanese companies, especially in the shoe and garment industry”, senior manager of the bank’s international banking department, Chris Lee, told the Post last month.

In September 2011, Taiwan’s Mega International Commercial Bank opened a local branch, followed by the March  2013 entry of Taiwan Cooperative Bank. That same month, Taiwan’s E Sun Commercial Bank announced plans to acquire a 70 per cent stake in Cambodia’s Union Commercial Bank for nearly $70 million.

Shanghai Commercial & Savings did not immediately respond to a request for comment. The bank’s website says that regulators in Taiwan approved the Cambodia office in January.

A share of Taiwanese investment in Cambodia flows into the garment industry. Taiwanese-owned Sabrina Garment factory, which supplies Nike, fired hundreds of workers on Saturday following violent protests and the arrest of unionists.

Taiwanese-owned garment factories Grand Twins International (Cambodia) Plc and TY Fashion are expected to become the first foreign-owned companies to list on Cambodia’s stock exchange.

By Anne Renzenbrink and May Kunmakara │13 June 2013│The Phnom Penh Post

KBZ Bank insurance subsidiary to go public

Myanmar’s leading bank, Kanbawza Group of Companies (KBZ Group) has decided to make its recently launched subsidiary, IKBZ Insurance Company into a public firm within coming three months, according to the managing director of IKBZ Insurance.

Myanmar has just permitted private firms to offer insurance services for the first time in more than 50 years. Five private companies including IKBZ Insurance Co Ltd were approved on May 25. In the past, the state-owned Myanmar Insurance was the only insurance service provider in Myanmar.

“Since the very beginning, we intended to form a public company for the business. However, we started as a private firm due to legal constraints and other difficulties. We aim for our insurance business to reach the international standards,” said Nyo Myint, Managing Director of IKBZ Insurance.

Myanmar is planning to launch a first ever stock exchange in 2015 allowing KBZ Group’s subsidiaries, including IKBZ Insurance, to be listed locally. Other major subsidiaries of KBZ Group include Myanmar Airways International, Air KBZ and Kanbawza Bank.

“Turning our subsidiaries into public companies will contribute to the successful operation of the upcoming stock exchange, as it will offer viable shares attracting people to invest their money in the stock market,” Nyo Myint said.

Vietnamese insurers deploy their troops overseas

The Foreign Investment Agency (FIA) has noted the growing tendency of Vietnamese businesses making outward investment when the domestic market has become narrower for them. (VIETNAMNET)

Laos, the promising land

Two Vietnamese enterprises have pioneered in exploiting the Lao market, including BIC, which in 2008 set up LVI joint venture with the Laos– Vietnam Joint Venture Bank and the Lao Foreign Trade Bank, and PTI, which established Lane Xang Joint Venture with the Lao Development Bank.

LVI is now the second biggest insurance company in Laos, while it is the most favorite insurance brand in the country. Its insurance premiums have been increasing rapidly year after year. The joint venture finished taking loss in 2012, while it got the ROE at 18 percent.

Following the impressive success of LVI, BIC has recently asked for the Ministry of Finance’s permission to increase its capital contribution in the joint venture. BIC plans to buy the 14 percent of stakes from the Laos– Vietnam Joint Venture Bank to increase its capital contribution ratio there from 51 percent to 65 percent.

PTI has also reported a successful business year in 2012 with Lane Xang, which has the fastest growth rate in Laos, which can be seen in the five-fold increase in the number of agents and the 2-fold increase in the number of workers.

According to Lai Manh Quan, General Director of Lane Xang, Laos is a small but potential market. The country’s economic growth rate is high, which is really the great opportunity for insurers to develop insurance products. Especially, since Lao people remain unfamiliar to “Bancasurance”, Quan said he can see a lot of more opportunities to cooperate with Lao banks to develop many other services.

Cambodia, an open market

A report showed that Vietnam is the seventh biggest foreign investor in Cambodia. Cambodia Vietnam CVI, the seventh one operating in the market, is the first insurance company which has the capital contribution from a Vietnam partner– BIDV Bank. CVI is now leading the Cambodian market in the insurance services in the aviation sector.

According to Cao Minh Son, CVI’s General Director, Cambodia is a“hot spot” for investment for 3 reasons. First, the US dollar has been used popularly in the country, which allows insurers to remit insurance premiums to Vietnam while no need to convert the money.

Second, Cambodian is a fast growing economy, and there are still few big international insurers.

And third, there is no limitation on the foreign ownership ratio in the finance service sector in Cambodia.

Myanmar promises golden opportunities

Myanmar has caught the attention of all the international investors following the statement on opening the market.

Vietnamese investors have also been nimble enough to set foot in the golden unexploited land. BIDV Bank, PetroVietnam, Hoang Anh Gia Lai, Simco Song Da, Viglacera, Vina Capital, ASV Pharma, Vietnam Airlines and the military telecom group Viettel all have arrived there to seek their opportunities.

The“golden opportunities” that analysts say are the unexploited industries, with 90 percent of industrial goods being fed by the imports. .Meanwhile, other important sectors such as service, healthcare service and finance remain underdeveloped.

BIDV has opened its representative office in Yangon, the biggest city of Myanmar in 2011. BIDV is considering setting up a 100 percent Vietnamese owned bank or a joint venture bank in the country as soon as the country opens the banking sector.

GE aims to double business in Myanmar this year

American conglomerate General Electric expects its business in Myanmar to double this year, a senior executive told The Myanmar Times last week.

Stuart Dean, the company’s chief executive officer for Southeast Asia, said GE earned US$50 million in 2012, its first year of operations in Myanmar, and he expects this to double this year.

“We see huge potential and are currently in discussions to deepen our local partnerships,” Mr Dean said on May 23.

The comments followed the establishment of a regional office and the signing of two potential distribution deals with local partners.

GE opened its Yangon office on May 23. At a ceremony in Nay Pyi Taw the day before, it announced that it had signed a memorandum of understanding with Lighting Co Specialists and a letter of intention with technology company Partners Associates. The announcements came just days after GE Energy’s president of global sales and marketing, James Suciu, met President U Thein Sein in Washington.

GE and Lighting Co Specialist aim to distribute a wide range of GE lighting products in Myanmar. Through Partners Associates, GE aims to sell its batteries to telecom companies, which are overly-reliant on diesel powered generators for energy.

GE became the first US company to re-enter Myanmar following the easing of US sanctions in July last year. Its first deal was to provide medical equipment to two Yangon Region hospitals through local partner Sea Lion.

Last September its aviation branch leased two aircraft to state-owned Myanma Airways.

Two months later GE made a foray into Myanmar’s energy sector through a project for a natural gas-fired power plant project with TOYO Thai Power Corp in Yangon’s Alhone Township.

Despite GE’s bullish outlook for Myanmar, the company has quickly learned of some of the troubles that come with being one of the first US firms on the ground in a country that is still under targetted sanctions imposed by the US government.

GE had planned to open its office earlier this year, but was delayed after it submitted a list of guests to the US Embassy to be checked against the Treasury Department’s Specially Designated Nationals (SDN) list.

The process of clearing around 400 names, according to Mr Dean, took far longer than expected.

US companies are barred from engaging in business with individuals and companies from Myanmar that appear on the SDN list.

By Tim MclaughLin   |   Monday, 27 May 2013

Credit Suisse buys 13.64% of Hoang Anh Gia Lai

HA NOI (VNS)— Credit Suisse (Hong Kong) Limited announced it had purchased over 73.3 million shares of property developer Hoang Anh Gia Lai (HAG). The deal was for the purpose of hedging transactions it had entered into with its off-shore clients, the business said earlier this week. The amount of shares/fund certificates held by Credit Suisse Hong Kong after the transaction is equal to 13.64 per cent of Hoang Anh Gia Lai’s outstanding shares. It made Credit Suisse the second-largest shareholder after Doan Nguyen Duc, the Vietnamese company’s chairman. Before the transaction, the investor held only 12 per cent of HAG shares.-VNS