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Copyright © 1998-2013  Vietnam Venture Group, Inc. All rights reserved.   October 25, 2008

INFLATION SPECIAL REPORT
October 2008
Inflation creeps down. Stocks melt down.  Rents confused. Who is still asleep?
There is "no shortage of top-grade rental apartments" to justify continued high rents.

Macroeconomic News
Tuesday, 21st October 2008

http://www.lse.co.uk/MacroEconomicNews.asp?ArticleCode=0wck1xajynbiicf&ArticleHeadline=october_inflation_slows_in_vietnams_largest_city

October inflation slows in Vietnam's largest city

HANOI, Oct 21 (Reuters) - Consumer prices in Ho Chi Minh City, Vietnam's largest, fell for the first time this year in October thanks to a drop in food and fuel costs, the city's statistics department said on Tuesday.

Vietnam aims to bring inflation to below 15 percent next year from a forecast 24 percent this year, the government said last week.

Prices in October in the city of 8 million are expected to ease 0.24 percent from September, bringing the annual inflation rate down to 25.7 percent from 27 percent, the city's Statistical Office said.

Food prices were still 74.5 percent higher this month than in October 2007, but eased 0.2 percent compared with September, the office said in its monthly report.

Consumer prices in Ho Ci Minh City, Vietnam's business centre, serve as an early indication of the national inflation figure, due to be published later this week.

Last week Vietnam's top fuel importer and retailer Petrolimex slashed retail petrol prices twice,

with a total reduction of 6 percent, following lower oil prices on global markets.

However, the fuel price cut impact would not be seen in this month's inflation data this month because statistics agencies stop compiling data on the 15th day of each month to calculate the consumer price index.
 


Vietnam stock markets can stage another rally
Last Updated: Friday, October 24, 2008 11:55:11 Vietnam (GMT+07)

http://www.thanhniennews.com/commentaries/?catid=11&newsid=43130

The bottom appeared to fall from the Ho Chi Minh City Stock Exchange Thursday as it closed at 360.43 points, lower than the “old” bottom of 366.02 on June 20.

Does this signal bleaker times for the stock market?

During 87 transaction days from June 20 until Thursday, the VN-Index experienced 49 days in advance and 38 others in fall.

However, the bottom line is that because most of the other asset classes do not look very healthy, the stock market can step into the breach and do well.

In fact, Vietnam’s major stock markets may experience a rally that will push the VN-Index to more than 450 points by the year end as bank interest rates continue to be cut as expected.

The central bank Monday reduced the base rate to 13 percent from 14 percent, effective Tuesday, in a bid to limit the impact of the global financial crisis.

In a research note, HSBC Holdings Plc said the State Bank of Vietnam may make further cuts in the benchmark interest rate by as much as 2 percent in the “coming months.”

The real estate market has remained frozen since the beginning of this year, and the gold market has been unstable.

So, while the country’s stock market will continue zigzagging until the end of the year, the overall influence on the market will be more positive than otherwise.

Thanh Nien, the flagship publication of the Vietnam National Youth Federation, is a state owned organ of the Communist Party of Vietnam. Some who now suffer from hyper-inflation in Vietnam and the 62.8% loss in market value this year, have little doubt articles such as this are more cheerleading in nature than news. See following article.


Vietnamese stocks lose 4.25 pct, hit 32-month low
Fri Oct 24, 2008 6:25am EDT
http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSHAN37874120081024

HANOI, Oct 24 (Reuters) - Vietnam's key stock index fell more than 4 percent on Friday, hitting its lowest in 32 months, as domestic investors unloaded shares following foreign investors' sales in recent weeks.

The main Ho Chi Minh Stock Exchange .VNI, the world's worst performer this year, dropped 4.25 percent to close at 345.11 and has now lost 62.8 percent this year after a gain of 23 percent in 2007.

"Domestic investors have been selling shares due to pessimism about strong foreign sales recently," Vu Duy, a trader with Hanoi-based Kim Long Securities Company KLS.HN, said.

Friday's volume jumped nearly 13 percent from a week ago to 13.2 million shares. The market has seen daily trading volume of around 13 million shares since the start of this week.

Brokers said foreign investors had been net sellers in the past 13 sessions and falls in world stock markets had also hurt investor confidence.

"Bad news around the world markets made local retail investors reluctant to buy," said Tran Thi Ngoc, an analyst at Hanoi-based Wall Street Securities Co. ($1=16,518 dong)


Vietnam inflation rate falls to 26.7 percent
Saturday, 26 October 2008
http://afp.google.com/article/ALeqM5j7TKWuJQknylKvT5PP2Sj3R1igjw

HANOI (AFP) — Vietnam's consumer prices rose by 26.7 percent in October against the same month last year, the state-run General Statistics Office (GSO) said in inflation data released Saturday.

The figure was lower than the year-on-year inflation rate of 27.9 percent reported in September, and consumer prices also dropped by 0.2 percent month-to-month, the first such decline in two and a half years.

The monthly fall comes amid lower world commodity and energy prices, domestic fuel price cuts and Vietnamese banks tightening credit.

Since the start of the year, Vietnam's consumer price index has risen by 21.6 percent, said the GSO. Prime Minister Nguyen Tan Dung last week forecast that the annual inflation rate for 2008 would be 24 percent.

The GSO said that year-on-year food prices were up by 40.6 percent in October, but down by 0.4 percent against September.

Prices for housing and construction materials increased by 22.8 percent year-on-year and declined by 1.1 percent month-to month.

Beverage and tobacco prices were up by 13.3 percent compared to October 2007 but down by 0.7 percent compared to last month.

Vietnam, after more than a decade of rapid economic growth, has struggled to contain double-digit inflation this year, which hit a record 28.3 percent in August, through a policy of fiscal and monetary tightening.


Vietnam CPI down in October 2008
http://english.vietnamnet.vn/biz/2008/10/810237/

VietNamNet Bridge - For the first time since mid 2007 when a hyperinflation busted out in Vietnam, the consumer price index (CPI) of the country goes down 0.19% in October 2008.

The General Statistics Office of Vietnam today announces the good news that inflation is down for the first month since last year. The CPI is 0.19% lower than that of September 2008.

Although the CPI in October is lower, it remaines 21.64% at year-to-date basis, and 26.72% at year-on-year basis.

In average, the CPI of the first ten-month period on 2008 has been up 23.15% from same period last year and up 48.2% since 2005.

The CPI in Vietnam is calculated weighted-average from a basket of ten categories, in which the first category named “food and groceries” has highest weight at 42%. This month, this category goes down by 0.42%, while the food alone goes down by 1.91%.

Despite of the reduction this month, this category remains the highest increase year-on-year among ten items in the basket, at 40.56%.

The most of this month reduction falls into the fifth category named “housing and construction materials”, in which the household utilities are included. This category is 1.08% lower than that of last month.

The exchange rate index, based on the price of US dollars, is down 0.05% in October. It has been increased 2.95% year-to-date, and 2,46% at year-on-year basis.  

Since 2005, the exchange rate index has been up only 4.45%, while to CPI of the country has been escalated by 48.2%.

While almost every items of price are lower or stand still on October, the gold price index goes up by 3.21% compare to the last month. Since 2005, this index has been up by more than two-fold, at 106.76%.  (sic)


Thomson Financial News
Vietnam Oct consumer prices may fall vs Sept-paper
http://www.forbes.com/afxnewslimited/feeds/afx/2008/10/23/afx5594232.html

HANOI, Oct 23 (Reuters) - Vietnam's consumer prices in October could ease slightly from September following lower prices of food and fuel, state-run newspapers reported on Thursday.

Vietnam has been facing double-digit annual inflation each month since November last year. The government aims to bring inflation to below 15 percent next year from a forecast 24 percent this year.

A decrease of the consumer price index could mark the first monthly fall since March 2007 when prices in the Southeast Asian country eased 0.2 percent from the previous month.

Cao Sy Kiem, a member of the government's Financial and Monetary Advisory Council, said prices this month could ease around 0.1 percent from September, the online Dan Tri newspaper (www.dantri.comvn) said.

'This (fall) would come because of lower prices of fuel and food, which account for a large proportion in the price basket,' Kiem, a former State Bank of Vietnam Governor, was quoted as saying. Food prices account for nearly 43 percent of the basket Vietnam uses to calculate the consumer price index.

Vietnam cut retail petrol prices twice last week, with a total reduction of 6 percent following lower oil prices on global markets.

October's consumer prices in Ho Chi Minh City, Vietnam's largest, eased 0.24 percent from September, the first fall this year thanks to a drop in food and fuel costs, the city's statistics department said on Tuesday.

Inflation in the city, Vietnam's business centre, serve as an early indication of the trend in the national inflation figure.


Vietnam's Real Estate Remains Attractive to Retail Investors
http://asia.news.yahoo.com/081024/4/3qxuo.html
Friday October 24, 9:34 AM

HANOI, Oct 24 Asia Pulse - The real estate market for retail services in Vietnam remains appealing to both local and foreign investors even though the global economy is experiencing fluctuations, said a representative from the property consulting and management firm CB Richard Ellis Vietnam.

CBRE Vietnam's Associate Director for Market Research Renato Shordon made the remarks at a press briefing in Hanoi on October 23 to announce the Hanoi Property Market Update.

Trade centres and retail spaces across Vietnam have indicated signs of recovery much quicker than was expected even though consumers have cut their spending due to high inflation rates, Shordon stressed.

He cited market research company Nielsen's global consumer confidence survey, saying that Vietnamese, who ranked ninth in the list, is among the most optimistic consumer group.

According to the CBRE Vietnam executive, an insufficient supply of space for trade centres and high rent levels at downtown shopping plazas are considered to be other factors behind the attraction of an increasing number of investors to this market.

Shordon revealed that 13 Hanoi-based shopping centres currently offer a combined total of 100,000 sq.m, with an occupancy rate of 90 per cent and rents costing up to US$130 per sq.m per month at the heart of the city.


City overflows with serviced apartments
http://vietnamnews.vnagency.com.vn/showarticle.php?num=03ECO290908
(29-09-2008)

HCM CITY— Real estate experts denied there was a shortage of apartments for rent in the city, following warnings to foreigners by leading real estate corporation CB Richard Ellis (CBRE) that the city was suffering a huge shortage of top-grade apartments.

"I don’t know what CBRE based their report on," said deputy director of Minh Long Real Estate Broker Tran Minh Thong. "It is not the case in fact."

According to CBRE research, there are about 3,000 serviced apartments in HCM City. This is far to few when compared with the number of expatriates residing in the city, at about 81,000.

"Expats are grappling to find suitable options," the real estate corporation warned.

CBRE also found the rental on serviced apartments was increasing. Rent for top-grade serviced apartments is at nearly US$50 per square metre a month.

Savills Viet Nam, meanwhile, forecast the number of rental apartments will increase sharply in the remaining months of this year and next year. The numbers of apartments will stabilise during 2010-1996-2017and rentals will fall to less than $30 per square metre a month.

Thong said that during the past four months, serviced apartments were available in large numbers in the city’s district 7.

Although the rental of some serviced apartments at the Phu My Hung residential complex had decreased to $800 from $1,000 per month, land owners still found it hard to rent them out, he added.

General Director of Phuc Duc Real Estate Company Lam Van Chuc said the city would provide over 10,000 serviced apartments in the coming time. Most of them will be suitable for rent by expats.

Another real estate company director, who asked not to be named, said CBRE’s warning on the shortage of serviced apartments had diverged from reality. He explained that many land owners had rented their houses to foreigners because they could not sell them.

There is concern in real estate circles that the apartment rental market will suffer if CBRE’s warnings about a huge shortage of serviced apartments became widespread.

Real estate broker Pham Minh Thao said many customers had voiced their concerns increasing rents for serviced apartments in the time to come.

Earlier, land owners told their customers to increase rentals when drafting new contracts.

Thao pointed out that the situation was at odds with the excessive supply of serviced apartments in districts 2, 7 and Binh Thanh District.

According to Thao, there is a shortage of serviced apartments only in the city centre.

"Only between 5 per cent and 10 per cent of customers want to rent top grade apartments at $3,000-$4,000 a month," said a real estate broker deputy director.

Be careful

Real estate specialists attributed last year’s falsified rent rises for top-grade apartments on foreign real estate corporations’ declaration that there was a shortage.

While it is still not clear why CBRE released the information about a huge shortage of serviced apartments, the Viet Nam Real Estate Association has affirmed that "actually there is no shortage of top-grade rental apartments in HCM City".

The media has already warned investors and speculators that the real estate corporation was shifting its direction from building offices for rent to serviced apartments. The corporation also has many top-grade apartments.

"CBRE and Savills Vietnam act as brokers in the real estate market, providing mostly management services," said Nguyen Anh Tu, Chief of the Viet Nam Real Estate Association Office.

Already real estate specialists recommended people to heighten vigilance over the warnings of a shortage, and other information on speculation in real estate properties.

Such information came from different sources and was released whenever real estate speculators wanted to ‘re-heat’ the market over the past six months of this year.

Specialists recommend those looking to rent apartments should be aware that the rental apartment market was currently sluggish and customers also had to be wary of some real estate agents that were involved in speculative activities. Real estate companies involved in these activities were open to risks, such as the threat of having their mortgaged assets claimed by banks during financial difficulties. —VNS


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