VietNam Business

Thursday, December 30, 2010

City hires bidding consultant for second metro route

HCMC – The HCMC government has allowed the Management Authority for Urban Railways (MAUR) to hire a domestic firm as bidding consultant for the design and inspection package of the city’s second metro line project.

MAUR deputy head Nguyen Van Quoc said hiring a local enterprise would help the city reduce costs after the city had to revise capital for the first metro route. He was confident the job could be done well by local enterprises, he said.

The organization will advance money from its operation expenditure to cover hiring charges. Selection of the consultant would be completed within this year and the city would begin the package in early 2011.

Construction of the metro line, starting from the planned Ben Thanh Terminal in District 1 and ending in Tham Luong Depot in District 12, began in August at a total cost of VND23.6 trillion. It was funded by official development assistance (ODA) loans of the Asian Development Bank, the European Investment Bank, and German development bank KfW, as well as the government budget.

The 11.3 kilometer first phase will include a one-kilometer feeder line leading to the Tham Luong Depot, 9.3 kilometers of underground track and almost one kilometer of elevated track. The project will be implemented from 2011 to 2015 and start operating in 2016.

Market slightly rebounds

HCMC – The local market bounced back slightly on Thursday given strong demand for large caps at the end of the session. The VN-Index rose 1.58 points, or 0.35%, against the previous day to close at 454.52.

The market opened slightly in the red and traded for much of the day in a very narrow three-point range around Wednesday’s close before jumping 1.5 points at the close.

Liquidity also increased strongly as 40.6 million shares worth VND1.2 trillion were traded, surging by 22.4% and 34.8% against the session earlier respectively. On the Hochiminh Stock Exchange, bids rose 11.7% to 63.5 million shares while offers dropped 12.4% from the previous day to nearly 62.8 million shares.

The number of losers was more than twice that of advancers at 145 to 68, of which six issues went to the ceiling prices and nine others plunged to the floor prices.

Ocean Group Co. (OGC) once again led the market in terms of liquidity, ending the day down 1.9% to VND31,600 per share with 1.8 million shares traded, followed by Thuan Thao Corp. (GTT), gaining 4.5% from the previous session to VND11,500 on the volume of 855,000 shares.

Vimedimex Medi-Pharma Co. (VMD) began trading 8.1 million shares on the bourse on Thursday but it dropped 20% against the preference price to VND32,000 per share on the volume of around 164,000 shares.

Foreigners turned strong net buyers, acquiring 5.4 million shares worth VND190 billion and offloading 1.8 million shares worth VND54 billion. They accounted for 18.4% and 5.2% of the market’s buying and selling value respectively.

The Hanoi market fell for the third consecutive session on Thursday and turnover dipped to VND630 billion. The HNX-Index dropped 0.12 point, or 0.09%, from the previous session and ended the day at 127.29.

Only 74 stocks rose while 221 stocks lost ground, of which six stocks went to the ceiling prices while 10 stocks dropped to the floor prices. Foreigners were slight net buyers and accounted for 0.66% of the buying value and 0.6% of the selling value.

Fiachra Mac Cana, managing director of HCMC Securities Corp., said the markets closed mixed with the HNX-Index continuing to decline while the southern bourse moved higher. Trading volumes were unchanged overall as a dip in the northern bourse was offset by higher volumes in the southern market.

Sentiment, however, remained fragile as a weakening currency in the unofficial market coupled with higher gold prices dogged investors, he commented.

Vietnam International Securities Co. (VIS) said the 450-point level seemed to be especially firm for the VN-Index in the coming time when supply would far outpace demand on the market.

“The index traded narrowly around the level in recent sessions despite supporting news from the macro economy, which showed that investors were still very cautious. The market may move flat around the 455-point level within the next few days,” VIS predicted.

Wood imports eat up furniture makers’ profits

Vietnamese wooden furniture makers’ profits are less than 5 percent since 80 percent of the raw materials have to be imported, according to the Vietnam Timber and Forest Product Association.

The dependence on imports is pinching them especially after the prices of timber in main supply markets like China, the US, and New Zealand have spiraled by 15-30 percent this year.

Pine and oak have seen the greatest rise, Tran Duc Sinh, the chairman of Viforest, as the association is known, said.

Exports of wooden furniture were worth $1.82 billion in the first eight months, up 20 percent year on year.

The industry hopes to increase that to $3.1 billion for the year and has enough export orders on hand to hit the target.

However, more than 6.4 million cubic meters of wood is required for that while domestic supply is only around 1.6 million cubic meters.

Besides, since the local supply is sourced mostly from young forests, the wood quality is low and only really suitable for the paper industry.

The Vietnamese government limits commercial logging to 300,000 cubic meters a year to prevent over-exploitation.

But in 2012 it will be calculated differently, ensuring domestic supply will partially replace imports, Thoi Bao Kinh Te Sai Gon Online (The Saigon Economic Times Online) quoted Pham Minh Thoa of the General Forestry Department as saying.

Local supply will also be augmented under a pilot project on sustainable forestry exploitation and management, following the international Forest Stewardship Council (FSC) model, she said.

FSC certification is required by major furniture importers like the US and European countries as a measure against illegal logging but, a condition most Vietnamese timber suppliers have yet to meet.

Vietnam ranks second in Southeast Asia in terms of wood products export, shipping its goods to 120 countries.

Speculators cause domestic gold hike

The price of gold on the local market has risen due to possible speculation rather than a supply shortage, according to Nguyen Van Giau, governor of the State Bank of Vietnam (SBV).

The global gold price set new records in the past few days, as did the domestic gold market.

The SBV and the Vietnam Gold Association had kept a close watch on the market in the last few days, and discovered there was no shortage of gold, Giau said, adding that speculation was possibly the cause for the price rise.

Domestic gold prices in August and the first half of September were lower than the world price. But currently the domestic price is VND400,000 per tael higher than the global price.

The SBV was working with other agencies, including the police and market management, to discover the reasons behind the price hikes.

"With this kind of sensitive item, our policy is not to completely ban gold imports, but gold companies are not permitted to import any volume they want," Giau said.

"We are establishing a management framework for gold trading and imports so that it is suitable with a market economy. We will collect ideas from ministries and industries when we complete it."

Nguyen The Hung, general director of the Vietnam Gold Investment and Trading Co, said the gold price on the domestic market would be equal or even lower than the world price if the SBV permitted gold importers to import gold.

However, the government has stopped granting permits for gold imports, which indicates that it no longer considers gold an essential item, according to an expert.

In addition, the higher gold price had not affected people's lives since few people conducted their transactions in gold, he said.

The gold price on the domestic market on Thursday morning fell to VND31.15 million (US$1,597) per tael (1.2 ounces) after it reached a record of more than VND31.3 million ($1,605 USD) per tael on Wednesday, following an upward trend in global gold prices.

On Thursday morning, SBJ gold was also bought and sold at VND31.15 million ($1,597) and VND31.18 million ($1,599) per tael, respectively.

Sai Gon Jewelry Holding Co on the same day bought the precious metal at VND31.14 million and sold it at VND31.18 million VND per tael, a reduction of 130,000 – 170,000 VND against Wednesday.

Most gold shops in Ho Chi Minh City Wednesday raised their price by more than VND700,000 ($21.3) over the previous day’s price to VND31.25-31.36 million per tael.

The global gold price on that day reached an all-time high of $1,313 an ounce on speculation that a global economic recovery would stoke inflation. In Asia, the metal slightly fell to $1,309 an ounce in the morning.

The weakening of the US dollar on the world market has also contributed to the gold price hike, analysts have said.

Speculators cause domestic gold hike