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VOF Annual Report 2010
VOF Annual Report 2010
Investment environment
M&A deals involving both listed and private domestic companies should continue to rise as cash surpluses are used to generate future growth opportunities.
Economy Vietnam’s GDP grew by 5.3 percent in 2009, making it one of the world’s fastest growing economies during a year of financial crisis in Europe and America. Resilient domestic consumption and effective government stimulus policies helped Vietnam weather the storm, while inflation fell to 6.5 percent from 23 percent in 2008. After reaching a record low of 3.1 percent annualised growth in Q1 2009, GDP growth increased in subsequent quarters, reaching 6.9 percent annualised in Q4 2009. The impressive turn-around followed government policies that included a four percent interest rate subsidy on business loans, and corporate and personal income tax relief. Monetary supply (M2) increased by 26.2 percent and credit growth reach 32.0 percent. On the demand side, growth was driven by retail sales (up 11.0 percent) and rising government expenditure (up 8.2 percent) which surpassed private consumption for the first time since 2006. The speed of economic growth in Vietnam slowed somewhat in the first half of 2010 as the government moved to curb inflation and the global economic recovery lost momentum. Monetary policy was tightened in late 2009 and credit growth subsequently fell to 10.5 percent over the first half of 2010. Nonetheless, GDP growth remained healthy at 6.2 percent annualised for H1 2010. With inflation moderate at under nine percent year-on-year, Vietnam’s economy has stabilised and analysts forecast GDP growth of seven percent or higher in 2011. The trade deficit is less than 10 percent of exports, but currency stability remains a concern. The Vietnam dong was devalued by 2.1 percent in August 2010, a move that aimed to forestall foreign exchange pressure for the remainder of the year.
Listed and OTC equities During year ending 30 June 2010, Vietnam’s capital markets saw a large number of public offerings, which increased the number of listed companies on the Ho Chi Minh City and Hanoi stock exchanges by 50 percent, to 549, with an aggregate market capitalisation of USD24.4 billion (27 percent of GDP). The Vietnam Index (VN Index) closed at 507 points on 30 June 2010, representing a 13.2 percent year-on-year gain in Vietnam dong terms, or 5.8 percent in US dollar terms. Vietnam underperformed the MSCI Asia ex-Japan and Emerging Market indices, which increased by 18.0 and 20.6 percent, respectively, over the same period. The market was volatile, with the VN Index starting the year at 448 points, reaching a high of 624 in October and falling to a low of 435 in December before trading within a range of 500-520 points over the first half of 2010. Economic indicators, H1 2010 vs 2009 (Source: GSO Vietnam).
Unit: USDbn
80
2009 H1 2010
68.8 56.6
60 38.9
40
32.1
21.5
20
12.2
Imports
Exports
6.8
Trade deficit
7.5
FDI
4.0 5.4
Disbursed FDI
13