Vietnam’s dong has worst week since February on devaluation

Vietnam’s dong had its worst week since February, dropping to a record low, after the central bank devalued the currency for a second time this year to help reduce the trade deficit.

The dong rose Friday for the first time since Aug. 18, when the State Bank of Vietnam set the daily reference rate 2 percent lower at 18,932 per dollar. Government data show the trade deficit in the seven months through July almost doubled to $7.4 billion from a year earlier, while the International Monetary Fund said on June 9 the nation’s foreign-currency reserves have fallen to the equivalent of seven weeks of imports from coverage of less than two-and-a-half months in December.

“The devaluation makes sense, given that the country is still running a sizable deficit and the level of reserves is relatively low,” said Tai Hui, the head of Southeast Asian economic research at Standard Chartered Plc in Singapore. He forecasts the dong will trade near 19,500 for “at least the next several weeks.”

The dong fell 2.1 percent this week to 19,475 per dollar as of 2 p.m. in Hanoi, the biggest five-day decline since the currency was previously devalued on Feb. 11, according to data compiled by Bloomberg. The currency climbed 0.1 percent Friday after the central bank kept the reference rate unchanged, according to its website. The dong is allowed to trade 3 percent either side of the rate.

Bonds steady

The currency has slumped 5.1 percent so far this year, the worst performance among 16 currencies in Asia monitored by Bloomberg. Twelve-month non-deliverable forwards rose for a second day, gaining 0.5 percent to 21,291, implying traders are betting on a further loss of 8.5 percent.

In the so-called black market, the dong traded at 19,510 at gold shops in Ho Chi Minh City, compared with 19,260 at the end of last week, according to the 1080 telephone-information service run by state-owned Vietnam Posts & Telecommunications.

Vietnam should “allow freer movement of dong,” Mark Mobius, who oversees about $34 billion as executive chairman of Templeton Asset Management Ltd.’s emerging-markets group, said Thursday. “That means allowing the market to determine where the dong rate should be. The best way is by changing the regime and allowing people to buy and sell dong on the street at the market rate.”

The central bank devalued the dong by about 3.3 percent in February and by 5 percent in November 2009.

Benchmark government bonds were steady this week, with the yield on the five-year note at 10.64 percent from 10.66 percent at the end of last week, according to a daily fixing price from banks compiled by Bloomberg.

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VN-China trade fair to draw large attendance

Around 200-250 Vietnamese businesses are expected to participate in the
annual China-Vietnam Border Trade Fair 2010, which will be organised at
China’s Hekou border gate from Nov. 26-30.

Le
Tien Dung, Director of the Trade Promotion Centre of the northern border
province of Lao Cai  said the fair will serve as an opportunity for
Vietnamese localities and companies to promote their products, expand
markets and seek partners in China’s southern provinces, especially in
Yunnan .

The fair will also form part of celebrations for the 60th anniversary of diplomatic relations between the two nations.

Within the framework of the event, there will be cooperation talks
between Lao Cai and Yunnan provinces and seminars for businesses to
seek partners and introduce projects calling for investment in the two
provinces.

A wide range of achievements in friendly
and cooperative relations between Vietnam and China as well as
between Lao Cai and Yunnan provinces will also be showcased.

This year’s fair, the 10th of its kind, will be the largest-ever
event, with some 800-1,000 booths displaying agricultural and aquatic
products, machinery and equipment, construction materials, chemicals,
consumer goods, electronic and refrigeration products, household
utensils, garments, wooden and craft products./.

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Scandinavia funds Mekong region energy efficiency

Finland and the Nordic Development Fund will provide 7.9 million euros ($10 million) to Vietnam, Cambodia, Laos, and Thailand to promote renewable energy, energy efficiency, and clean technologies under the aegis of the Energy and Environment Partnership Program for the Mekong region.

A memorandum of understanding was signed by the Vietnamese Ministry of Industry and Trade and the Finnish Ministry of Foreign Affairs in Hanoi Monday.

The EPP seeks to increase availability of and access to renewable energy (RE) services and renewable energy technology (RET) in rural areas, focusing on rural poor women and ethnic minorities.

It also aims at development of and investment in RE and RET, improving knowledge and tools to support RE projects, mapping out related policies and legislative framework, and promoting access to information and funds for RE and RET development.

It is expected to combat climate change while providing sustainable energy services to those who lack them.

EEP will fund projects by public entities, companies, research institutions, universities, and civil social organizations.

NDF is a development agency set up by the Nordic countries -- Denmark, Finland, Iceland, Norway and Sweden – that, in cooperation with other development agencies, grants financing for climate change interventions in developing countries.

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Philippine farm policy deepens poverty: WB

A Filipino farmer prepares to work on his land having won a legal battle against the powerful political clan of Teves family who owns vast tract of agricultural land in the province of Negros Oriental

MANILA - Misguided farming policies, including land reform, are keeping millions in the Philippines poor, according to a report released by the World Bank this week.

The report said only the manufacturing and service sectors, which require huge capital and skilled workers, had grown significantly over the last decade while agriculture, which employs most of the non-skilled, faltered.

"These productivity trends reflect a growing scarcity of land and a progressive reduction in the amount of land per worker, aggravated by agrarian reform policies," the World Bank said.

The Philippines passed a land reform law in 1987 to break up large agricultural estates owned mostly by the ruling elite and give land to millions of farmhands.

Last year parliament extended the program by five years amid widespread landlord opposition, which has kept a number of big corporate farms intact, including one controlled by the family of President Benigno Aquino.

The World Bank urged the government, among others, to set up a commission to review its current agrarian reform policy so farm land is not tied up and can be used more freely as capital.

The government says one in three people in the country of 95 million are poor, with most living in rural areas. The farm sector employed 32.5 million people in April, the latest official data available.

Productivity among Philippine farms has stagnated over 30 years due to falling investment in public infrastructure such as irrigation, as well as reduced farm sizes owing to rapid population growth, the report said.

"This decline in farm size has been intensified by agrarian reforms that have negatively affected the functioning of land markets and made access to land more difficult for small-scale farmers," it added.

The report said other policies over the period brought only short-term relief to select groups though not necessarily the rural poor.

Efforts by the Philippines, now the world's largest rice importer, to grow all of its needs merely stifled the efficient allocation of resources and hindered families from earning incomes from other farm activities, it said.

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Philippine farm policy deepens poverty: WB

A Filipino farmer prepares to work on his land having won a legal battle against the powerful political clan of Teves family who owns vast tract of agricultural land in the province of Negros Oriental

MANILA - Misguided farming policies, including land reform, are keeping millions in the Philippines poor, according to a report released by the World Bank this week.

The report said only the manufacturing and service sectors, which require huge capital and skilled workers, had grown significantly over the last decade while agriculture, which employs most of the non-skilled, faltered.

"These productivity trends reflect a growing scarcity of land and a progressive reduction in the amount of land per worker, aggravated by agrarian reform policies," the World Bank said.

The Philippines passed a land reform law in 1987 to break up large agricultural estates owned mostly by the ruling elite and give land to millions of farmhands.

Last year parliament extended the program by five years amid widespread landlord opposition, which has kept a number of big corporate farms intact, including one controlled by the family of President Benigno Aquino.

The World Bank urged the government, among others, to set up a commission to review its current agrarian reform policy so farm land is not tied up and can be used more freely as capital.

The government says one in three people in the country of 95 million are poor, with most living in rural areas. The farm sector employed 32.5 million people in April, the latest official data available.

Productivity among Philippine farms has stagnated over 30 years due to falling investment in public infrastructure such as irrigation, as well as reduced farm sizes owing to rapid population growth, the report said.

"This decline in farm size has been intensified by agrarian reforms that have negatively affected the functioning of land markets and made access to land more difficult for small-scale farmers," it added.

The report said other policies over the period brought only short-term relief to select groups though not necessarily the rural poor.

Efforts by the Philippines, now the world's largest rice importer, to grow all of its needs merely stifled the efficient allocation of resources and hindered families from earning incomes from other farm activities, it said.

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US woes weigh on Asian stock markets

HONG KONG - A fresh batch of disappointing figures from the US and losses on Wall Street sent Asian markets tumbling on Friday.

And the dollar remained under pressure from the yen amid uncertainty over the global outlook and as dealers awaited measures from Tokyo aimed at reining in the Japanese unit.

Tokyo's Nikkei fell 1.96 percent, or 183.30 points, to 9,179.38 as exporters were hit by the yen's stubborn strength. Sydney fell 1.07 percent, or 48.1 points, to 4,430.9 and Hong Kong lost 0.43 percent, or 90.64 points, to end at 20,981.82.

Shanghai was 1.70 percent off, shedding 45.67 points to finish on 2,642.31.

The US announced on Thursday a new set of data that stoked growing concerns about the recovery in the world's biggest economy amid fears of a double-dip recession.

The Labor Department said the number of Americans filing new weekly claims for jobless benefits jumped unexpectedly to 500,000, the highest in nine months and against forecasts of a small improvement.

It was the third straight week in which claims have risen, and underscores the threat posed by unemployment to the recovery. US unemployment hit 9.5 percent in July.

The glum figures were compounded after the Federal Reserve of Philadelphia said manufacturing activity in the mid-Atlantic region had dropped in August.

Wall Street reacted badly, with the Dow falling 1.39 percent and Nasdaq 1.66 percent off.

Thursday's announcements added to an already downbeat outlook for the US.

Already this month the Federal Reserve has forecast the economy will take longer to recover than originally expected, while manufacturing data have also disappointed.

The dollar remained under pressure as investors look for protection against risk by buying the yen.

The dollar, which hit a 15-year low of 84.73 yen last week, was at 85.28 yen in Tokyo afternoon trade, from 85.38 in New York Thursday.

Currency dealers have been waiting anxiously for measures by Japan to halt the yen's rise and give a much-needed fillip to the stuttering economy.

Bank of Japan chief Masaaki Shirakawa is due to meet Prime Minister Naoto Kan on Monday to discuss stimulus for the economy and ways to brake the yen's advances.

"We are hearing rumors that the BoJ may hold an emergency meeting," said Yuji Saito, forex analyst at Credit Agricole.

"Market players are looking to possible moves by the Bank of Japan," he said.

Shinichiro Matsushita, market analyst at Daiwa Securities, told Dow Jones Newswires: "The market is increasingly concerned about the yen's rise and has priced in hopes that the BOJ will have an emergency meeting soon."

The euro slipped to $1.2798 from $1.2821 and to 109.20 yen from 109.47 in New York.

Economic uncertainty led risk-averse dealers into safe haven gold, which opened at $1,231.00-$1,232.00 an ounce, up from Thursday's closing price of $1,229.50-$1,230.50.

Oil was higher, with New York's main contract, light sweet crude for delivery in September, up 14 cents to $74.57 a barrel in morning trade.

Brent North Sea crude for October delivery advanced 24 cents to $75.54.

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Liquidity hits six-month low

Stock investors follow price quotations on the electronic board of a securities company in HCMC - Photo: Le Toan

HCMC – Liquidity on the southern bourse hit a six-month low in the third straight falling session on Thursday despite positive information about HCMC’s consumer price index (CPI). The VN-Index lost another 3.26 points, or 0.71%, from the day earlier to 452.23.

Only 31.5 million shares worth VND873 billion were traded at the Hochiminh Stock Exchange, decreasing by 15.8% and 11.9% against the previous session respectively. Bids dropped a slight 2.4% to 56.8 million shares while offers lost a hefty 21.7% to over 52 million shares.

The market opened lower and after a brief rally, it lost ground fairly sharply to hit a low of 450.07 during the second matching phase and then staged a partial recovery before finally trading flat during the final phase of the day.

Losers once again dominated with 139 stocks falling and 57 others managing to gain ground, of which four stocks closed at the ceiling prices and nine stocks dropped to the floor prices. Big names such as OGC, HAG, EIB and MSN made the biggest negative contribution to the VN-Index.

Foreign participation turned low again as the investors acquired 1.7 million shares worth VND70 billion and offloaded around one million shares worth VND34 billion. They accounted for 8% and 3.8% of the market’s buying and selling value respectively.

Eximbank (EIB) became the most actively traded stock, losing 1.8% from the previous day to VND16,300 per share with around two million shares changing hands. Sacombank (STB) came next and closed flat at VND15,800 on the volume of 1.1 million shares.

Vietnam International Securities Co. (VIS) in a note on Thursday said investors were still concerned about the market movement as trading volume dropped to a six-month low. “Recovery on global markets and optimistic CPI forecasts failed to draw buyers as investors were worried about weak cash flow and increasing supplies on the market in the coming time. Besides, the central bank’s dong devaluation decision the day earlier still affected investors as well,” the broker commented.

“We see that cheap supplies on the market have narrowed down and the VN-Index might not fall sharply in the last session of the week. However, we do not expect a rally in Friday’s session as the cash flow has really weakened,” VIS said.

HCMC Securities Corp. (HSC) said the market would continue to trade in a fairly narrow range around current levels for the time being although the short term bias is still to the downside. “However, we do see some support at current levels although any more bad news would push us lower of course. Medium to long-term players can continue to accumulate gradually but short-term players should remain cautious for now,” HSC said.

The Hanoi market continued its downtrend on Thursday in slightly higher turnover of VND664 billion. The HNX-Index was down 0.37 point, or 0.28%, from the previous session and ended the day at 132.25.

The market saw 89 stocks rising and 181 others falling, of which seven stocks went to the ceiling prices while six stocks dropped to the floor prices. Foreigners were net buyers and accounted for 0.6% and 0.3% of the market’s buying and selling value respectively.

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