Economic & Bond Commentary
September 20, 2016
ACBS Research Department
www.acbs.com.vn1 Tel: (+84) (8) 3823 4159 (ext: 354) Bloomberg: ACBS <GO>
Mr. Vi Phuc Tran
09/12/2016 – 09/16/2016
Economic & Bond Commentary
September 20, 2016
ACBS Research Department
www.acbs.com.vn2 Tel: (+84) (8) 3823 4159 (ext: 354) Bloomberg: ACBS <GO>
MARKET OVERVIEW
China Outstanding Credit to GDP ratio climbed to 30.1% in Q1 2016 (Source: BIS). The economy has been booming in terms of credit sales and ineffective fund liquidations resulted by Government’s stimulus since 2008. Considering how the US’
respective ratio was 10.1% back in 2008, a decelerating China economy with record high bad loan level and a might-be- forming housing bubble is going to rock up global volatility. A banking system owned and backed by the Government can only guarantee a less painful landing, not preventing it.
Russia Sovereign Funds was down to $32,2bln 09/2016 from $91.7bln back in 09/2014. As Oil Sector makes up for 37% of Russia Public income, a failure to negotiate a production cut from OPEC meeting next week could drain this fund by the end of H1 2017. Moscow last resort might be the remaining $70bln from their Social Welfare Fund until an alternative implemented.
FED Meeting this week on 21st will be highly speculated as last week data wasn’t supporting a rate rise scenario. Even among the FED members, there has been controversial views regarding the rate path. Some said the economy wasn’t stable enough, others concerned about a yet to be seen overheated economy. Nevertheless, statistic figures did suggest there would be contractionary stresses hence global meltdown on bonds and commodity markets if interest are to be raised this week.
Otherwise, it would be less damaging for FED to hike the lending rate in their December meeting, one months away from the tsunami created by the Presidential Election.
Within the same day of FED Meeting, BOJ will also make their announcement about upcoming plans for the Abenomics.
Domestically, ETFs completed their repositioning last week, we are expecting Equity market to be less volatile on the upcoming months.
VGB 2016 Issuance target has been completed, fund excess is expected to be prolonged till the end of the year, a chance of an interest rate rise H2 2016is still unlikely.
VGB-GGB MARKET PRIMARY BOND MARKET
Source: HNX, ACBS VGB issuance target of 2016 has been completed. Unless further issued, which would further enhance the already ample fund abundance, we are expecting less active periods on the primary market in upcoming months.
0 2000 4000 6000 8000 10000
8/22-8/26 8/29-9/2 9/5-9/9 9/12-9/16
Billions
New Issuance with Maturity
3y >=5y 10y >=15y
Bil VND
0.00 0.20 0.40 0.60 0.80 1.00 1.20
0 2 4 6 8 10 12
8/22-8/26 8/29-9/2 9/5-9/9 9/12-9/16
Primary Bond Market
Win amt Offer Win ratio
Economic & Bond Commentary
September 20, 2016
ACBS Research Department
www.acbs.com.vn3 Tel: (+84) (8) 3823 4159 (ext: 354) Bloomberg: ACBS <GO>
Bond Issuance Schedule This Week
SECONDARY BOND MARKET
Source: HNX, VBMA, ACBS Foreign investor funds picked up their pace last week with a significant 1,2tln transaction amount.
Bond yields declining trend still holds, though decelerating to their limits.
0 5 10 15 20 25
8/22-8/26 8/29-9/2 9/5-9/9 9/12-9/16
Secondary Market
Outright Repo
Tri VND
-600 -400 -200 0 200 400 600 800 1000 1200 1400
8/22-8/26 8/29-9/2 9/5-9/9 9/12-9/16
Foreign Investors
Bil VND
3.5%
4.5%
5.5%
6.5%
7.5%
1Y 2Y 3Y 5Y 7Y 10Y
Yield Curve
26-Aug-16 01-Sep-16 09-Sep-16 16-Sep-16
09/19/2016-09/23/2016
Issuer Offer Amount Issue Date Maturity Tenor
State Treasury 1,000,000,000,000 22/09/2016 03/03/2026 10
Economic & Bond Commentary
September 20, 2016
ACBS Research Department
www.acbs.com.vn4 Tel: (+84) (8) 3823 4159 (ext: 354) Bloomberg: ACBS <GO>
MONEY MARKET
Source: ACBS, Bloomberg An ample week of funds in the market, and soon to be enhanced by the upcoming matured T-Bills.
0 1 2 3 4 5 6
J-16 F-16 M-16 A-16 M-16 J-16 J-16 A-16 S-16
Interbank Rates
ON 2w 1m 3m
%
(60,000) (40,000) (20,000) - 20,000 40,000 60,000
8/22-8/26 8/29-9/2 9/5-9/9 9/12-9/16
T-bill
Winning Matured Net Cash flow
Billion VND
0 50 100 150 200 250 300
Sep-15 Dec-15 Mar-16 Jun-16 Sep-16
Thousands
OMO Outstanding
Tri VND
0 20 40 60 80 100 120
Sep-15 Dec-15 Mar-16 Jun-16 Sep-16
SBV Bills outstanding
Tri VND
Economic & Bond Commentary
September 20, 2016
ACBS Research Department
www.acbs.com.vn5 Tel: (+84) (8) 3823 4159 (ext: 354) Bloomberg: ACBS <GO>
OTHER MARKETS SOVEREIGN CDS
Source: Bloomberg In contradiction with other ASEAN countries, Vietnam sees their Credit improved last week whilst others decreased, a good signal for potential international investments.
FOREX MARKET
Source: SBV, Bloomberg SBV raised their USD/ VND reference rate last week to the highest in 2016, strengthening the FX risks hedging position.
We a prepared for FED meeting this week as a start.
50 100 150 200 250 300 350
CDS in ASEAN
Indonesia Malaysia Thailand Vietnam Philippines
20 70 120 170 220 270 320 370
Vietnam CDS
VN CDS 1y VN CDS 5y
20000 20500 21000 21500 22000 22500 23000
Sep-15 Dec-15 Mar-16 Jun-16 Sep-16
USD/VND
Ref Rate Ex Rate Cap
Ex Rate Floor Market Ex Rate
21000 21500 22000 22500 23000
Jan- 16
Feb- 16
Mar- 16
Apr- 16
May- 16
Jun- 16
Jul-16 Aug- 16
Sep- 16
USD/VND
Ref Rate Ex Rate Cap
Ex Rate Floor Market Ex Rate
Economic & Bond Commentary
September 20, 2016
ACBS Research Department
www.acbs.com.vn6 Tel: (+84) (8) 3823 4159 (ext: 354) Bloomberg: ACBS <GO>
GOLD MARKET
Source: Bloomberg, ACB.
US Inflation data hammered gold price by 2% throughout the weekend, most of the global investment funds have backed out from Gold in expectations of this week rate rise.
Until FED’s meeting on 21st Sept, gold is expected to move sideways without any clear direction
APPENDIX
FX rate USD EUR JPY
Date Bid Ask Bid Ask Bid Ask
16/09/2016 22,270 22,340 24,890.05 25,188.03 216.21 226.74
15/09/2016 22,270 22,340 24,892.26 25,190.27 214.78 218.89
14/09/2016 22,270 22,340 24,867.90 25,165.62 214.24 218.33
13/09/2016 22,260 22,330 24,836.83 25,134.19 215.65 219.78
12/09/2016 22,260 22,330 24,870.03 25,167.79 215.32 219.43
Source: Vietcombank
Deposit Interest Rate 2 weeks 1 month 3 months 6 months 1 year 2 years
7/12/2016 1% 4.60% 4.90% 5.50% 6.20% 6.50%
Source: ACB 1000
1050 1100 1150 1200 1250 1300 1350 1400
Gold Price in USD
-200 0 200 400 600 800 1000 1200
35700 35800 35900 36000 36100 36200 36300 36400 36500 36600 36700
8/17 8/20 8/23 8/26 8/29 9/1 9/4 9/7 9/10 9/13 9/16
Domestic Gold Price
Domestic vs. Global spread Domestic Gold Price
Economic & Bond Commentary
September 20, 2016
ACBS Research Department
www.acbs.com.vn7 Tel: (+84) (8) 3823 4159 (ext: 354) Bloomberg: ACBS <GO>
CONTACTS
Ho Chi Minh City Head Office
41, Mac Dinh Chi, Dist. 1, Ho Chi Minh City Tel: (+84 8) 3823 4159
Fax: (+84 8) 3823 5060
Hanoi Office
10 Phan Chu Trinh, HoanKiem Dist., Ha Noi Tel: (+84 4) 3942 9395
Fax: (+84 4)3942 9407
RESEARCH DEPARMENT Director – Head of Research
Anh Le
(+84 8) 3823 4159 (x354) [email protected]
Manager – Industry Coverage Uyen Nguyen
(+84 8) 3823 4159 (x303) [email protected] Associate– Property
Truc Pham
(+84 8) 3823 4159 (x303) [email protected]
Associate – Steel, Logistics, Agri, Power Yen Tran
(+84 8) 3823 4159 (x326) [email protected]
Associate – Consumer- related, Technology Chi Luong
(+84 8) 3823 4159 (x327) [email protected]
Analyst – Oil & Gas Hung Phan
(+84 8) 3823 4159 (x354) [email protected]
Analyst – Property, Plastic, ETF
Hung Vu
(+84 8) 3823 4159 (x323) [email protected]
Analyst – Consumer- related, Technology Trung Tran
(+84 8) 3823 4159 (x351) [email protected]
Analyst– Property Hung Cao
(+84 8) 38234159 (x250) [email protected]
Analyst – Steel, Power Cuong Nguyen
(+84 8) 3823 4159 (x250) [email protected]
INSTITUTIONAL CLIENT DIVISION Director - Head of Institutional Client
Tyler Cheung (+84 8) 54 043 070 [email protected]
Senior Associate Institutional Client Hung Dang
(+84 8) 3823 4798 [email protected]
Senior Associate Institutional Client Diep Phan
(+84 8) 3823 4159 (x307) [email protected] Manager - Trading
Hanh Huynh (+84 8) 5404 6632 [email protected]
Senior Trader Ngoc Dinh (+84 8) 5404 6626 [email protected]
Trader Nghia Le
(+84 8) 3823 4160(x 311)
[email protected]
Economic & Bond Commentary
September 20, 2016
ACBS Research Department
www.acbs.com.vn8 Tel: (+84) (8) 3823 4159 (ext: 354) Bloomberg: ACBS <GO>
DISCLAIMER
Analyst Certification(s)
We, the author(s) of this report, hereby certify (1) that the views expressed in this research report accurately reflect our personal views about any or all of the subject securities or issuers referred to in this research report and (2) no part of our compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this research report.
Important Disclosures
ACBS and/or an affiliate thereof (hereby collectively called ACBS) did or may seek to do business with companies covered in this report as its routine business. ACBS's proprietary trading accounts may have a position in such companies’ securities. As a result, the investor should be aware that ACBS may have a conflict of interest from time to time.
ACBS produces a variety of research products including, but not limited to, fundamental analysis, equity-linked analysis, quantitative analysis, and trade ideas. Recommendations contained in one type of research product may differ from recommendations contained in other types of research products, whether as a result of differing time horizons, methodologies, or otherwise.
Disclaimer
This report is provided for information purposes only. ACBS makes no express or implied warranties, and expressly disclaims all warranties of merchantability or fitness for a particular purpose or use with respect to any data included in this report. ACBS will not treat unauthorized recipients of this report as its clients. Prices shown (if any) are indicative and ACBS is not offering to buy or sell or soliciting offers to buy or sell any financial instrument.Without limiting any of the foregoing and to the extent permitted by law, in no event shall ACBS, nor any affiliate, nor any of their respective officers, directors, partners, or employees have any liability for (a) any special, punitive, indirect, or consequential damages; or (b) any lost profits, lost revenue, loss of anticipated savings or loss of opportunity or other financial loss, even if notified of the possibility of such damages, arising from any use of this report or its contents. Other than disclosures relating to ACBS, the information contained in this report has been obtained from sources that ACBS believes to be reliable, but ACBS does not represent or warrant that it is accurate or complete. The views in this report are subject to change, and ACBS has no obligation to update its opinions or the information in this report.
Some parts of this report reflect the assumptions, views and analytical methods of the analysts who prepared them, and ACBS is not responsible for any error of their works and assumptions. ACBS may have issued, and may in the future issue, other reports that are inconsistent with, and reach different conclusions from, the information presented in this report.
The analyst recommendations in this report reflect solely and exclusively those of the author(s), and such opinions were prepared independently of any other interests, including those of ACBS. This report does not constitute personal investment advice or take into account the individual financial circumstances or objectives of the investors who receive it. The securities discussed herein may not be suitable for all investors. ACBS recommends that investors independently evaluate each issuer, securities or instrument discussed herein and consult any independent advisors they believe necessary. The value of and income from any investment may fluctuate from day to day as a result of changes in relevant economic markets (including changes in market liquidity). The information herein is not intended to predict actual results, which may differ substantially from those reflected. Past performance is not necessarily indicative of future results.
This report may not be distributed to the public media or used by the public media without prior written consent of ACBS. Otherwise it will be considered as illegal. The breacher shall compensate fully to ACBS any loss or damage which arises from such breach (if any).
In the event that the distribution and/or receipt of this report is prohibited by the investor’s jurisdiction, the investor shall dismiss this report immediately otherwise it will be at his/her own risks.
ACBS does not provide tax advice and nothing contained herein should be construed to be tax advice. Accordingly, the investors should seek advice based on their particular circumstances from an independent tax advisor. This report may contain links to third-party websites.
ACBS is not responsible for the content of any third-party website or any linked content contained in a third-party website. Content contained on such third-party websites is not part of this report and is not incorporated by reference into this report. The inclusion of a link in this report does not imply any endorsement by ACBS. Access to any third-party website is at the investor’s own risks, and the investor should always review the terms and privacy policies at third-party websites before submitting any personal information to them. ACBS is not responsible for such terms and privacy policies and expressly disclaims any liability for them.
© Copyright ACBS (2016).All rights reserved. No part of this report may be reproduced in any manner without the prior written permission of ACBS.
