Economy

The bank says caution is needed despite the sector making an important contribution to the country’s Gross Domestic Product (GDP). In its regular June report, the HSBC notes that property prices, especially in the luxury segment in Vietnam’s big cities, have increased over the past two years. Last year, prices of luxury apartments climbed up 9 percent year-on-year, while those in the affordable and mid-end segments rose 4-5 percent. The market share of high-end and luxury segments, meanwhile, surged to over 70 percent in 2020 from below 30 percent in 2019. Although foreign direct investment in Vietnam’s real estate market in May soared by over 200 percent against the same period last year, most of the capital was still focused on production. The HSBC deduced that property prices rose mainly due to domestic investors. As it had happened in many other nations, this was the result of loosened monetary policies that created favorable conditions for lowering interest rates and increasing liquidity. Credit growth in the Vietnamese property sector rose 15 percent in January and February over the same period last year, surpassing the target of 12 percent set by the State Bank of Vietnam, the country’s central bank. As of mid-April, the credit growth stood at more than 15 percent. In mid-April, the central bank called on commercial banks to strengthen risk control, announcing that it would tighten control over credit for sectors with potential risks, including the property sector. According to the HSBC report, the central bank can take stricter control measures if needed. It said watchdogs should strike a balance between strict control measures and limiting credits for property, on the one hand, while minimizing imminent risks posed by Covid-19 to the sector, on the other. It noted that the property sector was making bigger contributions to Vietnam’s GDP at some 8 percent. Higher property prices would prevent the central bank from further slashing …

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The design of Long Thành International Airport in Đồng Nai Province. — Photo courtesy of ACV HÀ NỘI — The State-run Airports Corporation of Việt Nam (ACV) has said it wants to borrow US dollars from local banks for the country's largest airport project, Long Thành International Airport in Đồng Nai Province. ACV’s chairman, Lại Xuân Thanh, sent a report to the Economic Committee of the National Assembly, asking them to support the plan of borrowing and paying in US dollars in order to maximise benefits and efficiency. Thanh said as the interest rate in the foreign currency was lower than the Vietnamese đồng , it would help the firm to save on costs. According to ACV’s leader, phase one of the investment project, estimated to cost about US$2.5 billion, was being focused on, but the COVID-19 pandemic had a great impact on economies around the world and in particular the aviation industry. As all international commercial flights were stopped in Việt Nam, it affected ACV's main source of foreign currency revenue, while the outbreaks in some localities also significantly reduced domestic passenger volume. Thanh also said the pandemic has made it difficult to negotiate and sign contracts with partner companies as foreign experts had to undergo quarantine. Moreover, the ACV representative said, the soaring price of raw materials, especially steel prices, was causing difficulties for the project’s implementation. To deal with all the factors, ACV proposed to the Prime Minister to allow it to accumulate money from production and business activities for investment. The firm also proposed the PM consider and approve the plan to allow ACV to borrow from domestic state-owned banks in USD and pay in USD to save on interest. ACV's representative said: “The lending interest rate in USD is always significantly lower than that in VND, while ACV has direct and indirect USD revenue from business activities in international airports such as NộI …

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Illustrative image (Source: Internet) Hanoi (VNA) – As Vietnam makes its anticipated progress from frontier status to a fully-fledged emerging market , the stock market is now at the stage where more and more private investors are getting on board, according to the UK newspaper Proactive . The article said Vietnam’s stock market recently topped the milestone of 1 billion USD of daily transactions, making it the second most liquid in South-East Asia . With the longest record of any independent asset manager in the country and the second biggest investor behind the government, Dragon Capital is first on the list for most overseas investors in Vietnam. “When we started,” says Dragon Capital founder and chairman Dominic Scriven, “Vietnam's biggest export was scrap metal, and exports were 2 billion USD. After years in between where it emerged as one of the biggest agricultural exporters – of rice, of cashew nuts, of cinnamon, and several others – this year exports will be close on 300 billion USD and the biggest chunk of exports will be electronics and smartphones.” “And what's guides that is a political system, political philosophy and a social structure that all combined to underlie consistency and stability,” he was cited by the article as saying. While Vietnam’s equity market is now turning over a healthy amount per day, Scriven pointed out that the market remains relatively immature and the Vietnamese economy still offers considerable catch-up opportunities with other local rivals. He said around 95 percent of the Vietnamese daily stock market volume is private investors not institutions. Ebullient is putting it modestly, with economic growth averaging 7 percent for the past six years and expected to remain one of the world’s fastest growing countries. Dragon is perhaps best known to UK investors as manager of the FTSE 250-listed Vietnam Enterprise Investments Ltd (LON:VEIL) investment trust, but also runs an open-ended UCITS …

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