Vietnam Economics & Strategy

abc
Global Research
Economics: Growth continues to stride confidently,
while higher frequency indicators also look good. Inflation eases further and should be helped by autumn harvest in the near term. However, structural issues such as the large trade deficit remain a challenge for Vietnam.

Vietnam Monitor (Issue 29)

Growth solid, but outlook cautious

Equity Strategy: The volatile Vietnam equities

market saw declines in both index level and turnover. However, valuation is still not appealing enough to attract foreign investors.

Fixed Income Strategy: VGB yields are likely

to see near-term downside with continuation of accommodative policy measures. However, the longerrun sustainability of these measures is questionable.

12 July 2010
Wellian Wiranto Economist The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch +65 6230 2879 wellianwiranto@hsbc.com.sg Jacqueline Tse* Equity Strategist The Hongkong and Shanghai Banking Corporation Limited +852 2996 6602 jacquelinetse@hsbc.com.hk

FX Strategy: USD demand is likely to ramp up

through Q3, as USD loans mature, and therefore we see growing upward pressure on USD-VND through 2010.
Growth has pushed further ahead in all sectors
% Yo Y 16 12 8 4 0

Daniel Hui Senior FX Strategist The Hongkong and Shanghai Banking Corporation Limited +852 2822 4340 danielpyhui@hsbc.com.hk Virgil Esguerra Strategist, Asia Local Rates The Hongkong and Shanghai Banking Corporation Limited +852 2822 4665 virgilesguerra@hsbc.com.hk Dominic Bunning Analyst HSBC Bank plc +852 2822 1672 dominic.bunning@hsbc.com

-4 07 08 M an ufacturi ng
Source: CEIC, HSBC

09 C on s tr uc tion

10 S er v ic e

But the large trade deficit is still a structural issue

10 8 6 4 2 0 -2 -4 20 07 2 008 Trade ba la nce
Source: CEIC, HSBC

U SD bn

View HSBC Global Research at: http://www.research.hsbc.com *Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/qualified pursuant to FINRA regulations Issuer of report: The Hongkong and Shanghai Banking Corporation Limited Singapore Branch

2009 Ex port

2010 Im port

MICA (P) 177/08/2009

Disclaimer & Disclosures This report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it

Vote for the Worlds Local Broker www.asiamoney.com/polls

Vietnam Economics & Strategy 12 July 2010

abc

Economics
Growth continues to stride confidently, in line with robust industrial production and retail sales figures Inflation eases further and should be helped by autumn harvest in the near term, but credit ramp-up may nudge prices upward again Trade deficit hovers stubbornly above $1bn/month level a structural challenge that will take time to work through

Strident Growth
Vietnams economic growth proceeds at a decent pace. In Q2, it registered 6.4% year-on-year growth. Although somewhat lower than our expectation of 7.0% growth, it nonetheless represents a robust pace. After seasonal adjustments, Vietnams GDP grew by 2.8% sequentially in Q2. This is a sharp reversal from the quarter-on-quarter shrinkage that we saw in Q1 this year although we argue that this is more likely due to statistical aberration in the GDP data than a representative reflection of the strong economic activities. (See Vietnam Monitor: Taking a breather, 30 April 2010).

Growth appears to be broad-based, with sectors ranging from manufacturing and construction to services showing firm upturns. The manufacturing sector expanded by 9.1% y-o-y in Q2, after the 6.0% growth in Q1 indicating that Vietnam counts as one of the beneficiaries of resilient trade recovery within the region. Construction activities continued apace, growing by 11.5% in Q2. The biggest sector in the economy the services sector cruised along at a rate of 7.4% in Q2.
2. Higher frequency indicators are still high
40 30 % y-o-y, 3mma 20 10 0 - 10 07 08 In dus tr ial P ro duc tion
Source: CEIC, HSBC

1. We are all heading up

% YoY 16 12 8 4 0 -4 07 08 M an ufacturing
Source: CEIC, HSBC

09

10 R eta il S ales

Such strength does not come as a surprise at all, given that the higher-frequency indicators have
09 C on str uc tion 10 Serv ice

been pointing there. Industrial production numbers, for instance, have recently picked up pace again, after a period of consolidation earlier

Vietnam Economics & Strategy 12 July 2010

abc

in the year. Junes industrial output increased by 14.6% y-o-y compared to 13% in April, for example. On the other hand, retail sales continue to power on, hovering at an elevated growth rate for months now, pointing toward a very buoyant private consumption space two-thirds of the GDP, by expenditure measure.

All in all, we remain relatively cautious about inflation in Vietnam, even if we no longer think that it will reach double-digit territory this year. Apart from the strong economic growth spurts that we have witnessed so far, particularly in the blowout retail sales numbers indicating strong demand momentum in the economy, we are circumspect about the potential inflationary effect of any sudden surge in credit growth in the country. Year to date, credit has expanded by just over 11% y-o-y, still some distance away from the 25% targeted by the authorities. Recently, the central bank has been persuading the banks to lower their lending rates again, to 12% from the current average rate of 14.5% that press reports suggest. In a move illustrative of the authorities intention to boost credit growth via the lowering of lending rates, the government has passed a new law, effective January 2011, affecting the role of the central banks policy base rate. As reported by Bloomberg, rather than for banks to determine commercial rates themselves, Vietnams base rate will move toward acting as a guidance to control high-rate loans.1 More colourfully, a domestic press report asserts that the new law will allow the central bank to set base interest rates to combat loan sharking.2

Of Inflation and Sharks

Vietnams inflation prints have been surprising slightly on the tame side in recent months. It posted 8.7% y-o-y CPI inflation in June, coming after three successive months of above-9% inflation. The recent inflation trajectory has been led by the prices of food which commands 40% of the CPI basket in this country. After peaking at nearly 11% y-o-y inflation in March, food CPI trekked southward on abundant harvests. Food inflation stood at 9.3% y-o-y in June. In the near term, it appears that food prices should stay relaxed for a while more, especially with the onset of the autumn harvest season that is expected to peak in mid-July.
3. Inflation turns down, but for how long?
Inf lation, % y-o- y 50 40 30 20 10 0 -10 2007 2008 Headline
Source: CEIC, HSBC

The Luxury of Trade Deficit

2009 Food 2010 Cons tr uction

The price of construction materials, which had been growing rampantly, appears to lose some of its fizz as well. Even then, at 16.2% y-o-y inflation in June, it is not easy to argue that price pressures on this front have resolutely eased. This is especially so, given the strong momentum in construction activities that we have garnered from the GDP prints so far.

Vietnam continued to run trade deficit at a significant level in recent months. After one single month of having a trade deficit that was below $1bn in May, it reverted to the more familiar (but not more comforting) pattern of
______________________________________
1

Vietnam base rates role will move toward preventing high

rates, Bloomberg, 8 July 2010.

2

President signs off on three new laws, Vietnam News, 8

July 2010

Vietnam Economics & Strategy 12 July 2010

abc

crossing over again most recently posting $1.2bn deficit in June.

4. Trade Deficit: Familiarity doesn't necessarily bring comfort
10 8 6 4 2 0 -2 -4 2007 2008 Trade balance
Source: CEIC, HSBC

5. Feeling Good, with Imported Goods

Im port s of dom est ic s ect or, USDbn 60 50 40 30 20 10 0 200 400 600 800 1000 1200

USD bn

GDP p er capita, USD

2009 Ex port 2010 Im port
Source: CEIC, HSBC

In aggregate, Vietnam ran a trade deficit of $6.7bn for the first half-year of 2010, averaging about $1.1bn deficit per month. Although this is a step down from the $1.7bn monthly average we saw in H2 2009, it is still way higher than the $300mn average in H1 2009. Moreover, it looks like we have to contend with a trade gap for Vietnam for a while more. As we argued before, the deficit has to do with persistent structural imbalances within the economy that are unlikely to be resolved anytime soon. One of these factors is the propensity for the consumption of imported goods. Although it is, of course, a very good thing that GDP per capita in Vietnam continues to rise over recent years, there is the tendency for more and more purchase of imported goods, as purchasing power improves. Although this is an example on one end of the spectrum, luxury cars are increasingly selling well in Vietnam, indicative of the general trend to consume imported goods as the standard of living gets elevated.3
______________________________________
3

Illustrative of a wider issue, the penchant for imported goods over domestically produced ones, extends beyond luxury goods, to other goods that Vietnam has productive capacity for. Take sugar, for instance. Even though there are plenty of producers domestically, Vietnam continues to import significant amount of the sweetener. This is largely because the domestic producers lack the scale to upgrade their technologies, to be able to compete on pricing. Addressing the countrys trade deficit cannot be achieved overnight, although we argue that improving the competitiveness of domestic enterprises will be a key ingredient towards that goal. For now, strong FDI inflows, together with development aid and remittances, are sufficient to cover the trade gap, preventing any outright balance of payment concerns from arising overtly. Wellian Wiranto

Philippines had been rerouted to Ho Chi Minh City. Luxury The Audi Q5, for instance, is apparently so popular in cars find plenty of buyers, VietNamNet Bridge, 8 July 2010.

Vietnam that a number of shipments that were heading for the

Vietnam Economics & Strategy 12 July 2010

abc

Equity Strategy
Index dropped, turnover dwindled Current valuation is not attractive enough to lure foreign investors No catalyst to revitalize the market until 2011 National Congress

Index and turnover both trend down

Vietnam has again demonstrated its characteristic as a tricky market. The Ho Chi Minh (HCM) Index lost 8% since we last published Vietnam Monitor at the end of April, paring some of the year-to-date gains to just 1% (chart 1). Meanwhile, market capitalization stayed flat at USD36bn. The one-month average of the aggregated daily turnover dropped from USD197mn in April to USD120mn in June, of which, the HCM Index turnover dropped 38% and the Hanoi Index turnover dropped 42% from April turnover (chart 2). The stock performance was lacklustre despite an increase in companies trading on the exchanges. Since April, 47 new companies started trading on the exchanges, raising the total to 553 actively traded

companies in Vietnam. 25 of these companies started trading on the Hanoi Exchange and 22 on the Ho Chi Minh Exchange (see table 3). Most of these companies are in the construction sector, with a few banks and commodities companies alongside. The largest newly traded company is a real estate developer called Ocean Group with a market capitalization of USD518mn. The second largest newly traded company is Sacombank with a market capitalization of USD230mn. Both securities are traded on the HCM Exchange.

Valuation not attractive enough to lure investors

Vietnam trades at 13.3x 2009 earnings, slightly down from 14x since we last published. Although this places Vietnam on the low end of the Asian peer group in terms of 2009 PE (MSCI Asia ex Japan 2009 PE was 17.2x), Vietnams risk /

1. Vietnam stock index vs MSCI Asia ex Japan

2. Daily trading value on HCM and Hanoi exchanges (20DMA)

140 130 120 100 90 80 70 60 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 VNINDEX Index MXASJ Index
USDmn

250 200 150 100 50 0

HCM

Hanoi

110

Oct-09

Jul-09

Apr-09

Jan-09

Source: HSBC, Bloomberg

Source: HSBC, Bloomberg

Jan-10

Apr-10

Jul-10

Vietnam Economics & Strategy 12 July 2010

abc

3. New companies that started trading on exchanges since April 2010 Code OGC SBS NVT DTL SPM NTB PXI UDC DLG TDC MKP SBA GTT BCE NNC PXS PXT SBC PXM NHS CMV TNT VCR PVR VDS DNY PHS AME MIH CMI DLR HPB HTC TET KSD VCM IDV VXB LCS HDO CT6 KHB TSM NSN VE3 DC2 CX8 Name OCEAN GROUP JSC SACOMBANK SECURITIES JSC NINH VAN BAY REAL ESTATE JSC DAI THIEN LOC CORP SPM CORP TRANSPORT ENGINEERING CONSTR PETROLEUM INDUSTRIAL & CIVIL URBAN DEVELOPMENT AND CONSTR DUC LONG GIA LAI GROUP JSC BINH DUONG TRADE AND DEVELOP MEKOPHAR CHEMICAL PHARMACEUT SONG BA JSC THUAN THAO CORP BINH DUONG CONSTRUCTION AND NUI NHO STONE JSC PETROLEUM EQUIPMENT ASSEMBLY PETROLEUM PIPELINE & TANK SAIGON BEER TRANSPORTATION MIEN TRUNG PETROLEUM CONSTRU NINH HOA SUGAR JSC CAMAU TRADING JSC TAI NGUYEN CORP VINACONEX INVESTMENT AND TOU PETROVIETNAM PREMIER RECREAT VIET DRAGON SECURITIES JSC DANA Y STEEL JSC FORTUNE SECURITIES CORP ALPHANAM MECHANICAL ELECTRIC IMPORT EXPORT JSC HA NAM CAVICO INDUSTRY AND MINERALS DALAT REAL ESTATE JSC PP PACK MAKING JSC HOC MON TRADE JSC NORTHERN TEXTILES AND GARMEN SOUTH EAST ASIA HAMICO EXPOR VINACONEX TRADING AND MANPOW VINH PHUC INFRASTRUCTURE DEV BEN TRE CONSTRUCTION MATERIA LICOGI 16.6 JSC HUNG DAO CONTAINER JSC CONSTRUCTION JSC NO 6 HOA BINH MINERAL JSC TIEM SON CEMENT JSC 565 CONSTRUCTION-JSC VNECO 3 ELECTRICITY CONSTRUC DEVELOPMENT INVESTMENT CONST CONSTREXIM INVESTMENT AND CO Industry Subgroup Real Estate Oper/Develop Finance-Invest Bnkr/Brkr Real Estate Oper/Develop Steel-Producers Medical-Whsle Drug Dist Real Estate Oper/Develop Building-Heavy Construct Building-Heavy Construct Diversified Operations Real Estate Oper/Develop Medical-Drugs Building-Heavy Construct Transport-Services Building&Construct-Misc Inactive/Unknown Oil Field Mach&Equip Building&Construct-Misc Transport-Truck Building&Construct-Misc Sugar Inactive/Unknown Real Estate Oper/Develop Diversified Operations Real Estate Oper/Develop Finance-Invest Bnkr/Brkr Steel-Producers Finance-Invest Bnkr/Brkr Machinery-General Indust Inactive/Unknown Quarrying Inactive/Unknown Containers-Paper/Plastic Building-Heavy Construct Textile-Products Miscellaneous Manufactur Human Resources Real Estate Oper/Develop Inactive/Unknown Building-Heavy Construct Transport-Services Building&Construct-Misc Coal Bldg Prod-Cement/Aggreg Building-Heavy Construct Bldg&Construct Prod-Misc Inactive/Unknown Building-Heavy Construct Exchange HCM HCM HCM HCM HCM HCM HCM HCM HCM HCM HCM HCM HCM HCM HCM HCM HCM HCM HCM HCM HCM HCM Hanoi Hanoi Hanoi Hanoi Hanoi Hanoi Hanoi Hanoi Hanoi Hanoi Hanoi Hanoi Hanoi Hanoi Hanoi Hanoi Hanoi Hanoi Hanoi Hanoi Hanoi Hanoi Hanoi Hanoi Hanoi Mkt Cap (USDmn) 518 230 60 58 54 51 49 44 38 37 30 26 24 24 24 22 19 18 17 17 15 14 46 40 29 28 25 12 11 11 10 10 9 9 8 7 6 6 6 5 5 4 4 3 3 3 3

Source: HSBC, Bloomberg; As at 7 July 2010

reward trade-off is much less attractive versus other Asian markets when it comes to 2010 PE. Data available to make estimates is extremely limited in Vietnam. We currently assume 2010 earnings growth of 25% based on the average of the past three years. The 2010 PE comes to 10x, which is higher than Koreas 9.2x. We believe investors will agree that liquidity and transparency are less of an issue in Korea than in Vietnam. Given investors still find volatility,
6

limited liquidity, and lack of transparency a concern in Vietnam, we believe other Asian markets offer better risk / reward trade-off. (HSBC has an overweight stance on Korea, Australia and Indonesia. Please see Asia Insights Quarterly, 8 July 2010 for more details on country allocation). As a result, current valuation is not attractive enough to entice foreign investors to return to Vietnam. The foreign ownership level stayed flat at 16%, the same as Aprils level. The

Vietnam Economics & Strategy 12 July 2010

abc

number of stocks that hit the foreign limit has dropped from 8 to 3. Currently, the only stock that has reached the foreign limit on the HCM exchange is Royal International Corporation while the two companies that have reached the foreign limit on the Hanoi exchanges are Asia Commercial Bank and Tung Kuang Industrial.
4. Key stock market data HCM Market cap (USD mn) No. of stocks Stocks with mkt cap >USD1bn Stocks with mkt cap >USD500mn Stocks with mkt cap >USD200mn Stocks that hit foreign limit Daily turnover (USDmn, 1mth ave) Foreign ownership PE (2009) x ROE (%) DY (%)
Source: HSBC, Bloomberg; As at 7 July 2010

Hanoi 7,478 307 1 2 6 2 49 10% 13.6 16.5 3.0

Total 36,376 553 8 19 31 3 120 16% 13.3 19.5 2.1

28,897 246 7 17 25 1 70 18% 13.2 20.2 1.9

of companies that have market capitalization of more than USD200mn actually declined to 31 from 34 since April. The number of companies with market capitalization of USD500mn or more stayed the same at 19 and the number of companies that are larger than USD1bn increased by only one, to eight. The eight largest market cap companies are all banks and real estate developers except for one, Vietnam Dairy Product JSC. Bank for Foreign Trade is still the company with the largest market capitalization in Vietnam (USD2.7bn). Despite the ongoing discussion on market reform to shorten the settlement time to T+2 from T+4 and to extend the trading hours into the afternoon, we think the stock market performance will be insipid in 2H10. 2011 will be a more exciting year for Vietnam as the National Congress will take place. Until then, we do not see compelling reason to have significant exposure to this market. Jacqueline Tse

What makes Vietnamese stocks even less attractive to foreign investors is the small market capitalization. Even with the 47 new companies that started trading on the exchanges, the number

Vietnam Economics & Strategy 12 July 2010

abc

5. Key valuation data for the largest listed Vietnamese stocks (market cap > USD200mn) Code Name Industry Subgroup Exchange Mkt cap (USD Ave daily Foreign Foreign limit Room for mn) t/over ownership foreign (USDm) buying (USDm) HCM HCM HCM HCM HCM HCM Hanoi HCM HCM HCM HCM Hanoi HCM HCM HCM HCM HCM HCM HCM HCM Hanoi HCM Hanoi HCM HCM HCM Hanoi HCM HCM Hanoi HCM 2,701 1,683 1,503 1,461 1,310 1,296 1,245 1,193 876 697 678 655 605 605 597 588 542 518 515 403 401 386 366 341 335 325 322 271 268 243 230 0.54 0.73 0.23 0.30 0.64 0.21 1.08 2.03 0.79 0.77 0.84 0.01 3.54 1.04 2.45 0.81 1.63 NA 0.83 2.60 3.53 1.51 7.20 NA 0.18 0.88 0.94 0.66 0.65 0.35 NA 17% 3% 28% 49% 39% 3% 0% 0% 11% 3% NA 17% 3% 18% 0% 0% 1% 20% 2% 14% 6% 1% 1% 38% 1% 1% 0% 6% 0% 0% 44% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 854.5 766.4 316.0 127.7 590.5 607.3 581.3 333.8 PE Chg 3M

VCB VNM CTG BVH VIC MSN ACB HAG EIB PVF FPT SQC SSI HPG STB DPM KBC OGC PVD SJS VCG ITA PVX POM VPL DIG PVS PPC KDC SHB SBS

JSC BANK FOR FOREIGN TRADE Commer Banks Non-US VIET NAM DAIRY PRODUCTS JSC Food-Dairy Products VIETNAM JSC COMMERCIAL BANK Commer Banks Non-US BAOVIET HOLDINGS Multi-line Insurance VINCOM JSC Real Estate Oper/Develop MASAN GROUP CORP Investment Companies ASIA COMMERCIAL BANK Commer Banks Non-US HAGL JSC Real Estate Oper/Develop VIETNAM EXPORT-IMPORT Commer Banks Non-US COMMER PETROVIETNAM FINANCE JSC Finance-Invest Bnkr/Brkr FPT CORP Telecommunication Equip QUY NHON MINING CORP Non-Ferrous Metals SAIGON SECURITIES INC Finance-Invest Bnkr/Brkr HOA PHAT GROUP JSC Miscellaneous Manufactur SAIGON THUONG TIN COMMERCIAL Commer Banks Non-US PETROVIETNAM FERT & CHEMICAL Chemicals-Diversified KINH BAC CITY DEVELOPMENT SH Real Estate Oper/Develop OCEAN GROUP JSC Real Estate Oper/Develop PETROVIETNAM DRILLING AND WE Oil-Field Services SONGDA URBAN & INDUSTRIAL ZO Building&Construct-Misc VIET NAM CONSTRUCTION & IMPO Building&Construct-Misc TAN TAO INVESTMENT INDUSTRY Real Estate Oper/Develop PETROVIETNAM CONSTRUCTION Oil Field Mach&Equip CO POMINA STEEL CORP Steel-Producers VINPEARLLAND TOURISM JSC Resorts/Theme Parks DEVELOPMENT INVEST Building&Construct-Misc CONSTRUCT PETROVIETNAM TECHNICAL SERVI Transport-Services PHA LAI THERMAL POWER JSC Electric-Generation KINHDO CORP Food-Baking SAIGON - HANOI COMMERICIAL Commer Banks Non-US SACOMBANK SECURITIES JSC Finance-Invest Bnkr/Brkr

12.9 8.7 NA 28.6 24.4 19.1 10.4 12.7 14.8

-6% 6% -10% 3% 28% 34% -12% -7% -15% -10% 4% -3% -24% -13% -8% -10% -8% NA -18% -2% -24% -6% 41% NA 34% -16% -2% -7% -2% -7% NA

318.2 26.3 332.0 12.0 209.6 480.8 278.8 12.0 186.8 9.1 291.4 6.8 287.9 8.3 261.0 14.3 150.9 102.6 243.2 10.5 142.4 10.6 172.5 1,332.3 185.8 14.6 174.7 27.7 39.2 160.9 154.9 157.7 117.6 131.2 119.1 10.9 5.4 64.5 6.7 9.2 5.8 10.4 11.5 NA

Source: HSBC, Bloomberg; As at 7 July 2010

Vietnam Economics & Strategy 12 July 2010

abc

Fixed Income Strategy

Modest downside in VGB yields, but continued stability hinges on expansion of current accommodative policies Accelerated loan growth, dollar debt maturities could require further policy action during 2H10 Long-run sustainability of such policies is questionable

Policy support buoys bonds

VGB yields continued to grind lower since posting year-to-date highs during 1Q10. 2yr and 5yr VGB yields have declined by roughly 200bp and 125bp to 10% and 11%, respectively, since March. Bond market stability is likely to remain in the coming months, but this is predicated on the continuation and possibly the expansion of extraordinary measures instituted by policymakers since April. These policy measures namely liquidity injections and policy guidance in bank rates were primarily intended to stoke private sector credit growth, which is a key pillar in the governments growth strategy of attaining 6.5% GDP growth this year. Government bonds were direct beneficiaries of these policies due to improved liquidity conditions and a system-wide reduction in interest rates. Provided that liquidity remains flush, bond yields may decline by 50bp more over the next three months. In spite of our expectations of near-term downside in bond yields, there remain longer-term fundamental questions over the sustainability of current measures. Recall that the governments ambitious growth target in 2009 (largely fed by a government-subsidised credit

stimulus programme) stoked economic overheating concerns in 4Q09 that ultimately forced the State Bank of Vietnam (SBV) to hike benchmark rates and liberalise bank deposit/lending rates in December 2009. Our FX strategists also see renewed upward pressure on USD-VND in 2H10 (see FX Strategy section).
1. HSBC forecast yields (mid) 2yr Current + 1mth + 3mths + 6mths
Source: HSBC

5yr 11.05 11.00 11.00 11.50

10yr 12.25 12.00 12.00 12.00

10.05 10.00 9.50 10.00

For now, near-term bond market stability rests largely on the continuation of the governments accommodative policies, specifically: Deliberate efforts by the government, in concert with the domestic bank association, to guide commercial lending and deposit rates towards 12% and 10%, respectively4 Sustained liquidity injections through the SBVs open market operations (OMOs)5

______________________________________ 4 Commercial lending rates have declined by approximately 400-500bp from 16-18% during 1Q10 5 As of 8 July, the excess liquidity from the SBVs OMOs stood at VND50trn

Vietnam Economics & Strategy 12 July 2010

abc

2. Vietnam bond yields may continue downtrend since April

3. A 25%-credit growth target implies that total outstanding bank loans will increase by VND467trn (eUSD25bn)

14 12 10 8 6 4 2 Oct-09 Jul-09 Jan-09 Jan-10 Apr-09 Apr-10 Jul-10 %

60% 50% 40% 30% 20% 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*

2,500 2,000 VNDtr 1,500 1,000 500 -

2y r VGB
Source: HSBC

5y r VGB

Ov ernight call

Total loans (Rhs)

Loan grow th (y -o-y , Lhs)

Source: CEIC, HSBC *2010 based on 25% credit growth target

Increased accessibility to SBV repos has enhanced bank demand for VGBs for use as collateral in such borrowings However, potential liquidity strains in the coming months could require policymakers to expand on current measures. First, liquidity could tighten based on the overall improvement in credit growth6. Although deposit growth was relatively strong (15% year-to-June), bank loandeposit ratios still remain elevated near 1.0 and the official growth target still implies a VND467net increase in outstanding bank loans (see chart 3). Moreover, the significant amount of dollar debt maturing in coming months combined with an overall preference to shift from dollar to VND funding means that domestic corporates may increasingly resort to VND loans for refinancing, placing added strain on VND liquidity. These potential liquidity strains could require that authorities step-in to support domestic liquidity through increased OMOs. To address the difficulty faced by banks in obtaining longer-term funding, the SBV is considering extending repo funding from one and two weeks currently to include 3mths and 6mths. The SBV may also reduce repo rates, presuming of course that it does not cut
______________________________________ 6 Bank loans have accelerated from 4% year-to-April to 10% year-toJune, closer to the governments 2010 target of 25%

benchmark rates outright, which is possible if credit and growth objectives are not achieved. Provided that officials continue to foster the conditions necessary to meet credit growth objectives, VGB yields may experience further downside near-term. Given the SBVs current repo rates7, 2yr VGB yields may decline towards a floor of 9.00%. Banks ability to use VGBs as collateral for short-term repo funding means that VGB yields could temporarily dip below the 10% system-wide deposit rate cap in the near-term. Over the medium-term, there are broader questions over the sustainability of such policies, which heighten the risk of economic overheating. In this respect, our economist forecasts the current account deficit and headline inflation to rise in comparison to last year to 8.9% of GDP and 9.0%, respectively. At this point, a repeat of 4Q09 developments is a remotely possible but not probable scenario, in our view. However, we believe the gravity of this scenario warrants caution towards VGB investments for the time being. Virgil F Esguerra

______________________________________ 7 The rate on the SBV's one-week and two-week repos are currently 7% and 7.5% respectively

10

Vietnam Economics & Strategy 12 July 2010

abc

FX Strategy
USD borrowing supported VND in H1 2010, but narrowing rate differentials will increase USD demand in 2H Remittances and FDI offer support against trade deficit Overall pressure is building for a weaker VND

Pressure building in Q3
While the USD-VND market has been the most liquid and stable in the last three months as has been in the prior year and a half, we expect upward pressure to build on USD-VND going forward. Onshore USD demand and a widening trade balance should outweigh the potential increases in remittances and FDI inflows. Although pressure on spot and NDF markets was fairly limited in May and June, it seems to have returned in recent weeks (chart 1). If this trend continues, then market liquidity will quickly deteriorate as the market clearing USD-VND rate rises beyond the ceiling of the trading band.

Domestic USD demand cycle turning

We have in the past highlighted how the onshore USD supply and demand dynamics are a particularly important overlay on more conventional cross-border flows in the VND market. This is due to the fact that Vietnam remains highly dollarized, and the USD and gold represent popular substitutes to VND as a liquid store of value. And indeed, it was a shift away from dollar hoarding that helped the USD-VND market stabilize earlier this year, in a process that was much driven by policy. In lowering domestic USD savings rates, policymakers catalyzed a

USD-VND trading more inline with band, but upward pressure expected to increase through Q3

19500 18500 17500 16500 15500 Jan-08 Fix

Source: Bloomberg, HSBC

Apr-08

Jul-08

Oct-08

Jan-09

Apr-09 Ceiling

Jul-09

Oct-09 Floor

Jan-10

Apr-10

Jul-10

Official USD/VND spot

NDF Fix

11

Vietnam Economics & Strategy 12 July 2010

abc

massive surge of domestic USD borrowing. According to various local press reports, domestic foreign currency loans (predominantly in USD) rose some 20% between January and May, while VND credit was up only 3.5%. The SBVs previous attempts to limit USD hoarding by lowering USD deposit rates appear to have helped cause this surge in USD borrowing, which has seen a greater divergence in VND and USD lending rates. Increasing USD demand from importers has also likely played a role. Currently USD rates range between 5-6.5%, while VND rates are around double these levels. However, policy appears set to turn this USD demand cycle around. The SBV has been attempting to normalise the market and encourage lower VND rates. We see this process continuing and expect USD credit to rise less sharply in comparison to VND as rate differentials narrow. Exacerbating this will be the USD demand that comes to market when outstanding USD loans mature. Although we do not know the exact maturity of the USD loans, local reports suggest the majority are held over a 3m-9m period. Therefore through Q3 and Q4 many will be due for repayment, meaning an increased demand for USD in coming months. Although a gap in rates is likely to persist, slowing USD credit growth coupled with increasing VND growth should mean greater demand for dollars coupled with lower supply, putting clear pressure on VND to weaken.

and our economists are forecasting the overall deficit to increase slightly from last year, which clearly puts further pressure on VND to weaken.
2. Trade deficit persists in 2010
0.5 0.0 -0.5 -1.0 -1.5 -2.0 -2.5 -3.0 -3.5 05 06 07 08 09 10

USDbn

Trade Balance 3 mm a
Source: HSBC, CEIC

which may be difficult for other flows to meet

Some support may be found from rising remittances and FDI flows. While these data are not produced as consistently as one would like, we are able to make some broad remarks for the VND from the latest information available. According to the SBV, overseas remittances totalled USD3.6bn year-to-date in June, which compares favourably to the previous year and the trade deficit outflow. According to the MOF website, disbursed FDI inflows were USD4.5bn ytd in May. Therefore, over the first half of the year these combined flows actually outstripped the trade deficit which should offer VND support. However, it is worth noting that FDI in Vietnam has been shifting towards domestic focussed firms rather than exporting firms, as discussed by our economist in previous research. Hence increasing FDI flows may be currency negative in the medium term, as FDI will not directly generate greater FX earnings, but will spur greater investment activity which tends to be import intensive. Dominic Bunning

Trade deficit funding requirement to rise

Aside from the impacts of domestic dollar demand, the external flow side of the picture is also important for the VND, particularly given the large trade deficit. Despite a gentle upturn in the trend of the trade balance, the deficit is still notable (chart 2). Recent EUR weakness will likely have had a negative impact, with the Eurozone making up c20% of Vietnams exports,

12

Vietnam Economics & Strategy 12 July 2010

abc

Disclosure appendix
Analyst Certification
Each analyst whose name appears as author of an individual chapter or individual chapters of this report certifies that the views about the subject security(ies) or issuer(s) or any other views or forecasts expressed in the chapter(s) of which (s)he is author accurately reflect his/her personal views and that no part of his/her compensation was, is or will be directly or indirectly related to the specific recommendation(s) or view(s) contained therein.

Important Disclosures
This document has been prepared and is being distributed by the Research Department of HSBC and is intended solely for the clients of HSBC and is not for publication to other persons, whether through the press or by other means. This document is for information purposes only and it should not be regarded as an offer to sell or as a solicitation of an offer to buy the securities or other investment products mentioned in it and/or to participate in any trading strategy. Advice in this document is general and should not be construed as personal advice, given it has been prepared without taking account of the objectives, financial situation or needs of any particular investor. Accordingly, investors should, before acting on the advice, consider the appropriateness of the advice, having regard to their objectives, financial situation and needs. If necessary, seek professional investment and tax advice. Certain investment products mentioned in this document may not be eligible for sale in some states or countries, and they may not be suitable for all types of investors. Investors should consult with their HSBC representative regarding the suitability of the investment products mentioned in this document and take into account their specific investment objectives, financial situation or particular needs before making a commitment to purchase investment products. The value of and the income produced by the investment products mentioned in this document may fluctuate, so that an investor may get back less than originally invested. Certain high-volatility investments can be subject to sudden and large falls in value that could equal or exceed the amount invested. Value and income from investment products may be adversely affected by exchange rates, interest rates, or other factors. Past performance of a particular investment product is not indicative of future results. Analysts, economists, and strategists are paid in part by reference to the profitability of HSBC which includes investment banking revenues. For disclosures in respect of any company mentioned in this report, please see the most recently published report on that company available at www.hsbcnet.com/research.
* HSBC Legal Entities are listed in the Disclaimer below.

Additional disclosures
1 2 3 This report is dated as at 12 July 2010. All market data included in this report are dated as at close 08 July 2010, unless otherwise indicated in the report. HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its Research business. HSBC's analysts and its other staff who are involved in the preparation and dissemination of Research operate and have a management reporting line independent of HSBC's Investment Banking business. Information Barrier procedures are in place between the Investment Banking and Research businesses to ensure that any confidential and/or price sensitive information is handled in an appropriate manner.

13

Vietnam Economics & Strategy 12 July 2010

abc

Disclaimer
* Legal entities as at 31 January 2010 Issuer of report 'UAE' HSBC Bank Middle East Limited, Dubai; 'HK' The Hongkong and Shanghai Banking The Hongkong and Shanghai Banking Corporation Limited, Hong Kong; 'TW' HSBC Securities (Taiwan) Corporation Limited; 'CA' HSBC Corporation Limited Singapore Branch Securities (Canada) Inc, Toronto; HSBC Bank, Paris branch; HSBC France; 'DE' HSBC Trinkaus & 21 Collyer Quay #03-01 Burkhardt AG, Dusseldorf; 000 HSBC Bank (RR), Moscow; 'IN' HSBC Securities and Capital Markets HSBC Building (India) Private Limited, Mumbai; 'JP' HSBC Securities (Japan) Limited, Tokyo; 'EG' HSBC Securities Egypt S.A.E., Cairo; 'CN' HSBC Investment Bank Asia Limited, Beijing Representative Office; The Singapore 049320 Hongkong and Shanghai Banking Corporation Limited, Singapore branch; The Hongkong and Website: www.research.hsbc.com Shanghai Banking Corporation Limited, Seoul Securities Branch; The Hongkong and Shanghai Banking Corporation Limited, Seoul Branch; HSBC Securities (South Africa) (Pty) Ltd, Johannesburg; 'GR' HSBC Pantelakis Securities S.A., Athens; HSBC Bank plc, London, Madrid, Milan, Stockholm, Tel Aviv, 'US' HSBC Securities (USA) Inc, New York; HSBC Yatirim Menkul Degerler A.S., Istanbul; HSBC Mxico, S.A., Institucin de Banca Mltiple, Grupo Financiero HSBC, HSBC Bank Brasil S.A. Banco Mltiplo, HSBC Bank Australia Limited, HSBC Bank Argentina S.A., HSBC Saudi Arabia Limited. This document has been issued by The Hongkong and Shanghai Banking Corporation Limited Singapore Branch ("HSBC") for the information of its institutional and professional customers; it is not intended for and should not be distributed to retail customers. The Hongkong and Shanghai Banking Corporation Limited is regulated by the Securities and Futures Commission. The Hongkong and Shanghai Banking Corporation Limited Singapore Branch is regulated by the Monetary Authority of Singapore. All enquires by recipients in Hong Kong must be directed to your HSBC contact in Hong Kong. If it is received by a customer of an affiliate of HSBC, its provision to the recipient is subject to the terms of business in place between the recipient and such affiliate. This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. HSBC has based this document on information obtained from sources it believes to be reliable but which it has not independently verified; HSBC makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of the Research Division of HSBC only and are subject to change without notice. HSBC and its affiliates and/or their officers, directors and employees may have positions in any securities mentioned in this document (or in any related investment) and may from time to time add to or dispose of any such securities (or investment). HSBC and its affiliates may act as market maker or have assumed an underwriting commitment in the securities of companies discussed in this document (or in related investments), may sell them to or buy them from customers on a principal basis and may also perform or seek to perform investment banking or underwriting services for or relating to those companies. In Korea, this publication is distributed by either The Hongkong and Shanghai Banking Corporation Limited, Seoul Securities Branch ("HBAP SLS") or The Hongkong and Shanghai Banking Corporation Limited, Seoul Branch ("HBAP SEL") for the general information of professional investors specified in Article 9 of the Financial Investment Services and Capital Markets Act (FSCMA). This publication is not a prospectus as defined in the FSCMA. It may not be further distributed in whole or in part for any purpose. Both HBAP SLS and HBAP SEL are regulated by the Financial Services Commission and the Financial Supervisory Service of Korea. HSBC Securities (USA) Inc. accepts responsibility for the content of this research report prepared by its non-US foreign affiliate. All U.S. persons receiving and/or accessing this report and wishing to effect transactions in any security discussed herein should do so with HSBC Securities (USA) Inc. in the United States and not with its non-US foreign affiliate, the issuer of this report. In the UK this report may only be distributed to persons of a kind described in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001. The protections afforded by the UK regulatory regime are available only to those dealing with a representative of HSBC Bank plc in the UK. In Singapore, this publication is distributed by The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch for the general information of institutional investors or other persons specified in Sections 274 and 304 of the Securities and Futures Act (Chapter 289) (SFA) and accredited investors and other persons in accordance with the conditions specified in Sections 275 and 305 of the SFA. This publication is not a prospectus as defined in the SFA. It may not be further distributed in whole or in part for any purpose. In Australia, this publication has been distributed by The Hongkong and Shanghai Banking Corporation Limited (ABN 65 117 925 970, AFSL 301737) for the general information of its wholesale customers (as defined in the Corporations Act 2001). Where distributed to retail customers, this research is distributed by HSBC Bank Australia Limited (AFSL No. 232595). These respective entities make no representations that the products or services mentioned in this document are available to persons in Australia or are necessarily suitable for any particular person or appropriate in accordance with local law. No consideration has been given to the particular investment objectives, financial situation or particular needs of any recipient. In Japan, this publication has been distributed by HSBC Securities (Japan) Limited. It may not be further distributed in whole or in part for any purpose. Copyright. The Hongkong and Shanghai Banking Corporation Limited Singapore Branch 2010, ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of The Hongkong and Shanghai Banking Corporation Limited Singapore Branch. MICA (P) 177/08/2009

14

abc

GEMs Research Team

Economics
Latin America Ramiro D Blazquez +54 11 4348 5759 Lorena Dominguez +52 55 5721 2172 Javier Finkman +54 11 4344 8144 Andre Loes +55 11 3371 8184 Sergio Martin +52 55 5721 2164 Jorge Morgenstern +54 11 4130 9229 Asia Qu Hongbin +852 2822 2025 Frederic Neumann +852 2822 4556 Seiji Shiraishi +886 81 5203 3802 Christopher Wong +852 2996 6917 Wellian Wiranto +65 6230 2879 CEEMEA Kubilay Ozturk +44 20 7991 6045 Alexander Morozov +7 49 5721 1577 Murat Ulgen +90 212 376 4619 Simon Williams +971 4 423 6925 ramiro.blazquez@hsbc.com.ar lorena.dominguez@hsbc.com.mx javier.finkman@hsbc.com.ar andre.a.loes@hsbc.com.br sergio.martinm@hsbc.com.mx jorge.morgenstern@hsbc.com.ar hongbinqu@hsbc.com.hk fredericneumann@hsbc.com.hk seiji.shiraishi@hsbc.co.jp christopherwong@hsbc.com.hk wellianwiranto@hsbc.com.sg kubilay.ozturk@hsbcib.com alexander.morozov@hsbc.com murat.ulgen@hsbc.com.tr simon.williams@hsbc.com

Equity CEEMEA
Europe John Lomax Head of Equity Strategy, GEMs +44 20 7992 3712 john.lomax@hsbcib.com Herve Drouet +44 20 7991 6827 herve.drouet@hsbcib.com Sergey Fedoseev +44 20 7991 6831 sergey.fedoseev@hsbcib.com Veronika Lyssogorskaya +44 20 7992 3684 veronika.lyssogorskaya@hsbcib.com Wietse Nijenhuis +44 20 7992 3680 wietse.nijenhuis@hsbcib.com Anisa Redman +44 20 7991 6822 anisa.redman@hsbcib.com Sub-Saharan Africa Umulinga Karangwa +44 20 7992 3685 umulinga.karangwa@hsbcib.com Turkey Cenk Orcan Co-Head of Turkey Equity Research +90 212 376 4614 cenkorcan@hsbc.com.tr Bulent Yurdagul Co-Head of Turkey Equity Research +90 212 376 4612 bulentyurdagul@hsbc.com.tr Levent Bayar +90 212 376 4617 leventbayar@hsbc.com.tr Erol Hullu +90 212 376 4616 erolhullu@hsbc.com.tr Israel Avshalom Shimei +972 3 710 1197 avshalomshimei@hsbc.com Yonah Weisz +972 3 710 1198 yonahweisz@hsbc.com United Arab Emirates Kunal Bajaj +971 4 507 7458 kunalbajaj@hsbc.com David Lepper +971 4 423 6932 davidlepper@hsbc.com David Kinsey +971 4 423 6928 david.r.kinsey@hsbc.com Vikram Viswanathan +971 4 423 6931 vikramviswanathan@hsbc.co.in Egypt Ahmed Hafez Saad +202 2529 8436 ahmedhafezsaad@hsbc.com Alia El Mehelmy +202 2529 8438 aliaelmehelmy@hsbc.com Shirin Panicker +202 2529 8439 shirinpanicker@hsbc.com Saudi Arabia Tareq Alarifi +966 1 299 2105 tareqalarifi@hsbc.com Aybek Islamov +966 1 299 2102 aybek.islamov@hsbcib.com Raj Sinha +966 1 299 2100 raj.sinha@hsbc.com

Credit
Dilip Shahani +852 2822 4520 dilipshahani@hsbc.com.hk Keith Chan +852 2822 4522 keithkfchan@hsbc.com.hk Sheldon Chan +852 2822 3232 sheldonchan@hsbc.com.hk Olga Fedotova +44 20 7992 3707 olga.fedotova@hsbcib.com Devendran Mahendran +852 2822 4521 devendran@hsbc.com.hk Mary Ellen Olson +852 2822 4524 mary.ellen.olson@hsbc.com.hk Zhiming Zhang +852 2822 4523 zhimingzhang@hsbc.com.hk Keerthi Angammana, CFA +44 20 7991 5431 keerthisri.angammana@hsbcib.com

Currency
Marjorie Hernandez +1 212 525 4109 Daniel Hui +852 2822 4340 Perry Kojodjojo +852 2996 6568 Clyde Wardle +1 212 525 3345 Richard Yetsenga +852 2996 6565 marjorie.hernandez@us.hsbc.com danielpyhui@hsbc.com.hk perrykojodjojo@hsbc.com.hk clyde.wardle@us.hsbc.com richard.yetsenga@hsbc.com.hk

Asia
Research Management Chris Georgs +852 2996 6753 chris.georgs@hsbc.com.hk Herald van der Linde +852 2996 6575 heraldvanderlinde@hsbc.com.hk Real Estate Michelle Kwok +852 2996 6918 michellekwok@hsbc.com.hk Ashutosh Narkar +91 22 3023 1474 ashutoshnarkar@hsbc.co.in Alvin Wong +852 2996 6621 alvincmwong@hsbc.com.hk

Fixed Income
Pablo Goldberg Head of Latin America Fixed Income Strategy +1 212 525 8729 pablo.a.goldberg@us.hsbc.com Virgil Esguerra +852 2822 4665 virgilesguerra@hsbc.com.hk Gordian Kemen +1 212 525 4326 gordian.x.kemen@us.hsbc.com Alejandro Mrtinez-Cruz +52 55 5721 2380 alejandro.martinezcr@hsbc.com.mx Hernan M Yellati +1 212 525 6787 hernan.m.yellati@us.hsbc.com

abc

GEMs Research Team (continued)

Banks Todd Dunivant Head of Banks, Asia-Pacific +852 2996 6599 tdunivant@hsbc.com.hk Sarah Hung +886 2 8725 6026 sarahychung@hsbc.com.tw Kathy Park +82 2 3706 8755 kathypark@kr.hsbc.com York Pun +852 2822 4396 yorkkypun@hsbc.com.hk China Ken Ho +852 2996 6593 kenho@hsbc.com.hk Elaine Lam +852 2822 4398 elainehlam@hsbc.com.hk Insurance James Garner +852 6394 7866 james.e.garner@hsbc.com.hk Transport / Conglomerates Mark Webb +852 2996 6574 markwebb@hsbc.com.hk Sachin Gupta +91 22 2268 1079 sachin1gupta@hsbc.co.in Parash Jain +852 2996 6717 parashjain@hsbc.com.hk Eric Lin +852 2996 6570 ericpklin@hsbc.com.hk Azura Shahrim +852 2996 6976 azurashahrim@hsbc.com.hk Natural Resources Daniel Kang +852 2996 6669 danielkang@hsbc.com.hk Chris Chan +852 2996 6619 chris.chan@hsbc.com.hk Gary Chiu +852 2822 4297 garychiu@hsbc.com.hk Steven Hong Xing Li +852 2996 6941 stevenhongxingli@hsbc.com.hk Sarah Mak +852 2822 4551 sarahmak@hsbc.com.hk Scully Tsoi +852 2996 6620 scullytsoi@hsbc.com.hk Consumer & Retail Jessie Guo +852 2996 6572 jessieytguo@hsbc.com.hk Percy Panthaki +91 22 2268 1240 percypanthaki@hsbc.co.in TMT Tucker Grinnan +852 2822 4686 tuckergrinnan@hsbc.com.hk Steven C Pelayo +852 2822 4391 stevenpelayo@hsbc.com.hk Yogesh Aggarwal +91 22 2268 1246 yogeshaggarwal@hsbc.co.in Neale Anderson +852 2996 6716 neale.anderson@hsbc.com.hk Nam Park +852 2822 6591 nampark@hsbc.com.hk Rajiv Sharma +91 22 2268 1239 rajivsharma@hsbc.co.in Walden Shing +852 2996 6751 waldenshing@hsbc.com.hk Frank Su +8862 8725 6025 frankkssu@hsbc.com.tw Shishir Singh +852 2822 4292 shishirkumarsingh@hsbc.com.hk Wanli Wang +8862 8725 6020 wanliwang@hsbc.com.tw Tse-yong Yao +852 2822 4397 tse-yongyao@hsbc.com.hk Small & Mid-cap Suman Guliani +91 80 3001 3747 Sandeep Somani +91 22 2268 1245
sumanguliani@hsbc.co.in sandeepsomani@hsbc.co.in Latin America Patrick Boucher Head of Research, Americas +1 212 525 7632 patrick.j.boucher@us.hsbc.com Alexandre Gartner Head of Equity Research, Brazil +55 11 3371 8181 alexandre.gartner@hsbc.com.br Juan Carlos Mateos Head of Equity Research, Mexico +52 55 5721 3607 juan.mateos@hsbc.com.mx Consumer Brands & Retail Manisha A Chaudhry +1 212 525 3035 manisha.a.chaudhry@us.hsbc.com Francisco J Chevez +1 212 525 5350 francisco.j.chevez@us.hsbc.com Pedro Herrera +1 212 525 5126 pedro.herrera@us.hsbc.com Diego Maia +55 11 33718192 diego.t.maia@hsbc.com.br Lauren Torres +1 212 525 6972 lauren.torres@us.hsbc.com James Watson +1 212 525 4905 james.c.watson@us.hsbc.com Financials Victor Galliano +1 212 525 5253 victor.galliano@us.hsbc.com Mariel Santiago +1 212 525 5418 mariel.x.santiago@us.hsbc.com Transportation & Logistics Vanessa Ferraz +55 11 3371 8190 vanessa.c.ferraz@hsbc.com.br Natural Resources and Energy Jordi Dominguez +1 212 525 3460 jordi.x.dominguez@us.hsbc.com Lucia Marquez +1 212 525 7669 lucia.x.marquez@us.hsbc.com Reginaldo Pereira +55 11 3371 8203 reginaldo.l.pereira@hsbc.com.br Eduardo J Gomide +55 11 3371 9502 eduardo.j.gomide@hsbc.com.br Anisa Redman +44 20 7991 6822 anisa.redman@hsbcib.com Telecoms, Media & Technology Richard Dineen +1 212 525 6707 richard.dineen@us.hsbc.com Sean Glickenhaus +1 212 525 4131 sean.x.glickenhaus@us.hsbc.com Equity Strategy Garry Evans Global Head of Equity Strategy +852 2996 6916 garryevans@hsbc.com.hk Vivek Misra +91 80 3001 3699 vivekmisra@hsbc.co.in Steven Sun +852 2822 4298 stevensun@hsbc.com.hk Jacqueline Tse +852 2996 6602 jacquelinetse@hsbc.com.hk