Vietnam Moving Toward Forex Crisis, May Devalue Dong

[bingobongo]

didnt the crisis in 1997 start with a certain former asian tiger? it will be interesting to see the impact on LOS (on top of the potential coup part deux)

something wicked this way comes.........

Vietnam Moving Toward Forex Crisis, May Devalue Dong

BANGKOK -(Dow Jones)- Vietnam is veering toward a currency and banking crisis that could force a massive devaluation of the dong and trigger a rerun of East Asia's 1997 financial meltdown, an analyst at investment bank Morgan Stanley has warned.

http://www.fxstreet.com/news/forex-news/ar...90-873b53817174

Edited May 29, 2008 by bingobongo

[toptuan]

Would this mean a stronger dollar and weaker baht? Oh yes, oh yes, oh yes....

[bingobongo]

Would this mean a stronger dollar and weaker baht? Oh yes, oh yes, oh yes....

very much so, go short the dong (nice pun eh), baht depends on when the tanks start rolling for coup part deux

Edited May 29, 2008 by bingobongo

[lordofdelusion]

I was wondering when someone might begin posting on Vietnam. I have watched their stock market meltdown over the last couple of weeks. Didn't they stop trading and close the market? Yikes!!

I also was catching up on the Thai papers recently and noticed several articles regarding the recent SET move from the 880's back to the 820's. Seems foreign investors fear this unstable government. Something in the air for sure. Here on Phuket the place looks deserted. More staff sitting everywhere than working. Tough times ahead.

[lordofdelusion]

Would this mean a stronger dollar and weaker baht? Oh yes, oh yes, oh yes....

very much so, go short the dong (nice pun eh), baht depends on when the tanks start rolling for coup part deux

From the Bangkok post.

Kobsak Pootrakul, the executive director of the SET Research Institute, said the latest CEO survey showed that 75% of listed company chief executives did not see the current government lasting more than one year, a sharp change from 45% in the last survey three months ago.

The survey covered 118 listed companies that collectively represent 60% of the total market capitalisation of the Stock Exchange of Thailand.

THE PERFECT STORM?!

[bingobongo]

Would this mean a stronger dollar and weaker baht? Oh yes, oh yes, oh yes....

very much so, go short the dong (nice pun eh), baht depends on when the tanks start rolling for coup part deux

From the Bangkok post.

Kobsak Pootrakul, the executive director of the SET Research Institute, said the latest CEO survey showed that 75% of listed company chief executives did not see the current government lasting more than one year, a sharp change from 45% in the last survey three months ago.

The survey covered 118 listed companies that collectively represent 60% of the total market capitalisation of the Stock Exchange of Thailand.

THE PERFECT STORM?!

PERFECT STORM sounds about right, when the baht weakens, oil will cost more as it is $ denominated, and inflation will worsen (for the locals that is), so the BOT will need to raise rates

[backflip]

"when the baht weakens"

Gosh, bingobongo, when will that happen? You complain when the baht was weak, and you complain when the baht is strong. There's no end to your sadness.

[cclub75]

I think, soon, we will be able to rise our glasses to the people who were fascinated by the real estate market in Hanoi and Saigon ("more expensive than Bangkok, ouah ! but for real reasons, we have a deficit of supply, the demand explodes" etc. etc.)

Nothing changes. The same old story, over and over again.

[bingobongo]

the amount of pain coming to asia will be surprising....vietnam going to raise rates to curb inflation and soon LOS will follow......good luck backflip you will soon need it.......the pain will spread as Vietnam burns itself out (and yes it will spread to LOS even without the coup part deux)

Vietnam's Interest Rates Must Exceed Inflation Rate, Fitch Says

Fitch lowered its debt-rating outlook on Vietnam to negative from stable yesterday, saying country's banking system may be at risk because of a slow government response to fighting inflation.

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Edited May 30, 2008 by bingobongo

[Prakanong]

They are talking about 25% Inflation in The Straits times today for Vietnam!

[bingobongo]

I think, soon, we will be able to rise our glasses to the people who were fascinated by the real estate market in Hanoi and Saigon ("more expensive than Bangkok, ouah ! but for real reasons, we have a deficit of supply, the demand explodes" etc. etc.)

Nothing changes. The same old story, over and over again.

cclub75 you might want to break out the champagne now and take away backflip's kool aid, as it has already started......

just for you backflip..........

Investors flee freezing property market in Vietnam metro

Investors who last year had hoped to ride the property wave to riches are now jumping ship.

As investors rush to make their money back through rapid sell-offs, prices have plummeted by as much as 40 percent, real estate traders said.

http://www.thanhniennews.com/business/?cat...mp;newsid=38171

Edited May 30, 2008 by bingobongo

[Inthai]

Just returned from HCMC after a 2 months working stint and really had enough...poor infrastructure, high cost of living (you cant find a 1 bed room apartment in district 1 below 1000USD/month), constant noise pollution and an arrogance of local Vietnamese towards foreigners are making this place a truly hard ship posting for any Expat.

I am still yet to meet one Expat who loves living there....except those working for large multinationals living in 5000USD villas and paid packages arent complaining, everybody else just hates place and wants to get out after once they find something better...

Interestingly, only Expats not complaining are those having moved many moons ago directly from West and set up base, all others, especailly those having lived in Thailand for many years, cant wait for Friday and get over for with Air Asia for weekend in BKK...well, Vietnam is surely not for everybody and Vietnamese are truly living life in own little world.....

Will take another look 20 years from now, but for moment happy to be back in LOS and lovin' it here....

Have a nice day!

[Misty]

Interestingly, in 1997 Thailand (and most of the region) was not experiencing hyper-inflation.

Currency devaluations (even defacto ones such as Thailand's) tend to lead to imported inflation, rather than deflation. Post 1997, Thailand was able to successfully keep the lid on inflation after floating the baht (against many strategists' dire predictions). However, Thailand had some help from the strong deflationary pressure of a rising China with an undervalued currency, a strong dollar, and cheap oil and commodity prices.

Well, we don't have those same conditions now. And if Vietnam is already in the 20-25% inflation range, it would seem like a dong devaluation isn't going to help them fight the inflation battle. They may go ahead an do so, but I wouldn't necessary connect the dots that all the other Asian currencies will follow suit. I understand that many of Asia's central banks sold dollar reserves this week (of which they now have a war chest full, unlike Thailand in 1997) in order to help alleviate inflation.

So this time, it may be different. The existing conditions in the region and the globally economy are certainly different.

Cheers, Misty

[cclub75]

Interestingly, in 1997 Thailand (and most of the region) was not experiencing hyper-inflation.

Currency devaluations (even defacto ones such as Thailand's) tend to lead to imported inflation, rather than deflation. Post 1997, Thailand was able to successfully keep the lid on inflation after floating the baht (against many strategists' dire predictions). However, Thailand had some help from the strong deflationary pressure of a rising China with an undervalued currency, a strong dollar, and cheap oil and commodity prices.

Well, we don't have those same conditions now. And if Vietnam is already in the 20-25% inflation range, it would seem like a dong devaluation isn't going to help them fight the inflation battle. They may go ahead an do so, but I wouldn't necessary connect the dots that all the other Asian currencies will follow suit. I understand that many of Asia's central banks sold dollar reserves this week (of which they now have a war chest full, unlike Thailand in 1997) in order to help alleviate inflation.

So this time, it may be different. The existing conditions in the region and the globally economy are certainly different.

The article from Bloomberg has some weird items. "Because the central bank has kept the dong too strong" ?

That's a joke. The VND is "pegged" (asian ways) to the USD since very long time... And what about the slide of the USD ?

I would say exactly the contrary : the VDN was maintained artificially low versus USD. For too long. To boost the Private Exports (same story all over Asia).

Check the rates with Vietcom bank.

may 2008 = 16 200

may 2006 = 15 900

may 2005 = 15 800

may 2004 = 15 700

may 2003 = 15 400

So to summarize : despite a serious global decline of the USD, despite many years of explosive growth... the VND is today weaker !

It doesn't make sense.

In my opinion there is no link with the 97 thai situation.

Instead we have a classic asian overheating growth, in a controled country but with paradoxically poor controls, based on bubbles, fueling inflation.

Compounded by the global commodities inflation.

Over investment in real estate (we talk about it in other threads)

Over investment from foreigners, in industry etc.

Too much money, too quickly in a country that was at the bottom of the bottom in the 80's. The legendary greed of vietnamese has compounded the story.

Peasants upcountry struggle to live (especially those with fixed incomes). And the cities are going too fast. With on the top of that a typical insane (and incompetent) asian political system. And corruption.

From the soviet made bicycle and the "Hochiminh Shoes" directly to the SUV with the Ipod, without any "democracy" in between. It's a "show" growth, difficult to sustain.

For that matter, Vietnam is a little China...

Sure after, we can add the poor banking system, the bad debts everywhere, interest rates that were maintened too low, the casino mentality, etc.

What they could now ? Devaluate ? It would fire an hyperinflation zimbabwe style.

Instead, they should say that the party is over : let the bubbles explode, accept to wipe out a bunch of vietnamese nouveaux riches (sorry nomenklatura), cut the credit machine, suppress all subsidy policies, open the game to foreigners (really), initiate political reforms, social reforms etc.

It won't happen of course...

That's the fundamental flaw of most of asian economies : they want the butter, the cream and the arse of the farmer. All this for free. And at the same time.

Edited May 30, 2008 by cclub75

[roadking95]

Just returned from HCMC after a 2 months working stint and really had enough...poor infrastructure, high cost of living (you cant find a 1 bed room apartment in district 1 below 1000USD/month), constant noise pollution and an arrogance of local Vietnamese towards foreigners are making this place a truly hard ship posting for any Expat.

I am still yet to meet one Expat who loves living there....except those working for large multinationals living in 5000USD villas and paid packages arent complaining, everybody else just hates place and wants to get out after once they find something better...

Interestingly, only Expats not complaining are those having moved many moons ago directly from West and set up base, all others, especailly those having lived in Thailand for many years, cant wait for Friday and get over for with Air Asia for weekend in BKK...well, Vietnam is surely not for everybody and Vietnamese are truly living life in own little world.....

Will take another look 20 years from now, but for moment happy to be back in LOS and lovin' it here....

Have a nice day!

I have to agree with you on several points that you have made. I live and work in HCMC and the arrogance towards foreigners is exactly right, I am tired of hearing how I have to learn about Vietnam but when I try to tell them they can learn something from other cultures, they are just not interested. I have to say I find the people here to be very ignorant as far as wanting to learn, even when I help to correct their English for them, I get told that I dont understand Vietnam. I even had my accountant tell me that NO in English is not the same as NO in Vietnamese. So now I am looking at moving to Thailand as I have been told that as people and as employees they are much easier to deal with, my god I hope so.

[PeaceBlondie]

I have to say I find the people here to be very ignorant as far as wanting to learn, even when I help to correct their English for them, I get told that I dont understand Vietnam. I even had my accountant tell me that NO in English is not the same as NO in Vietnamese. So now I am looking at moving to Thailand as I have been told that as people and as employees they are much easier to deal with, my god I hope so.

Maybe to an accountant in Vietnam, our word for 'absolutely not,' does not apply, as in Thailand.

[Inthai]

I am not surprised reading your comments Roadking95, not at all!!

I have never come across such a stubborn and narrow mindedness like in Vietnam. I lived in HCMC for over 2 and half years (from District 1 to Phu My Hung) with a short break in between and have yet to meet one really happy Expat which could only say positive things about locals, not a single one. Constant lack of consideration for others and anything are making more and more Expats leave Vietnam, sooner then later. They just have enough now and dont want to keep up anymore with constant nuisances.

Thailand is whole different ball game, eventough not easier working here, existing infrastructure, still great value for money and excellent quality of living are making this country heaven for me, compared to Vietnam.

[roadking95]

I have to say I find the people here to be very ignorant as far as wanting to learn, even when I help to correct their English for them, I get told that I dont understand Vietnam. I even had my accountant tell me that NO in English is not the same as NO in Vietnamese. So now I am looking at moving to Thailand as I have been told that as people and as employees they are much easier to deal with, my god I hope so.

Maybe to an accountant in Vietnam, our word for 'absolutely not,' does not apply, as in Thailand.

I spoke to her in Vietnamese and said khong(no) she knew exactly what it meant.She also gave me advice that foreigners need to learn about her language but they dont need to know what words in English really mean.

Example, I was qouted by a sms company to send messages to businesses here, they informed me that I could use 160 syllables. I asked him if it was syllables or characters and he said syllables. I made up my message which contained about 30 syllables and 130 characters, gave it to him and he refused it saying that I had used 160 syllables and that a space between words was counted as a syllable. Even after contacting him and informing him what a syllable was, his reply"this is Vietnam its different". And that is what you get day in and day out here.

[Naam]

Would this mean a stronger dollar and weaker baht? Oh yes, oh yes, oh yes....

very much so, go short the dong (nice pun eh), baht depends on when the tanks start rolling for coup part deux

so if another coup takes place the Baht will "weaken" like it did for the period when the generals were in power ?

[LaoPo]

Vietnam Stocks Decline, Extending World's Worst Rout

By Chen Shiyin and Nguyen Dieu Tu Uyen

May 30 (Bloomberg) -- The worst may not be over for Vietnam's stock market, the world's biggest decliner, as shares resumed declines after a computer breakdown halted trading for three days.

The benchmark VN Index fell 1.5 percent to 414.10, extending this year's 55 percent retreat, after a government report showed prices jumped the most since at least 1992, Morgan Stanley said Vietnam is heading for a ``currency crisis'' and Fitch Ratings cut its outlook on the nation's debt rating.

The Ho Chi Minh City Stock Exchange, which caps daily declines to 2 percent, fixed the computer error that interrupted the index's 17-day tumble, the longest streak since October 2003. The VN Index closed at its lowest since Aug. 2, 2006, as 139 of its 151 members dropped. It had tripled in value from the end of 2005 through 2007.

``We'll see a continuation of the selling,'' said John Shrimpton, a director of Dragon Capital Group, a Ho Chi Minh-based fund manager with assets of $2 billion. ``Inflation is one aspect causing the drop. The market was clearly overvalued.''

The VN Index, started in 2000, surged almost fivefold in the two years through its March 12, 2007, peak as the economy grew at the fastest pace in a decade and a government equity sale program helped lure foreign and domestic investors. Refrigeration Electrical Engineering Joint-Stock Co., the Ho Chi Minh City-based maker of air conditioners and electrical appliances, rose 523 percent from the end of 2005 through 2007. The company's shares have slumped 75 percent in 2008.

Lost Savings

Vietnam Dairy Products Joint-Stock Co., the country's biggest maker of dairy products, and PetroVietnam Fertilizer & Chemical Joint-Stock Co., Vietnam's largest fertilizer producer, contributed most to today's decline.

Local investors who own about 75 percent of listed shares in Vietnam, a Communist Party-led nation of more than 85 million people, are reeling from the plunge. Nguyen Van Hai lost almost 700 million dong ($43,000), and his parents sold their house to help repay loans he'd used to invest.

``I entered the stock market with hopes that I could earn enough to own a house and get married,'' the 29-year-old Hanoi- based taxi driver said. ``Those wishes have now vanished.''

Even after the tumble, Vietnamese stocks aren't cheap enough to prompt Templeton Asset Management Ltd.'s Mark Mobius to buy.

The 151 companies in the VN Index trade below 10 times estimated earnings, down from as high as 30 times, according to data from Dragon Capital. Stocks in the MSCI Emerging Markets Index trade for 13.5 times profit, data compiled by Bloomberg show.

``It's got a little way to go down still,'' said Mobius, who oversees $47 billion in emerging-market equities at Templeton in Singapore. ``If you're going to go in there, you better think long- term, otherwise you can get stuck with a very illiquid security.''

`Entrenched' Inflation

About 52,000 stocks and bonds changed hands on average each day this month on the Ho Chi Minh exchange, plunging from the 2007 daily average of 965,000.

The International Monetary Fund said last November lending to state-owned companies is exacerbating Vietnam's inflation, which is already more ``entrenched'' than in any other Asian country.

Consumer prices jumped 25.2 percent in May from a year earlier, the most since at least 1992 and the fastest pace in Asia, according to May 27 figures from the General Statistics Office in Hanoi. Food prices surged 67.8 percent.

Vietnam's central bank raised its key interest rate to 12 percent on May 17, the highest since it was introduced in 1998, from 8.75 percent. The country is heading for a ``currency crisis'' because the bank has kept the dong too strong as inflation soars and the trade deficit widens, Morgan Stanley said in a May 28 report.

Fitch Ratings cut its outlook for Vietnam's BB- rating to negative from stable yesterday, citing risks to the banking system because the government was too slow to respond to higher inflation.

`Hard Landing'

``The longer it takes the government to raise interest rates, rein in inflation and slow down demand, the more likely that would lead to a hard landing,'' James McCormack, head of Asia-Pacific sovereign ratings at Fitch in Hong Kong said in an interview with Bloomberg Television today. Interest rates ``have to be higher than inflation.''

Property developers have led this year's slump amid concern higher borrowing costs will curb home purchases. Idico Urban & House Development Joint-Stock Co., a Dong Nai province-based builder, retreated 81 percent, the most this year for any company listed on the Ho Chi Minh exchange.

Some foreign investors say the market is attractive enough to add to their holdings.

`Embryonic Market'

``We're increasing our investments in Vietnam even more,'' said Beat Lenherr, who oversees more than $20 billion of assets as Singapore-based chief global strategist at LGT Capital Management. ``This is an embryonic market that had a strong birth. Now the baby is struggling a little, but we think it'll get its strength back.''

Luong Minh, a 53-year-old state employee, who earns 5 million dong a month in Ho Chi Minh City, is less sanguine after losing 100 million dong in the stock market.

``I don't want to sell the shares I have, but the longer I keep them, the bigger the loss,'' Minh said. ``It is hard to sell now anyway as the market is almost frozen. We are desperate.''

http://www.bloomberg.com/apps/news?pid=206...r=world_indices

LaoPo

[bingobongo]

let me guess som tham and bar girls will keep LOS from the pain?

the beauty is that Vietnam has/had a more dynamic coup free envt than LOS

i wonder if "other" refers to LOS, maybe backflip's genius can enlighten us........NOT

Vietnam Inflation Crisis Is Feared

Vietnam's accelerating inflation is threatening to morph into a full-blown crisis, and it provides a warning to other Asian countries trying to tamp soaring prices.

http://online.wsj.com/article/SB1212066382...whats_news_asia

Edited May 30, 2008 by bingobongo

[bingobongo]

let me guess backflip, "its a great time to buy", because LOS is "special" and "different"

interest rate will rise in LOS to curb the same rampant inflation.....

Slump leaves upmarket property speculators in the lurch

Prices fall back to pre-bubble levels on a combination of factors, and would-be millionaires hastily sell out to cut losses.

The downward spiral began when the government tightened monetary policy earlier this year to fight skyrocketing inflation.

http://www.thanhniennews.com/business/?cat...mp;newsid=38802

Edited May 31, 2008 by bingobongo

[backflip]

Again, bingobongo, you make a prediction and, when it blows up in your face, you resort to insults. Less than a year ago, you were touting Vietnam as the place to invest...and now we can all see just how foolish your prediction was.

[lordofdelusion]

Again, bingobongo, you make a prediction and, when it blows up in your face, you resort to insults. Less than a year ago, you were touting Vietnam as the place to invest...and now we can all see just how foolish your prediction was.

Ahh, be nice people. A year ago Vietnam would have been a place to invest. You have to create a bubble before it can burst.

And Naam, usually I would agree with your point of view but I think this time it's different. The US is not going into a funk, it's coming out. Dollar stronger, markets getting traction. Add to that another govt. shake-up here so soon after the last, and with Vietnam teetering, I think LOS gets hurt. By the PM's remarks today, I believe his quote was "take them out" in reference to the protestors, I would not look for a bloodless coup the next time around. And with one of the ministers accused of insulting the king.... ugly business.

[highdiver]

Again, bingobongo, you make a prediction and, when it blows up in your face, you resort to insults. Less than a year ago, you were touting Vietnam as the place to invest...and now we can all see just how foolish your prediction was.

on 2007 he predicted that the junta was the great economic crisis. and then the stock market went, up the baht got stronger, forign investment poured in, exports rose real estate value went up.

he is predicting that the condo market is going down for the past 2 years yet prices seem to go up all time. and this is from a guy who claimed to have sold his "project"in bangkok in 2006 just before the big rise..

in the economy threads he predicted that investment in Vietnam is the best thing...and he also told us that the SET is about to crash 4 months ago.

he further predicted that advised us "boys and girls" to position on shorts and that turned out to be wrong as well.

and he claims that he feels really good about making a 6 figure income in the west.... yeah right a guy with a 6 figure income has nothing better to do but leave in the west and post Anti Thai ant everything posts all day.

he does not really post anything... he just cuts and pastes dooms day prediction along with provocative remarks.

KOKO the monkey.... :D

[highdiver]

Would this mean a stronger dollar and weaker baht? Oh yes, oh yes, oh yes....

very much so, go short the dong (nice pun eh), baht depends on when the tanks start rolling for coup part deux

so if another coup takes place the Baht will "weaken" like it did for the period when the generals were in power ?

:D

or the stock market crash... or the crash in the real estate or the foreign investments or the growth in exports and GDP

maybe the Junta was not all that bad

[backflip]

During the coup, the baht got STRONGER, not weaker.

[highdiver]

During the coup, the baht got STRONGER, not weaker.

it was a sarcastic remark outlining the validity of Bongo's predictions. which not only did not realise but actually did the opposite.

[Naam]

During the coup, the baht got STRONGER, not weaker.

that's what the graph proves which i posted. to his convenience the Right Honourable Expert Sir Bingo, Esq. (aka THE SKY IS FALLING) never reacts when facts are presented. he prefers to beat around the bush with noncommitting theories or using inappropriate and unfounded parallels (e.g. a Viet Nam crises will affect South East Asia)

[bingobongo]

last time i checked, Vietnam had a more vibrant economy and no threat of coup as compared to LOS, rates will rise in Vietnam and LOS.......

dear lord, does the sexpat use his money for som tham or bar girl as both together are unaffordable

Vietnam Faces Growing Inflation Rates

Food and beverage costs rose by over 42 percent year-on-year, with the staple food rice and other grains up almost 68 percent in May compared to a year earlier, said the General Statistics Office.

http://news.newamericamedia.org/news/view_article.html?article_id=5d3b5e4d9acf5f58472671784ab48490