Securities and Fund Services
Online Academy | September 16
16, 2013
Vietnam Market Update
1 Vietnam Economic Updates
1.
Vietnam Summary Jan – Aug 2013
 Summary View:
 With weaker than expected growth, we see 5.1% GDP growth for 2013F, and 5.5% for 2014F
 We lowered our 2013F inflation forecast to 6.6% on recently disinflation trend led by food prices
 We revised our C/A surplus forecast upward (to 5.1% of GDP)
 On 28 June 2013:
 SBV devalued the USD-VND-midpoint by 1% to 21,036 (from 20,828) dong per dollar.
 SBV also cut the VND deposit rate cap by 50bps from 7.5% to 7% for tenor from 1 month to below 6 months; cut
the VND deposit rate cap from 2% to 1.2% for tenor below 30 days;
y cut the USD deposit cap from 2% to 1.25% for
individual and from 0.5% to 0.25% for corporate;
 The FX rate has been kept within the trading band after Dong devaluation, while Dong interest rate saw a slight move as SBV
took money market intervention.
 Trade deficit in August
g
2013 amounted to $
$300 million after a revised July
y surplus
p
of $
$379 million. YTD trade deficit surged
g as
high as 80% to $578 million as compared to same period last year.
 Annual inflation in August was 7.5%, increased 0.83% MOM.
 Jan-Aug 2013 FDI disbursement rises 3.8% YOY to $7.56 billion.
 Vietnam Asset Management Co. (VAMC) was established in July 2013 to deal with bad debt, however, uncertainties remain
on: i) adequate funding: local media reports VAMC will be set up with only VND500bn of capital (which is equivalent to $23.7
million); ii) Gov’t reported NPL ratio is much lower than estimates from other agencies; iii) Lack of clarity on the transparency in
pricing and legal framework for disposing the bad assets.
2
Growth looking weaker than expected; we cut GDP growth forecasts
 We were expecting global growth improvements and the lagged impact of policy easing,
easing especially on the monetary/credit
front, would lead to a stronger rebound, but recent data seem to indicate that recovery is weaker than expected. Not only did 1H
2013 real GDP growth disappoint (+4.9% YoY), mainly due to weakness in the agri sector and some softening of industry sectors,
but bank lending also remains anemic and weakened more in recent months than seasonal factors would imply. While exports
had been the bright spot of the economy, momentum seems to be fading slightly.
 We
W cutt our 2014-15
2014 15 growth
th fforecasts
t tto 5
5.2%
2% ((vs 5.4%)
5 4%) and
d5
5.5%
5% ((vs. 5
5.8%),
8%) respectively.
ti l
3
Contribution from net exports may shrink on weaker external demand
“Real” Retail Sales & IP Growth, Nominal Export & Import
Growth (in US$ bn)
100
%YoY
80
60
40
20
0
-20
-40
-60
-80
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13
Real Retail Sales
Industrial Production
Export Growth
Import Growth
Source: CEIC, Citi Research
 Vietnam's economy grew 4.89% in 1Q2013, 4.9% in 2Q2013 lowing from 5.44% in the last quarter of 2012 as the country
battles to revive an economy reeling from its worst slowdown in 13 years, since 1999. That was, however, faster than the 4.75%
growth in the same period last year.
 Jan-Aug 2013 exports rose 14.7% YOY to $84.8 billion while imports for those eight months jumped 14.9% YOY to $85 billion.
4
External picture remains strong - Current Account will likely turn out to
be (remarkably) better than we expected
% of GDP
15%
Trade Balance
Services Balance
Investment Income
Net Transfers
Overall Current Account
10%
5%
0%
-5%
-10%
-15%
-20%
2014F
2013F
2012F
2011E
2010
2009
2008
2007
2006
2005
2004
-25%
 Vietnam has revised some of its trade figures,
figures and the 2012 trade surplus is lower than earlier reported
reported. However,
However
because of a significant gap between GSO’s reported goods imports (c.i.f.) versus BoP reported goods imports (f.o.b), the CA
surplus may have been higher than we earlier thought, leading us to revise our CA surplus upward to 5.8% of GDP (vs our earlier
3.2% of GDP forecast) in 2012. We see this surplus falling gradually to around 5% of GDP in 2013F and 4% of GDP in 2014F.
 Disbursement of FDI during Jan-Aug 2013 rose by 3.8% YOY to $7.56 billion while FDI pledges rose 12.2% to $7.4 billion
f
from
a year earlier.
li JJapan made
d th
the llargestt iinvestment
t
t iin Vi
Vietnam
t
d
during
i JJan-Aug
A period,
i d ffollowed
ll
db
by Si
Singapore and
dR
Russia.
i Th
The
country expected to receive $14 billion FDI registration, of which $11 billion disbursement in 2013 (2012’s was $10.5 billion).
5
More benign inflation led by lower food prices support real incomes,
however, despite significant easing, credit growth remains anemic
70 %YoY
% 16
60
50
40
14
12
10
8
30
20
10
6
4
2
0
0
Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13
M2 Growth (L-axis)
Credit Growth (L-axis)
 Vietnam CPI in August 2013 rose 7.5% from a year earlier, up from 7.29% in July 2013.
 While lowering our CPI forecast to 6.6% this year, we do not expect credit growth to reach 12% target set by the Government.
Ongoing domestic weakness
eakness amidst credit intermediation has also been a dampener
dampener, alongside the decline in ho
housing
sing
construction / housing related price.
6
Inflation dynamics versus refinancing rates
50
Vietnam: CPI inflation
%YoY
40
30
20
10
0
-10
Jan-07
Jul-07
Jan-08
Jul-08
Headline
Jan-09
Jul-09
Food Stuffs
Jan-10
Jul-10
Jan-11
Non-Food
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Refinancing Rate
Source: CEIC and Citi Research estimates
 In late June 2013, SBV cut the VND deposit rate cap by 50bps from 7.5% to 7% for tenor from 1 month to below 6 months;
cut the VND deposit rate cap from 2% to 1.2%; cut the USD deposit cap from 2% to 1.25% for individual and from 0.5% to 0.25%
for corporate.
7
August 2013 CPI Basket Breakdown
Source: Reuters
8
VND bond yields fell on rate easing action and anticipation coupled
with slower than expected credit growth in 2012
22
%
22,000
20
18
21,000
Big blow-up
The golden
period?
16
smaller blow ups
14
20,000
19,000
12
18,000
10
17,000
8
16,000
6
4
Jan 07
Jan-07
15,000
Jul 07
Jul-07
Jan 08
Jan-08
Jul 08
Jul-08
Jan 09
Jan-09
VND 5yr Govt (L-axis)
Jul 09
Jul-09
Jan 10
Jan-10
Jul 10
Jul-10
Jan 11
Jan-11
Jul 11
Jul-11
Jan 12
Jan-12
Jul 12
Jul-12
Jan 13
Jan-13
USD-VND Rate (R-axis)
 We have continued to favor VND bonds in our 2013 Outlook mainly because we are constructive on the dong – we believe it
will remain largely stable through our forecast period though appreciation capped by SBV’s intervention. Inflation/fiscal risks
linger, but we believe it would remain manageable – with scant foreign positioning and the steep curve.
9
Analysis of VND bond yield versus FX movement
Daily QVN3YT=RR, QVND=
Price
/USD
2/16/2009 - 11/22/2013 (GMT)
Yield
13
21,300
12.5
21,000
12
20,700
11.5
20 400
20,400
11
20,100
10.5
19,800
10
19,500
95
9.5
19,200
9
18,900
8.5
18,600
8
18,300
7.5
18,000
Line, QVN3YT=RR, Bid Yield(Last)
8/28/2013, 7.545
Line, QVND=, Ask(Last)
8/28/2013, 21,220
17,700
17,400
7
6.5
6
.123
0
Q2
Q3
Q4
2009
Q1
Q2
Q3
2010
Q4
Q1
Q2
Q3
2011
Q4
Q1
Q2
Q3
2012
Q4
Q1
Q2
Q3
2013
Q4
Source: Reuters
10
3YR and 5 YR government bond yield
Daily QVN3YT=RR, QVN5YT=RR
Yield
1/17/2012 - 9/26/2013 (GMT)
Yield
12.5
12.5
Line, QVN3YT=RR, Bid Yield(Last)
8/28/2013, 7.545
Line, QVN5YT=RR, Bid Yield(Last)
8/28/2013, 8.238
12
11.5
12
11.5
11
11
10.5
10.5
10
10
9.5
9.5
9
9
8.5
8.5
8
8
7.5
7.5
7
7
6 5
6.5
6 5
6.5
.123
.123
F
M
A
Q1 2012
M
J
Q2 2012
J
A
S
Q3 2012
O
N
D
Q4 2012
J
F M
Q1 2013
A
M
J
Q2 2013
J
A
S
Q3 2013
Source: Reuters
11
Vietnamese banks are undergoing pressure to de-lever their balance
sheet from the previous excesses
140%
Domestic Bank Credit (as a percent of GDP)
% of GDP
120%
100%
80%
60%
40%
20%
0%
Dec-02
12
Dec-03
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Trade deficit comes back in August after two months of surplus in June
and July
$ mln
Vietnam Trade Balance
1500
1000
500
0
-500
-1000
1500
-1500
-2000
-2500
 Vietnam’s trade deficit in August was $300 million from two months of surplus in June and July. Jan-Aug exports rose by 14.7%
from a year earlier to $84
$84.8
8 billion
billion, while imports for those period were up 14
14.9%
9% to $85 billion
billion. The Net trade YTD deficit was $578
million. The country projects 2013 trade deficit of $3-4 billion.
13
Vietnam Jan – Aug 2013 trade volume breakdown
Source: Reuters
14
We believe FX Reserves in Vietnam rose >70% in 2012 and likely rise
further this year
 External position still remains strong and we continue to favor the dong (VND), gaining exposure via local bonds.
Vietnam trade surplus continues to expand this year and we think there is an upside to our CA forecast this year of 2.4% of
GDP. We estimate SBV saw its FX reserves rise at least $10bn in 2012F (SBV said it purchased $15bn) – and SBV’s FX
purchases
h
thi
this year reversed
d recently
tl as it sold
ld d
dollars
ll
to
t keep
k
the
th d
dong stable.
t bl W
We expectt thi
this iintervention
t
ti tto remain
i muted,
t d and
d
we continue to forecast foreign reserves to exceed $30bn by year-end.
15
After Dong devaluation late June 2013, FX stability has been reestablished
22,000
21,000
20,000
19,000
18 000
18,000
17,000
16,000
Offi i l rate
Official
t
B d
Band
Fl
Floor
C ili
Ceiling
Sep-13
Jun-13
Mar-13
Dec-12
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Mar-11
Dec-10
Sep-10
Jun-10
Mar-10
Dec-09
Sep-09
Jun-09
Mar-09
Dec-08
Sep-08
Jun-08
Mar-08
15,000
M k t rate
Market
t
 SBV devalued the USD-VND-midpoint by 1% to 21,036 (from 20,828) dong per dollar. SBV's move is not entirely a surprise,
though timing was a bit earlier than we expected. We thought there would be growing impetus to loosen monetary conditions not
only via lower rates but also via slightly weaker FX given the impaired financial transmission of the lower rates. As credibility in macro
stability
t bilit h
has b
been somewhat
h t regained,
i d we expected
t d SBV would
ld revertt b
back
k tto itits previous
i
pre-crisis
i i status
t t quo off a gradual
d l
depreciating crawl.
16
Fitch affirms Vietnam at “B+”, outlook Stable (January 2013)
 Vietnam's ratings are underpinned by its track record of strong economic growth and a favorable environment for foreign direct investment
that has rendered the economy less vulnerable to external shocks and raised its potential growth rate. The ratings are also supported by
favorable overall levels of external debt and debt service relative to rated peers as well as by high levels of domestic savings and
investment. Fitch estimates that Vietnam's domestic savings and investment rates have averaged 28% and 36% respectively over the past
five years.
 The ratings are constrained by higher and more volatile consumer price inflation than peers that renders the economy and exchange rate
vulnerable to adverse economic and financial shocks. Despite rapid economic growth and development over the last two decades, human
capital and the value-added per person remain low relative to single 'B' and 'BB' rated peers. The quality and timeliness of economic and
financial data in Vietnam are also rating weaknesses, particularly the lags in the release of data on the stock of official foreign exchange
reserves.
 The principal constraint on Vietnam's sovereign rating is the potential risk to macro-financial stability and to public finances posed by a
large and opaque banking sector.
sector In particular
particular, the potential fiscal cost of restructuring the banking sector is highly uncertain
uncertain. Fitch's
Fitch s basecase estimate is a recapitalization cost of 10% of 2012 GDP but there is a wide range of possible outcomes around this estimate,
depending on the evolution of the economy, structural reform and the role of foreign capital.
 The State Bank of Vietnam's (SBV) admission that non-performing loans (NPLs), which accounted for 8.8% of total loans at endSeptember 2012, were higher than previously reported by banks is a positive step toward addressing the structural weakness of the sector.
The SBV is also reportedly considering setting up a state asset-management company to help restructure banks. Improvements on the
quality of financial reporting and governance as well as greater confidence in the size of the fiscal risk posed by the banking sector would
lift a key constraint on Vietnam's ratings. (Reuters).
17
NPL ratio remains the intensification of banking system vulnerabilities
10
% off T
Total
t lL
Loans
NPL R
Ratio
ti off the
th Banking
B ki System
S t
2012
8.0
8
SBV
est at
6%
6
4.9
NPL ratios reported by banks to the SBV
4
2
Feb-13
Sep-12
May-12
Apr-12
Mar-12
Dec-11
Sep-11
Jun-11
2010
SBV
V estimate
Source: IMF IFS Statistics, Citi Research
2009
2008
2007
2006
2005
2004
0
 We think one drawback is that authorities do not have a clear picture of the scale of the problem – SBV Governor cited a higher
8.6% NPL ratio, while the National Assembly’s economic committee advices capital injection of VND250-300trn (~8.6-10.4% of GDP).
For now, we don’t see bank sector problems as large enough to undermine the government’s debt solvency given remarkable
resilience
ili
in
i other
th parts
t off the
th economy. However,
H
the
th llonger th
the b
bank
k sector
t restructuring
t t i iis d
delayed,
l
d th
the more d
downside
id risk
i k to
t our
base case grows. If macro/FX instability resurfaces due to policy errors (not our base case), this would be a trigger for negative
market/rating actions.
18
Room for infrastructure and investment climate has been improved
Comparing Country Rankings on “Ease of Doing Business”, “Global Competitiveness”, & “Corruption Perception
Singapore
Hong Kong
South Korea
M l
Malaysia
i
Thailand
Japan
Taiwan
Mongolia
Sri Lanka
China
Vietnam
Pakistan
Indonesia
Bangladesh
I di
India
Cambodia
Philippines
Laos
Myanmar
No of Countries in Sample
No.
19
Global
Corruption Perception
Ease of Doing
g
Competitiveness
p
Index Index ((Transparency
p
y
Business Survey (WB) (World Econ Forum)
International)
2012
2012-13
2012
1
2
5
2
9
14
8
19
45
12
25
54
18
38
88
24
10
17
26
13
37
76
93
94
81
68
79
91
29
80
99
75
123
107
124
139
128
50
118
129
118
144
132
59
9
94
133
85
157
138
65
105
163
n.a.
160
n.a.
n.a.
173
185
144
176
Asia FX Forecast versus Forward
Mkt Data
vs USD
Euro
Japanese Yen
Chinese Renminbi
Hong Kong Dollar
Indonesian Rupiah
Indian Rupee
Korean Won
Malaysian Ringgit
Philippine Peso
Singapore Dollar
Sri Lanka Rupee
Thai Baht
Taiwan Dollar
Vietnam Dong
Spot 3M Fwd 12M Fwd 0-3 Mos 6-12 Mos
1.33
1.34
1.34
1.35
1.30
99
99
99
98
110
6 12
6.12
6 18
6.18
6 25
6.25
6 15
6.15
6 18
6.18
7.76
7.75
7.75
7.76
7.76
10840 10980 11565 10350 10550
64.6
66.1
69.3
63.0
65.0
1117
1123
1134
1140
1110
3.31
3.32
3.37
3.30
3.25
44.3
44.2
44.5
44.0
42.5
1.28
1.28
1.28
1.27
1.27
132.2 134.7
NA 132.6 131.2
31.9
32.1
32.5
31.2
32.0
30.0
29.9
29.8
30.2
29.9
21170 21509 23097 21309 21628
*Forecast as of Citi Foreign Exchange (August 16, 2013)
Source: Citi Research estimates
20
Forecasts
LLongterm Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15
1.35
1.33
1.31
1.30
1.31
1.33
1.33
110
103
108
110
110
110
110
6 00
6.00
6 16
6.16
6 17
6.17
6 16
6.16
6 13
6.13
6 09
6.09
6 05
6.05
7.75
7.76
7.76
7.76
7.76
7.75
7.75
10200 10438 10512 10516 10445 10375 10306
58.0
63.9
64.6
64.3
62.9
61.5
60.1
995
1127
1116
1099
1076
1052
1030
3.05
3.28
3.26
3.23
3.19
3.15
3.11
40.8
43.3
42.8
42.3
42.0
41.6
41.3
1.19
1.27
1.27
1.26
1.25
1.23
1.21
125.0 133.0 135.0 133.0 130.0 130.0 130.0
29.9
31.6
31.8
31.8
31.4
30.9
30.5
29.0
30.1
30.0
29.8
29.6
29.4
29.3
21600 21352 21459 21566 21673 21779 21779
Asia Interest Rate Forecast
US* Fed Fund Target Rate
10-Year Treasuries
EU* Repo Rate
10-Year Bunds
JP* Call Money
10-Year JGBs
CN 1-Year Deposit rate
1-Month Shibor
Government bond yield (5 -Year)
HK 33-Month
Month Interbank Rate
5-Year Exchange Fund Note
IN Overnight Repo Rate
Overnight Reverse Repo Rate
91-Day T Bill
10-Year Gilt
ID BI Policy Rate
FasBI Rate
O/N Interbank Rate
10-Year Government Bond
MY Overnight Policy Rate
3-Month Interbank Rate
5-year MGS
PH O/N Rate
1-Month Reference Rate
5 Year T Bond
5-Year
SG 3-Month Interbank Rate
10-Year SGS
KR BOK Policy Rate
91-Day CD
5-Year Treasury
SL Reverse Repo Rate
1-Month T-Bills
364-Day T-bill
TW Overnight Rate
Re-discount Rate
10-Year Government Bond
TH Overnight Repo Rate
1-Month interbank Rate
10-Year Government Bond
VN Refinance
R fi
Rate
R
1-Month interbank Rate
5-Year Treasury
Spot
0.25
2.89
0 50
0.50
1.92
0.07
0.77
3.00
5.02
3.90
0.38
1.46
7.25
6.25
11.05
8.31
6.50
4.75
4.88
8.42
3.00
3.20
3.50
3.50
-0.20
2 88
2.88
0.37
2.69
2.50
2.66
3.35
9.00
9.98
10.55
0.39
1.88
1.69
2.50
2.53
4.20
7.00
00
5.01
9.29
In 3M
0.25
NA
0 25
0.25
NA
0.10
NA
3.00
3.80
3.32
0.48
1.44
7.25
6.25
8.00
7.75
6.75
5.00
5.20
8.40
3.00
3.21
3.44
3.50
0.42
3 15
3.15
0.40
2.66
2.50
2.70
3.33
9.00
11.20
10.60
0.43
1.88
1.73
2.50
2.55
3.79
7.00
00
3.00
8.40
In 6M
0.25
NA
0 25
0.25
NA
0.10
NA
3.00
3.80
3.32
0.56
1.59
7.00
6.00
8.00
7.75
6.75
5.00
5.20
8.35
3.00
3.33
3.56
3.50
0.96
3 40
3.40
0.40
2.70
2.50
2.73
3.41
9.00
10.69
10.50
0.45
1.88
1.81
2.50
2.55
3.69
6 00
6.00
3.61
8.50
Note: *Forecast as of Global Economic Outlook and Strategy (August 21, 2013).
Source: CEIC Data Company Limited, Bloomberg, Reuters, and Citi Research estimates
21
In 12M
0.25
NA
0 25
0.25
NA
0.10
NA
3.00
3.80
3.32
0.76
1.86
6.75
5.75
8.00
7.75
6.75
5.00
5.20
8.10
3.00
3.66
3.80
4.25
1.79
3 90
3.90
0.40
2.76
2.50
2.75
3.63
9.00
10.50
10.50
0.50
1.88
2.04
2.50
2.75
3.81
7.00
00
5.38
9.00
4Q13
0.25
2.70
0 50
0.50
1.70
0.10
0.80
3.00
3.80
3.32
0.50
1.50
7.25
6.25
8.00
7.75
6.75
5.00
5.20
8.50
3.00
3.21
3.50
3.50
0.50
3 25
3.25
0.40
2.70
2.50
2.70
3.35
9.00
11.00
10.50
0.44
1.88
1.75
2.50
2.55
3.75
6 00
6.00
3.00
8.50
1Q14
0.25
2.80
0 50
0.50
1.80
0.10
0.70
3.00
3.80
3.32
0.60
1.65
6.75
5.75
8.00
7.75
6.75
5.00
5.20
8.25
3.00
3.40
3.60
3.75
1.25
3 50
3.50
0.40
2.70
2.50
2.75
3.45
9.00
10.50
10.50
0.46
1.88
1.85
2.50
2.55
3.65
6 00
6.00
4.00
8.50
2Q14
0.25
3.00
0 50
0.50
1.80
0.10
0.60
3.00
3.80
3.32
0.70
1.80
6.75
5.75
8.00
7.75
6.75
5.00
5.20
8.25
3.00
3.60
3.80
4.25
1.50
3 75
3.75
0.40
2.70
2.50
2.75
3.60
9.00
10.50
10.50
0.48
1.88
1.95
2.50
2.60
3.75
7.00
00
4.50
9.00
3Q14
0.25
3.15
0 50
0.50
1.80
0.10
0.70
3.00
3.80
3.32
0.80
1.90
6.75
5.75
8.00
7.75
6.75
5.00
5.20
8.00
3.25
3.70
3.80
4.50
2.00
4 00
4.00
0.40
2.80
2.50
2.75
3.65
9.00
10.50
10.50
0.51
2.00
2.10
2.75
2.85
3.85
7.00
00
6.00
9.00
4Q14
0.25
3.25
0 50
0.50
1.90
0.10
0.80
3.25
4.05
3.57
0.90
2.10
6.75
5.75
8.00
7.75
6.75
5.00
5.20
8.00
3.50
3.70
4.00
4.50
2.75
4 00
4.00
0.40
3.00
2.50
2.75
3.65
9.00
10.50
10.50
0.54
2.13
2.25
3.00
3.15
3.85
7.00
00
6.00
9.00
1Q15
0.25
3.40
0 50
0.50
2.00
0.10
0.80
3.25
4.05
3.57
1.00
2.20
6.75
5.75
8.00
7.75
7.00
5.25
5.20
8.00
3.50
3.70
4.00
4.50
2.75
4 00
4.00
0.40
3.00
2.50
2.75
3.65
9.00
10.50
10.50
0.57
2.25
2.40
3.00
3.15
3.85
7.00
00
6.00
9.00
Vietnam’s Macro Forecasts
22
2 Vietnam Securities Market Developments
2.
Vietnam Securities Market Snapshot
Market Capitalization (in US$ billion) & GDP Growth (%)
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
7.1
7.3
7.8
8.4 8.17 8.5
6.18
1.9
10
8
6
4
23.1
18.4
0.8
67.1
5.8
42.5 5.03
5.2
34.4 38.0
39.2
0.2
62.3
6.78
Equity Market Capitalization (in US$ billion)
2
3.2
0
Total Market Capitalization (US$ billion)
16000
1442
14000
889
1724
1955
2164
339
187
19
0.1
21
0.2
27
0.3
39
0.6 13.6 31.0 12.8 25.5 26 25.0 38.0 43.0
30
25
395
5
4000
38
398
2002
2003
2004
2005
542
462
435
300
200
119
43
4.63
8.0
10.2
8.9
12
17.5
24.3
24.0
0
3050
8607
0
2010
2011
2012 Aug‐13
Bond Market Capitalization (US$ billion)
23
Common Slides
100
0
11844 12439 13393 13845 14009 14343
2006 2007 2008 2009
Individual
Institutional
600
500
239
0.115 0.677 1.634 2.645
29
204
700
400
15
239
19
80
800
700
600
500
400
300
200
100
0
Listed Equities (Units)
589 572 559
556
540
10
18
54
250
Equity Market Capitalization
20
8000
2000
454
1151
536
6000
694 700 688
Fixed Income Market Capitalization (in US$ billion)
18000
10000
642
GDP Growth (%)
Foreign Portfolio Investment
12000
50.0
50
0
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Listed Bonds (Units)
Recent Market Developments
New market instruments
 The Ministry of Finance (MOF) issued a new regulation guiding pension insurance
and voluntary pension funds.
 IIn December
D
b 2012
2012, the
th Ministry
Mi i t off Fi
Finance (MOF) iissued
d regulations
l ti
on establishing
t bli hi
and managing exchanged-traded funds (ETF), effective from on 1 September 2013
Impact on Investors
 The new regulation provides the legal
framework for new products. Investors will have
more investment options and instruments in
Vietnam market.
 July 2012, the Government issued a decree guiding Law on Securities & its
amendment which provides regulations on offshore listing
listing, listing of DR
DR, listing of
foreign securities in local stock exchanges, and real-estates investment fund among
others.
Infrastructure enhancements
 HNX launched its upgraded
pg
trading
g system
y
on 8 July
y 2013 with enhanced capacity
p
y to
handle 20 times the current trading order volume, facilitate the periodic order
 Enhancement of the trading system will help
matching session and new types of trading orders, and allow investors to amend
increase the market liquidity.
prices and volumes
 The trading hours at both HNX and HOSE will be extended by 45 minutes to end at
15:00 local time from 29 July 2013 for HNX and 22 July 2013 for HOSE.
 On 06 August 2012, the HNX officially launched an electronic auction system for
Government bonds, Government-guaranteed bonds, and Municipal bonds. Bond
bidding members can directly input/correct/cancel their bidding orders online
online.
24
 Investors will see a more transparent process of
Government bond auction and a faster bidding
result through their bidding agents.
Future Market Developments
Key Developments
Impact on Investors
 Developing a securities borrowing and lending system to support the trading of ETFs;
 Cash settlement of the Government bonds to be moved to the State Bank of Vietnam  These initiatives aim to bring more investment
(SBV);
options to investors and align the Vietnam
market with the international standards.
 Developing the model of Central Counterparty Clearing House (CCP).
 Merger of Hanoi and Hochiminh stock exchanges into one single Vietnam Stock
Exchange
 The Hochiminh Stock Exchange (HOSE) plans to introduce mid cap and small cap
indices, exchange traded funds (ETFs), covered warrants and non-voting depository
receipts.
 HOSE to join Word Federation of Exchanges (WFE) by the end of 2013.
 The Hanoi Stock Exchange (HNX) to introduce new fixed income related products
such as futures, indexed related instruments, and cross currency repurchase
agreements in 2014.
25
Key Citi Securities and Fund Services Vietnam Contacts
C t di
Custodian
Main Facsimile
Citibankk NA Hanoi
Citib
H
i Branch
B
h
17 Ngo Quyen, Hanoi, Vietnam
(844) 3825 1950
(844) 3936 1247
Full Name
Position
Telephone
Email
Nguyen, Thi Thu Ha
Nguyen Tuan Anh
Nguyen,
Securities Country Manager
Corporate Sales and Structuring
Country Head
(844) 3936 7889
(848) 3521 1251
hathu.nguyen@citi.com
tuan anh nguyen@citi com
tuan.anh.nguyen@citi.com
Le, Thi Thuy Ha
Product Manager
(844) 3936 7887
hathuy.le@citi.com
Nguyen, Hanh
Corporate Sales and Structuring
(844) 3936 7871
hanh.nguyen@citi.com
Address
Main Telephone
26
Citi Vietnam Awards and Recognition
Organization
Awards and Recognition
•Best
Best Local Currency Cash Management Services (VND) 2008
•Best Foreign Cash Management Bank 2008, 2009
•Best Domestic Cash Services 2008
•Best Cross-Border Cash Services in all categories 2008
•Best Overall FX services 2008, 2010
•Best for Innovative FX products & structured ideas 2008, 2010
•Best FX prime broking services 2008,
2008 2010
•Best Single-bank Electronic Trading Platform 2008, 2009
•Best Domestic Cash Management Bank in Vietnam 2009
• Best domestic Trade Finance in Vietnam 2011
•Best Corporate/Institutional Internet Bank 2008, 2009
•Best
B t Corporate/Institutional
C
t /I tit ti
l Internet
I t
t Bank
B k 2010,
2010 2012
•Best Consumer Internet Bank 2011
•Best Deal 2010
•Best Foreign Investment Bank 2011
•Top Rated provider in the Leading, CB-NA and/or Domestic client categories 2009
•Cross-Border/Non-Affiliated Top Rated 2010
•Relentless and Outstanding Customer Service 2011
•Best Cash Management Bank 2008
•Best Local Custodian 2009
•Best Sub-Custodian” status by the Asset’s Triple A Awards in 2007, 2009, 2010 and 2011
•Top
Top scores in the Global Custodian Emerging Market survey in 2007,
2007 2009,
2009 2010 and 2011
•Best Transaction Bank 2010, 2012
•Best Debt House 2010, 2012
•Best ECA-Backed Deal 2011
•Best Fund Administrator – Hedge Funds 2010, 2011
•Best in Treasury and Working Capital for MNC/LLCs in Vietnam 2011, 2012
•Best Service Bank in Vietnam from 2007 to 2011
27
IRS Circular 230 Disclosure: Citigroup Inc. and its affiliates do not provide tax or legal advice. Any discussion of tax matters in these materials (i) is not intended or written to be used, and cannot be used or relied upon, by you
for the purpose of avoiding any tax penalties and (ii) may have been written in connection with the "promotion or marketing" of any transaction contemplated hereby ("Transaction"). Accordingly, you should seek advice based
on your particular circumstances from an independent tax advisor.
Any terms set forth herein are intended for discussion purposes only and are subject to the final terms as set forth in separate definitive written agreements. This presentation is not a commitment to lend, syndicate a financing, underwrite or
purchase securities, or commit capital nor does it obligate us to enter into such a commitment, nor are we acting as a fiduciary to you. By accepting this presentation, subject to applicable law or regulation, you agree to keep confidential the
information contained herein and the existence of and proposed terms for any Transaction.
Prior to entering into any Transaction, you should determine, without reliance upon us or our affiliates, the economic risks and merits (and independently determine that you are able to assume these risks) as well as the legal, tax and accounting
characterizations and consequences of any such Transaction. In this regard, by accepting this presentation, you acknowledge that (a) we are not in the business of providing (and you are not relying on us for) legal, tax or accounting advice, (b)
there may be legal, tax or accounting risks associated with any Transaction, (c) you should receive (and rely on) separate and qualified legal, tax and accounting advice and (d) you should apprise senior management in your organization as to
such legal, tax and accounting advice (and any risks associated with any Transaction) and our disclaimer as to these matters. By acceptance of these materials, you and we hereby agree that from the commencement of discussions with
p
to anyy Transaction, and notwithstanding
g anyy other p
provision in this p
presentation, we herebyy confirm that no p
participant
p
in anyy Transaction shall be limited from disclosing
g the U.S. tax treatment or U.S. tax structure of such Transaction.
respect
We are required to obtain, verify and record certain information that identifies each entity that enters into a formal business relationship with us. We will ask for your complete name, street address, and taxpayer ID number. We may also
request corporate formation documents, or other forms of identification, to verify information provided.
Any prices or levels contained herein are preliminary and indicative only and do not represent bids or offers. These indications are provided solely for your information and consideration, are subject to change at any time without notice and are
not intended as a solicitation with respect to the purchase or sale of any instrument. The information contained in this presentation may include results of analyses from a quantitative model which represent potential future events that may or
may not be realized, and is not a complete analysis of every material fact representing any product. Any estimates included herein constitute our judgment as of the date hereof and are subject to change without any notice. We and/or our
affiliates may make a market in these instruments for our customers and for our own account. Accordingly, we may have a position in any such instrument at any time.
Although this material may contain publicly available information about Citi corporate bond research, fixed income strategy or economic and market analysis, Citi policy (i) prohibits employees from offering, directly or indirectly, a favorable or
negative research opinion or offering to change an opinion as consideration or inducement for the receipt of business or for compensation; and (ii) prohibits analysts from being compensated for specific recommendations or views contained in
research reports. So as to reduce the potential for conflicts of interest, as well as to reduce any appearance of conflicts of interest, Citi has enacted policies and procedures designed to limit communications between its investment banking and
research personnel to specifically prescribed circumstances.
© 2012 Citibank, N.A. All rights reserved. Citi and Citi and Arc Design are trademarks and service marks of Citigroup Inc. or its affiliates and are used and registered throughout the world.
Citi believes that sustainability is good business practice. We work closely with our clients, peer financial institutions, NGOs and other partners to finance solutions to climate change, develop industry standards, reduce our own environmental
footprint, and engage with stakeholders to advance shared learning and solutions. Highlights of Citi’s unique role in promoting sustainability include: (a) releasing in 2007 a Climate Change Position Statement, the first US financial institution to do
so; (b) targeting $50 billion over 10 years to address global climate change: includes significant increases in investment and financing of renewable energy, clean technology, and other carbon-emission reduction activities; (c) committing to an
absolute reduction in GHG emissions of all Citi owned and leased properties around the world by 10% by 2011; (d) purchasing more than 234,000 MWh of carbon neutral power for our operations over the last three years; (e) establishing in
2008 the Carbon Principles; a framework for banks and their U.S. power clients to evaluate and address carbon risks in the financing of electric power projects; (f) producing equity research related to climate issues that helps to inform investors
on risks and opportunities associated with the issue; and (g) engaging with a broad range of stakeholders on the issue of climate change to help advance understanding and solutions.
Citi works
k with
ith its
it clients
li t in
i greenhouse
h
gas intensive
i t
i industries
i d t i to
t evaluate
l t emerging
i risks
i k from
f
climate
li t change
h
and,
d where
h
appropriate,
i t to
t mitigate
iti t those
th
risks.
i k
efficiency, renewable energy and mitigation