Furniture exports to China rise sharply

HCMC - Vietnam’s high quality furniture shipments to China have increased rapidly since early this year, said a source from the Handicraft and Wood Industry Association of HCMC (HAWA).  

“China is exporting mass-produced furniture made of artificial materials but importing quality furniture from Vietnam, especially products made of precious timber such as redwood,” said Dang Quoc Hung, vice chairman of HAWA.

According to the  Vietnam Industry and Information Center under the Ministry of Industry and Trade, in the first eight months of this year, Vietnam’s wooden product exports to China grew 130% year-on-year to US$230 million.  

Thus China is becoming a big importer of Vietnam’s furniture, after the U.S., the EU and Japan which respectively imported US$889 million, US$387 million and US$271 million in January-August, Hung told reporters at the ongoing International Furniture and Handicraft Fair and Exhibition in HCMC, or Expo 2010.

Hung explained that while China is known as the world’s factory, it is also a huge market with increasing demand due to rising incomes and an emerging middle class.  

“If China keeps growing well, it will be the potential market for Vietnam’s wooden product makers. Vietnamese businesses should explore the tastes of Chinese consumers,” the vice chairman said, adding the rising yuan is expected to benefit Vietnamese exporters.  

According to Hung, the volume of furniture orders this year is increasing a little bit over last year, with the total export value expected to beat US$3 billion. However, the handicrafts industry is facing a gloomy picture due to fierce competition from China’s cheap mass-produced items.  

Preliminary statistics from the Vietnam Industry and Information Center shows a 38.4% year-on-year increase in Vietnam’s wooden product exports in January-September to US$2.45 billion. Exports to major markets namely the U.S., the EU and Japan have risen by 34.2%, 13.8% and 20.8% respectively.

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Market rises for third straight day

HCMC – The local market gained ground for the third consecutive session on Thursday as blue-chips continued moving up. The VN-Index rose 1.33 points, or 0.29%, from a day earlier to end at 462.05.

On the Hochiminh Stock Exchange, demand dropped 13.6% from the previous session to 62 million shares while supply surged 30.8% to nearly 84 million shares. Liquidity fell slightly with 37.3 million shares worth VND983 billion changing hands, decreasing by 2.5% and 6.4% respectively.

The market opened higher and gained a slight 1.27 points to 461.99 after the first matching phase and then rose further before jumping four points at the middle of the continuous matching phase, only to drop back steadily towards the end of the session.

The number of advancers was almost equal to that of gainers, at 159 to 162, of which nine stocks went to the ceiling prices and seven issues plunged to the floor prices.

PetroVietnam Fertilizer and Chemicals Corp. (DPM) became the most actively traded stock, gaining 4.7% to VND32,900 per share with 1.9 million shares changing hands. Eximbank (EIB) followed, falling 0.5% to VND17,800 with nearly 1.8 million shares traded.

Foreigners were strong net buyers again, acquiring 11.4 million shares worth VND473 billion and offloading 4.7 million shares worth VND172 billion, making up 48% and 17.5% of the market’s buying and selling value respectively.

The Hanoi market, meanwhile, declined strongly and turnover also tumbled to around VND540 billion. The HNX-Index shed 2.22 points, or 1.78%, from the previous session and ended the day at 122.62.

The market saw 122 stocks rising and 160 others falling, including seven stocks shooting up to the ceiling and five stocks dropping to the floor. Foreigners were net buyers, contributing 0.6% and 0.4% of the market’s buying and selling value respectively.

Vietnam International Securities Co. (VIS) in its daily report said the market still maintained the uptrend on Thursday given strong rallies of stock indices globally. Liquidity stayed low as most investors were cautious while some offloaded shares to take profits. The bustling gold market, meanwhile, seemed to be more attractive to local investors.

“The market is still in the cumulative stage and investors are waiting for the third quarter’s financial reports of listed firms. The VN-Index will move in a narrow margin in the last trading day of the week,” VIS said.

APEC Securities Co., meanwhile, said the slowing uptrend on Thursday was not surprising to investors as the VN-Index retreated more than twice when the market neared the range between 465 and 470 points since August. Low liquidity was a positive sign, showing the market had yet to reach the peak of the rising streak.

“We advise that investors stay outside the market on Saturday. The market will correct if the VN-Index broke the 470-point level but stock prices then will be higher than the recent correction stage,” APEC added.

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Coffee assoc wants huge stock to spur prices

HCMC – The Vietnam Coffee and Cocoa Association, or Vicofa, has asked the Government for permission to buy between 300,000 and 500,000 tons of coffee from the start of the upcoming harvest as a measure to support prices for farmers.

Luong Van Tu, chairman of Vicofa, told the Daily on Thursday that the amount under the retention scheme would vary depending on the fluctuation of prices during the 2010-2011 harvest lasting from later this month until early next year.

In the previous season, the Government assisted traders in stocking 200,000 tons by providing soft loans for them to buy coffee from farmers. However, the scheme did not work well as traders were able to buy only one quarter of the planned amount since the scheme was approved too late when farmers had almost sold out their crop.

“Given experiences from the previous season, we have proposed the Government to start the coffee retention scheme earlier, and therefore, it is expected that prices would be higher in the beginning of the harvest compared to last year,” he said.

However, the Government’s assistance to coffee traders this year would not be in the form of subsidized lending as in the previous year, said an official of the Department of Agro-Forestry, Fishery and Salt Processing under the agriculture ministry.

Rather, the Government will help traders access capital sources to buy coffee, said Le Xuan, head of the department. He added that coffee traders would have to buy the farm produce directly from farmers if they want to gain assistance.

The coffee amount planned for retention this year can be seen as substantial, as Vietnam produces around only one million tons of coffee a year.

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Gold firms get import quotas amid price rally

HCMC – The State Bank of Vietnam on Thursday issued quotas for local enterprises to import gold, sending domestic gold prices down after strong rallies in the previous days.

Nguyen Thi Cuc, deputy general director of Phu Nhuan Jewelry Co. (PNJ), said her company had been allowed to import 300 kg of gold, or around 8,000 taels – a local measurement unit equivalent to 1.2 troy ounces.

PNJ has placed orders with foreign partners and shipments are expected to arrive in Vietnam late this week at the earliest.

Truong Cong Nho, deputy general director of Saigon Jewelry Holding Co. (SJC), said SJC could import 200 kg of gold, or 5,330 taels, and that the yellow metal would arrive early next week.

Domestic gold shot up to VND33.03 million and VND33.1 million per tael for buying and selling respectively at 2:30 p.m. on Thursday but the prices later dropped by nearly VND300,000 shortly after the import quotas were announced.

Local gold on Thursday was VND130,000 per tael higher than the world level, down from the VND860,000 recorded on the previous day.

The central bank also extended import quotas to other large gold firms such as Agribank and Sacombank jewelry companies but the quotas are small.

“The central bank decision will leave a positive psychological impact on the market, helping to ease price hikes, encourage buying and curb selling. Local gold prices might be lower than the world in the future,” Cuc said.

Cuc added buying surged strongly from 3:30 p.m. on Thursday. PNJ as of 5:00 p.m. had sold 5,000 taels and bought 2,800 taels.

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Charm Engineering to build huge complex in Binh Duong

Jeon Yong Ho, marketing director of Charm Engineering Co., Ltd introduces the Charm Plaza property project seen in the background on Thursday - Photo: Quoc Hung

HCMC – South Korea’s Charm Engineering on Thursday announced to choose Posco E&C as the contractor to build phase 1 of its Charm Plaza project as a mix-use property complex in the southern province of Binh Duong.

The Charm Plaza project will be an apartment complex comprising of six 25-floor blocks with about 2,700 units plus supermarkets, said the company, which is more known as a manufacturer of LCD equipment and semi-conductors. The sprawling complex, covering five hectares at Song Than area in Di An District, will have total floor space of 363,000 square meters.

This project is a big-scale one comparable to major urban development projects not only in Binh Duong Province but also in HCMC, said Jeon Yong Ho, marketing director of Charm Engineering Co., Ltd at a press meeting.

The US$200-million project will set up model houses next month for introduction to customers, he said, adding sales marketing for the project would start soon. “We are planning to carry out marketing activities right from October 2010.”

On the other hand, the company is also running a pre-sale campaign, and many people in surrounding areas of the project in Binh Duong have made phone calls asking for information about the project, he said.

Apartments at Charm Plaza vary from 50 to 115 square meters in size, and the company plans to set up a reasonable selling price range from US$800 to US$1,000 per square meter.

Ho added that by providing amenities such as swimming pools like the standard for resorts, Charm Plaza has created a difference from other apartments. In addition, when the second phase of this project is in place, Charm Plaza will attract supermarket operators to invest in Binh Duong.

By choosing Posco E&C as the contractor, Charm Engineering is expecting to achieve positive results in selling apartments in the future, he said. The contractor Posco has established its reputation in Vietnam via building the Diamond Plaza in the center of HCMC.

Starting its investment in Vietnam since 2007, Charm Engineering has seven real estate projects with combined investment capital of more than US$890 million.

Ho said Charm Engineering would continue other projects including Toc Tien new town in Ba Ria-Vung Tau Province covering more than 183 hectares; a five-star resort hotel in Chi Linh area in Vung Tau City over 10.5 hectares; a serviced apartment building in Binh Thanh District, HCMC and another apartment project with 500 units in Thu Dau Mot Town, Binh Duong. 

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Vietnam probably won’t devalue again in 2010, ANZ says

Vietnam probably won’t devalue the dong again until next year, Australia & New Zealand Banking Group Ltd. predicted, after three moves by the nation’s central bank to reduce the value of the currency in the past year.

The dong was devalued in August, when the reference rate for the currency was weakened by 2 percent to 18,932 per dollar, following such moves in February and in November 2009.

Vietnam faces an “embedded expectation” of a weakening dong, Benedict Bingham, the International Monetary Fund’s Hanoi representative, has said. Recent wage increases in China as well as a stronger Chinese currency should underpin the dong for the rest of 2010 by making investment in Vietnam more attractive, Tamara Henderson, the Singapore-based head of Asia foreign- exchange research at ANZ, wrote in an Oct. 1 note.

“They have a little breathing space, particularly given that they recently devalued,” Henderson said by phone today.

Vietnam may win more foreign investment and experience a pickup in exports following China’s June 19 pledge to allow the yuan to trade more freely, PXP Vietnam Asset Management said at the time. The Chinese yuan has strengthened 2.1 percent against the dollar since then, while the dong has weakened 2.6 percent.

Exports climb

Vietnam’s exports increased 23 percent from a year earlier in the nine months through September, according to preliminary figures released on Sept. 27 by the General Statistics Office in Hanoi. That marks an acceleration from the 16 percent growth reported for the first half of 2010.

“Lower inflation and improved competitiveness should keep devaluation pressures at bay into year-end,” Henderson wrote.

The dong will probably be devalued again in the first half of 2011, she wrote, predicting that the currency will move to about 20,000 per dollar and citing Vietnam’s “ballooning” trade deficit as contributing to the dong’s weakening trend.

“Sizable” trade deficits have contributed to putting “downward pressure” on the dong, the Asian Development Bank said last week.

Vietnam’s cumulative trade deficit in the nine months through September reached $8.58 billion, according to the General Statistics Office. For September alone, the gap widened to $1.05 billion from $395 million in August.

‘Structural’ deficit

The trade gap “needs to come down,” Robert Prior- Wandesforde, a Singapore-based economist at Credit Suisse Group AG, wrote in a note dated Sept. 29. “The deficit partly reflects strong imports of capital goods, but also a penchant for consumer products.”

Vietnam’s trade deficit is “structural,” with exports largely consisting of lower value-added items such as commodities, footwear and garments while imports are primarily industrial machinery needed to build the country’s manufacturing base, Deutsche Asset Management (Asia) Ltd., which manages DWS Vietnam Fund Ltd., said on Sept. 27.

“It is common practice for emerging-market economies to devalue their currency to maintain competitiveness while running a trade deficit as they acquire capital for industry,” Deutsche Asset Management (Asia) said in a monthly note. “A currency equilibrium point will be reached as the economy matures.”

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Vietnam’s banks asked to lower deposit rates to 11 pct

The Vietnam Banks Association has asked members to reduce deposit rates to no more than 11 percent by Oct. 15 from 11.2 percent, according to a statement on the central bank’s website.

For non-term deposits and deposits of less than three months, the association asked commercial banks to make a bigger reduction to create a “suitable” interest-rate curve to attract long-term funds, according to the statement. Members were also asked to lower dollar-deposit rates and to cut borrowing costs to spur lending, according to the statement.

The Southeast Asian nation’s government has been asking commercial banks to increase lending to support the economy and meet a target for 25 percent credit growth this year. The State Bank of Vietnam on Sept. 28 allowed lenders to use 25 percent of non-term deposits made by businesses for loans. Bank credit has grown 19.27 percent from the start of the year to Sept. 27.

Vietnam’s gross domestic product may expand 6.7 percent this year, surpassing a target of 6.5 percent, Nguyen Xuan Phuc, chairman of the Government Office said Sept. 30. The government in May asked the State Bank of Vietnam to lower deposit rates to 10 percent and cut borrowing costs to 12 percent to spur economic growth.

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