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Briefing
Global economy
Governments published new economic stimulus package Natural disasters caused severe damages Commodity price reached a peak then plunged

U.S and Europe suffered from heavy losses on public debt crisis

Domestic economy
Net import considerably fell thanks to export FDI, ODA decreased, disbursement rose

Economic Financial report 2011

Government processed revision upon big departments, economic groups Merge of 3 banks SCB FCB and VNT Bank Gold price rose by VND 7mil/oz, enlarging the gap between domestic and global level to VND 3-5mil/oz.

Stock market
MoF officially issued Circular 183 on open funds

VN Index fell by 27.46%, HNX Index 48.6% to lowest ever

Net buying of foreign investors hit 4 year lowest, out floor trading gained attention Revenue decreased, expense rocketed

Real estate market

Real estate in Ha Noi strongly fell FDI on real estate plunged Government approved of Ha Nois general planning Real estate is categorized as non - manufacturing

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Compiled by Date analysis and Editorial division CafeF

Address: Floor 18, VTC Online building, 18 Tam Trinh, Hai Ba Trung, Ha Noi Tel: 04 39743410. Ext: 295 Fax: 04 39744082 Email: info@cafef.vn

Stock date updated

15

Excluding BVH, MSN, VIC and VNM, VN Index at 12/30/2011 hit 203.9, P/E and P/B on HOSE stayed at 6.25 and 1.31

Outstanding real estate projects TOP 100 richest people on stock market

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Economic Financial report 2011

GLOBAL ECONOMY
U.S and EU suffered from public debts On 08/02/2011, U.S raised its debt ceiling by USD 2.4 thousand bil to prevent bankruptcies. On 08/05/2011, its credit rating was downgraded to AA+ from AAA by S&P. U.S Treasury bonds stayed behind Britain, Germany, France or Canada on rating. 5 EU governments went bankrupted due to debt crisis and incessant credit rating downgrades: Spain, Italy, Greece, Ireland and Portugal. EIU lowered forecast on GDP growth of eurozone to 0.3% in 2012. There was no exceptional agreement to improve current situations. Arab spring exploded in Middle East, North Africa Arab spring initially occurred in Tunisia when a vegetable vendor on being suppressed by police fired himself. It took 1 year for protestors and strikers to bring down Zine El Abidine Ben Alis regime. At the end of 01/2011, strikers poured down to Tahrir square in Cairo, Egypt and turned down Hosni Mubaraks regime. In Libiya, choosing to fight against NATO and protesters, Muammar Qaddafi failed and was arrested on 10/20/2011. Abdullah Saleh fought until other governments in Gulf forced him to hand over utmost power on 11/23/2011. China competes with US for no1 in global manufacturing In 2010, Chinas manufacturing sector exceeded U.S to be global no1 since World War II. At the end of 2011, a downward global economic negatively affected Chinas economic growth. Final figure has not yet been released which ignited another competition between these two in 2012. Natural disasters exerted serious damages A 9 richter degree earthquake and tidal wave in Japan on 03/11/2011 killed 15,000 people, destroying cooling system at Fukushima Daiichi nuclear factory, bringing the world to worse nuclear disaster ever since Chernobyl. As announced by Japanese authorities, it takes 40 years to surmount all those damages. Additionally, there are deathly disasters: flood and landslides in Brazil in 01/2011; earthquake in New Zealand in 02/2011; storm in U.S on 04/2011; typhoon in U.S in 05/2011; volcanic eruption in Chile in 06/2011; Irene storm in U.S in 08/2011; forest fire in U.S in 09/2011; earthquake in Turkey in 10/2011; flood in Philippines in 12/2011 (death toll of over 1,000 people). U.S was under impact of at least 12 natural disasters, causing USD 1bil damage at maximum and serious human loss. Total financial damage hit USD 50bil. National authorities simultaneously introduced economic stimulus package On 09/22/2011, Fed announced Operation Twist of USD 400bil in which, Fed will sells USD 400bil short term bonds (within 3 years) to purchase USD 400bil long term bongs (within 630 years) from 10/2011, ending at 06/2012. In Sept, BoJ decided to loosen monetary policy in terms of extending scale of asset purchasing program from Yen 40,000 bil to 50,000 bil. Financial assets fund was increased from Yen 10,000 to 15,000 bil. On 11/30/2011, the first time in 3 years, Chinese central banks decreased obligatory reserve ratio by 0.5 points, On 11/30/2011, Chinas central bank reduced obligatory reserves for the first time in 3 years to 0.5 percentage point to 21% for large central banks, validated from 05/12/2012.

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Economic Financial report 2011

GLOBAL ECONOMY
On 11/30/2011, 6 global central banks created bilateral swap program to guarantee supply to any currency on requested. This expires on 02/01/2013. On 12/08/2011, ECB reduced essential rate in eurozone by 0.25 percentage point to 1%. Currencies went down On 03/18/2011, G7, for the first time of a decade, interfered with foreign currency market after an exceptional Yen increase. On 03/15/2011, Japan injected over Yen 15 thousand bil into market for Commodity market price reduction. In 08/2011, Japan decreased Gold price Yen. On 10/31/2011, Japan secondly reduced Gold price in 2011 rose by 10% to set record at Yen in 3 months. 1,923.7 USD/oz (09/06) due to safety demand On 09/06/2011, Swiss national bank (SNB) regarding accelerating public debt in Europe and harbored its franc at 1.20 franc/euro with a view global crisis. to weakening franc. ETF increased holding gold figure to 2,370 tons, On 10/11/2011, U.S Senate penalized China on highest ever, which equals productivity of all not raising Yuan. In total of 2011, Yuan rose by global gold mines in 2011 and higher than any only 3.83%, 30% lower than real price as national holding except for U.S, Germany, Italy assessed by U.S. and France. Global stock market Changes of main indexes (Source: FT) Index
S&P 500 FTSE 100 CAC 40 Ibex 35 DAX Hang Seng Straits Times RTS S&P/ASX 200 NZX 50

Movements of significant currencies against USD in 2011 (Source: FT)

Change
0.00% -5.55% -15.89% -11.74% -12.78% -19.97% -17.04% -22.02% -14.51% -1.04%

Central banks purchased a 4 time gold figure higher than prior year at 450 tons, specifically Russia, Thailand. Gold warehouses were overloaded, hiring expense hit records. New places were built up to meet raising demand.

Gold price in 2011 (Source: Kitco)

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Economic Financial report 2011 Political intension pushed up oil price Crude oil price reached record, WTI at 95.11 USD/barrel, Brent at 110.91 USD/barrel due to political instability in Middle East and Northern Africa. Fighting between protestors and loyalty group towards Muammar Qaddafi gave fall by 1.5mil barrels/day to oil from Lybia. Intension among Iran and western countries on nuclear issue at the end of year gave fuel to energy market. Commodities reached a peak then turned downwards Commodities price hit years records on a weak USD, strong demand prospective and concerns on supply. Since May when U.S was going to end its QE2 and faced debt ceiling pressure, accelerating public debts in Europe threatening global economic growth, in combination with a rather stable supply, however, commodities turned to downward trend. Compared to previous peak level, commodity indexes such as CRE (19 items), GSCI (24 items) fell by 30%.

Ending 2011, CRB lost 7%, GSCI fell by 1.2% first in 3 years.

Commodity Price Change YTY (Source: CafeF, Barclays Captial) Divestment from commodity market at the end of year In the beginning of the year, funds and investors massively purchased commodities on a positive outlook. However, since price fall and climbing gold as well as economic instability, all goods were sold off for investment transfer or cash. The trend became transparent later and overpoured into gold market after MF Global breakdown biggest global brokerage, pushing price down. According to statistics shown by US Future Trading Commission, from Sept to Dec, there were on average USD 550mil divested from commodity funds.

DOMESTIC ECONOMY
Net import strongly decreased thanks to export. Export turnover in 2011 was estimated at USD 96.3bil, a 33.3% rise against prior period. Export structure in 2011 remarked considerable changes against 2010. Heavy industry and mineral proportion rose by 4%; light industry, agricultural, aquatic, forestry and gold products slightly decreased. Total import turnover hit an estimated USD 105.8bil, a 24.7% rise against previous year. Net import was estimated at USD 9.5bil.

CPI in 2011 rose by 18.58% Electricity rose twice, gasoline rose twice and decreased 1 time, making CPI in 2011 stay at 18% as modified by Parliament, despite its downward trend and inflation at 18.58% - higher than ceiling level at beginning of the year.

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Economic Financial report 2011

DOMESTIC ECONOMY
Excluding price factor, export turnover rose by 11.4%, import 3.8% over 2010. Thanks to strong export, net import significantly minimized. FDI, ODA decreased, disbursement rose To 12/15/2011, total FDI inflow hit USD 14.7bil (including new registration and additions), a 26% fall by 2010, 76.4% of which is into industry and construction. Despite decreasing inflow, disbursement quality considerably improved against USD 11bil in 2010, equals to realized figure in 2010 and contributed 25.9% to social investment. In sponsor consulting summit, committed ODA figure to Vietnam in 2012 hit USD 7,386bil, slightly falling compared to 2011. Budget overspending stayed below planning Budget overspending in 2011 including principal debt payment hit an estimated VND 111,500bil, equivalent to 4.9%, principal payment proportioned 2.11%, lower than predicted 5.3%. Gains from aids were estimated at VND 674,500bil, rising by 20.6% against 2010 (2nd estimated figure). In which, tax income hit VND 586,151bil, a 21.8% increased over 2010; gain from crude oil hit VND 100,000bil. Loosen, decrease tax levy on many groups In 2011, Government issued documents upon loosening and decreasing tax levy at VND 15 19.5 thousand bil including: supporting package of VND 250,000 for low income group; extending payment period of corporate income tax for SMEs and enterprises with big number of labor and reducing total amount in 2011 by 30%; exempting 5% personal income tax towards income from dividends of stock investors; exempt stock transfer by individual investors from income tax. Government inspected sectors and big groups Process audit work for Ministry of Finance and Ministry of Commerce. 27 groups, general corporations and commercial banks are included in auditing list such as Vinshin, EVN, TKV, Vinalines These actions initially gave out findings such as long term investment of VND 50,000bil and accumulated loss of VND 35,000 bil of EVN; gasoline enterprises with limited efficiency in out of sector investment; audit conclusions of Gasoline Stabilizing fund. Restructuring social capital On 07/08/2011, Decree no 59/2011/ND-CP on transferring 100% state owned enterprises into joint stock companies were issued, making principal base of state owned enterprises restructuring. Equitization direction grasped attention from both domestic and exotic investors, for example, equitization of 10 companies in Ministry of Commerce; 6 of Vinachem; companies in Vietnam Airlines; 6 in Railway general corporation; urban and housing development; members in Song Da group; BIDV; VNSteel, Mobifone; PV Oil, Nhon Trach electricity Mineral resources were put under planning Facing an overloading mineral exploitation, Government announced a strategy to 2020, vision 2030. Government showed no encouragement towards exporting natural resources and definite abandonment on exporting crude minerals. Project certification was approved by Prime Minister.

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Economic Financial report 2011

Finance - Banking
Mobilization According to Ha Noi statistic department, total mobilized figure at the end of 12/2011 hit VND 808,290bil, rising by 2.6% and 1.7% against last month and prior year respectively. In Ho Chi Minh, the number reached an estimation of VND 886.9 thousand bil, 1.8% and 10% higher than last month and 2010 respectively. Credit growth In Ho Chi Minh, outstanding credit balance at the end of Dec was estimated at VND 753.8 thousand bil, 2.1% and 6.3% higher than last month and 2010. Outstanding loan balance of commercial joint stock banks hit VND 381.6 thousand bil, 50.6% total number, 6.5% higher than prior period. In Ha Noi, the number is VND 569,400 bil, 1% and 11.7% higher than last month and prior period, in which, short term outstanding balance is 1.5% and 11.5%, medium and long term is 0.2% and 11.9%.

Trading exchange rate in Dec was modified twice, ending 12/24 at 20,828 VND/USD.

Blue: overnight; Red: 1 week; light green: 1 month Interbank interest rate suddenly rose by 3040%/year at certain periods. Overnight rate reached 20%/year, however, mainly at over 12 month term with no significant trading figure.

According to final banking report 2011, total VND overnight interest rate (%) (Source: means of payments rose by 10%, credit12-13%, MB&TLS) in which VND 10.2%, foreign currencies 18.7%. In 2012, estimated growth is 14-16% and 15- Bond market 17% respectively. In Dec, Treasury mobilized VND 2,150 bil of government bonds through bids at HNX. Since Open market operations Dec, there has been 3 terms including 3 years In Dec, SBV injected about VND 16,428 bil into and 10 years instead of 3 and 5 previously. Open market in two terms: 7 days and 14 days. Interest remained at 14%/year, which was Traded bonds are mainly in 3 years at 12.1%/year. Only VND 50bil of 20 year bonds modified level at 07/04/2011. were successfully trade at 11.2%. Interbank transactions As estimated by State Treasury, mobilization by Below 1 month term took the most considerable bonds hit VND 65,000 bil, 81% target. This is due proportion at approximately 70% total to different factors, outstanding are unattractive transactions. Interest fluctuated between 12.4% interest, underdeveloped secondary market. and 17.5%/year. For overnight trading, interest stayed at 13.4%-14.4%/year.
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Economic Financial report 2011

GLOBAL ECONOMY
Legal documents On 12/15/2011, SBV issued Circular no 40/2011/TT-NHNN on Certification and organization, operations of commercial banks, foreign banks branches, representative office of foreign credit institutions, other foreign entities operating in Vietnam as bank. On 12/15/2011, SBV issued Circular 41/2011/TTNHNN guiding identification and updates of client information based on risk for preventing money laundering. On 12/15/2011, SBV issued Circular 42/2011/TTNHNN on granting syndicated credit to customers by credit institutions. On 12/29/2011, SBV issued Circular no 44/2011/TT-NHNN on internal audit and control of credit institutions, foreign banks branches. On 12/30/2011, SBV issued Circular 45/2011/TTNHNN on foreign currency management towards borrowing and collecting exotic loans. Important news On 12/06, SBV governor officially announced merging of 3 commercial banks including SCB FCB VNT Bank. BIDV as SBVs representative stated its thorough guarantee towards depositors benefits. On 12/24, SBV modified exchange rate 16th time since governors announcement of a below 1% change. Exchange rate at the end of the year hit 20,828 VND/USD. To seriously follow Decree 95 on administrative penalties in monetary and banking sector, SBV Surging price fined Metropole Ha noi with VND 500mil. Also, Ron92 rose by 26.83%, diesel 0.05S 38.3%, oil managing authorities confiscated USD 500,000 33.8%, electricity rose twice (15.28% and 5%), and VND 10bil collected from illegal foreign coal 20-40%, clean water 40% to recording level trading at Eximbank. pushing up other items price. Analysts recommended a ceiling lending rate to support enterprises. A rise by 30% of imported milk and pharmaceutics preyed upon customers. At certain period (July), food price doubled prior
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Gold market Gold price rose by VND 7mil/oz 8%, it hit highest increase by 40% when price reached a peak of VND 49.2mil/oz on 08/23/2011, global price also climbed to top of USD 1,900/oz. At year end, domestic price stayed at VND 4142mil/oz, gold price plunged to USD 1,600/oz. As a rising price pushed up demand, SBV allowed SJC and 5 commercial banks to sell stabilizing fund including Sacombank, ACB, Techcombank, DongABank and Eximbank which made purchased figure hit 10 tons in two weeks. While global price was modified, domestic level remained high, extending price gap to VND 35mil/oz. SBV issued a draft on gold market management to deal with market inadequacies, which is pending for approval. This new regulation will tighten gold slice manufacturing into SJC. Accordingly, SJC will be considered national symbol.

Commodity market

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Economic Financial report 2011

DOMESTIC ECONOMY
year. Gas, steel, constructing materials, animal feeds and consumption goods also dramatically increase. Due to strong importing demand, processing materials remained at highest ever such as coffee, rubber, pepper, pangasius, sprawn, potatoes... Product quality Illegal imports of unclean food products incessantly revealed exerted doubts to customers. Specifically, agar seaweed contains poisonous DEHP; sticky rice and chilla sauce are infected with Rhodamine B; instant noodles contain welding; instant beverages contain coloring elements; chickens are infected with steel flour exposing cancer; water injection to raise cattles weight; illegal import of cattles inner spoiled parts Igniting motorbikes and motors doubted consumers. There have been 40 cases with opening questions, despite certain concerns raised from low quality oil. Material drain to China This year, Chinese merchants massively collected commodities at local regions of Vietnam. Large numbers were seen with agricultural and aquatic products such as chilli, pepper, cashews, coffee, rubber, pork, eggs, yeam, cassava, lychee, fish This impacted market price, troubling purchasing activities of processing enterprises. There was a fact that many had to work for Chinese firms due to input shortage. Export set record Export in 2011 set record with USD 96.3bil, 16bil higher than target and 33% higher than 2010. The number of items with USD 1bil turnover rose from 16 to 22 with 5 of over USD 5bil including garment and textile, crude oil, telephone, footwear and aquatic products. Others remained an impressive growth such as telephone and components 200%, pepper 80%, cassava 82%, steel 65%, rubber 45%, coffee 55%... Many items experienced recording turnover such as: garment and textile (USD 14bil), crude oil (7.2bil), footwear (6.5bil), aquatic products (6.1bil), machineries and equipments (4bil), rice (3.5bil), wood (4bil), rubber (3bil), coffee (2bil)

Import growth in 2011 (%)

70 60 50 40 30 20 10 0 25.4 25.7 18.2 15.9 25.7 14.4 13.8 7.2 1.9 45.2 39.2 30.6 26.1 12 62.2 56.6

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Economic Financial report 2011

STOCK MARKET
Closing 2011, VN-Index was recorded at 351.55, decreasing by 27.46%. HNX-Index 58.74, a 48.6% fall to lowest ever. VKPs stock price was remarked as lowest at VND 900/share. 19/28 securities stock decreased to under VND 5,000; SBS, SME, ORS, APS, AIG fell by over 80% to under VND 3,000/share, this was also seen with real estate stocks such as NVT, HQC, SDU For the first time, Depository center allowed direct payment of dividends as SME was suspended from offset payment. SME was also put into controlling list and allowed to trade at Friday sessions. In 2011, there were 16 closed branches and 23 transaction offices and 15 new branches and 16 transaction offices. Total branches of securities companies are 150 and 83.

HoSE put 5 stocks into warning list including According to Mr Nguyen Son, minister of market DDM, IFS, VES, VPH and VSG, 5 into controlling development, Securities Commission, there are at list including BAS, CAD, CYC, MHC and VKP least 20 securities companies in need of due to 2 consecutive years with losses. DVD and restructuring. The others will consider financial DCC were cancelled listing (disclosure violation), safety regulations to restructure within 2 years. In DCL ceased trading due to delay in submitting 02/2012, VN-30 index will be released. financial reports. 5 stocks publicly stopped listing, Rebounding stock market in 2012 including MKP, IFS, SGT, SQC, V11 At the end of 2011, there have been promises by DVDs director of managing board Le Van Dung Ministry of Finances leaders, SBV and SEC on was sentenced to 4 year in prison due to stock rebounding stock market in 2012. price manipulation, remarking the first case to be According to Mr Vuong Dinh Hue, Minister of put in court since the claim is added into Criminal Finance, there has been general report and law, validated from 01/01/2010. detailed method on recovering stock market IPO, market offers submitted to government. Deputy Minister Vu Van At the end of 2011, BIDV completely sold all Ninh directed MoF, SEC to quickly deploy 84mil shares publicly issued at VND restructuring plans which will turn stock market 18,538/share. In 2011, there were only 6 into main capital channel. enterprises equitized such as Steel corporation According to SEC director Vu Bang, T+2 will be (Vn Steel 60% sold at VND 15,032/share), commenced in 2012, he will continue proposing to Petrolimex (all sold), Cosevco, MHB (28% at VND SBV on separating stock credit from non 11,025/share). manufacturing sector to enable capital inflow. Mr Dang Thanh Binh Deputy Governor of SBV Securities companies faced a hard year stated that capital for stocks will still be under KLS intended to leave securities field, SME, TAS control but at a more appropriate level. was cancelled depository due to liquidity shortage; Ha Thanhs director evaded with a negative VND Mr Nguyen Van Binh, SBV governor said that 100bil, investors sued FLC, HSSC. banking growth will be controlled to prevent banks Truong Son securities (TSS) cancelled brokerage operations, ending membership at HNX and HOSE. Dong Duong securities closed brokerage, transferred investors account to Kim Eng. from absorbing economic capital. Accordingly, mobilized rate will fall and so will lending rate. In upcoming period, SBV will re-identify balance between money and capital market to rebound stock market.
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Economic Financial report 2011

STOCK MARKET
Policy news On 12/16, MoF officially issued Circular 183 on Open fund. According to which, Open funds are not allowed to directly invest in real estate, precious metals, stones and restricted in certain securities type such as not exceeding 20% total asset value into 1 organizationTo be transferred into open type, closed funds need to fully response to 3 criteria on net asset value, investment portfolio and approval by 75% number of current funds. In 2011, MoF issued Circulars on developing stock market such as Circular 74 on allowing margin, open more than one account, trading shares within day; Circular 226 on supervising financial safety for securities company, Circular 37 on processing Decree 85 on penalty towards stock violation, individual responsibility allocation. In December, SEC proposed plan on Restructuring stock market including: Reclassification based on Circular 226); improving listing standards; diversifying investment products HOSE appointed new Chairman of Director Board and General Director. Mr Tran Dac Sinh replaced Mr Nguyen Doan Hung as new chairman; Mrs Phan Thi Tuong Tam replaced Mr Tran Dac Sinh as new General Director. On HNX, net buying value hit VND 645bil (2010: VND 833bil). In general, foreign net buying was recorded at VND 1,800bil 11% of 2010. This followed 2010 trend, however, foreign investors strongly sold at latter half of 2011.

Strongest net buying was seen with 3 most noticeable stocks including VNM Vinamilk (8.6mil units VND 951bil), FPT (16mil units VND 824bil) and CTG Vietinbank (17.7mil units VND 577bil). Not only on floors, VNM and CTG also absorde a considerable foreign capital through separate issuance. Vinamil separately issued 10.7mil shares to foreign investors at VND 130,000/share, gaining VND 1,400 bil, raising foreign holding to 49%. Vietinbank issued 10% share to IFC, gaining USD 182bil. Though once being strongly sold on being cancelled from FTSEs portfolio, FPTs shares were purchased by Orchid Fund, Singapore, therefore, raising this funds holding rate to 10%. At present, room left of FPT stayed at lower than 1%. Others with strong purchase are KDC Kinh Do (11.5mil units VND 404bil), VCB Vietcombank (11.5mil units 354bil), PVD (3.9mil units VND 240bil)

Foreign trading
On HOSE, foreign investors purchased 918 mil units of VND 29,266bil and sold 961mil VND 28,113bil. In which, deals accounted for 1/3 total number. Despite high selling figure, in terms of value, foreign investors still made a net buying of VND 1,153bil 4 year lowest in comparison with 2009 and 2010 of VND 3,195 and 15,370bil.

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Economic Financial report 2011

Vietcombank reached an agreement to issue 15% its share to Mizuho Bank, Japan valuing VND 11.8 thousand bil (USD 567mil). This is going to be processed at the beginning of this year. PNJ and ITC showed up in top 10 net buying of VND 195bil and 154bil respectively thanks to strong purchase by Vietnam Azelea Fund. This funds current holding of PNJ and ITC reached 7% and 20%. On net buying, VIC Vincom (17.6mil units VND 1,819bil) and STB (69.2mil units VND 1,017bil) outstood from others. Net buying towards these stocks occurred throughout the year but mostly in December. In2010, net buying figure of VIC hit 17.6mil units equal to this years net selling of VND 1,659bil. In the case of STB, strong selling happened simultaneously with its purchase of 100mil treasury shares. During the year, Dragon Capital divested from Sacombank and transferred to foreign investors. Others with over VND 100bil net selling include CTD (3.9mil 214bil), HAG (9.9mil 212bil) and CII (6.9mil 122bil). CTDs net selling was due to Dragon Capitals transfer to foreign investors. Despite being strongly sold, HAG and CII attracted foreign capital in terms of bonds. HAG issued USD 55mil of convertible bonds to Temasek Holdings, CII issued USD 40mil convertible bonds to Goldman Sachs. In 2010, HAG was recorded with highest net buying of over VND 2,000bil and USD 55mil convertible bonds also to Temasek Holding.

Top 10 net buying in 2011 Volume (mil) Net buying Name Value Volume (VND Buy Sell (mil) bil) VNM-Vinamilk FPT CTG-Vietinbank KDC-Kinh Do VCBVietcombank PVD-PV Drilling PNJ VCG-Vinaconex REE ITC-Intresco 23.6 58.8 43.7 22.2 37.9 24.0 10.2 21.1 32.5 12.5 15.0 42.8 25.9 10.7 26.4 20.0 5.2 14.1 18.5 4.7 8.6 16.1 17.8 11.5 11.5 3.9 5.0 7.0 14.0 7.8 951 824 577 404 354 239 195 167 164 154

Top 5 net selling in 2011 Volume (mil) Net selling Name Value Volume (VND Buy Sell (mil) bil) VIC-Vincom STB-Sacombank CTD-Coteccons HAG-HAGL CII 21.2 99.4 1.1 29.7 5.0 38.8 168.6 5.1 39.5 11.9 -17.6 -69.2 -3.9 -9.9 -6.9 -1819 -1017 -214 -212 -122

Out floor trading While floor trading remained quiet, out floor operations witnessed remarkable movements. As mentioned above, IFC purchased 10% Vietinbanks share; HAG, CII issued convertible bonds to foreign investors Besides, there are famous cases such as KKR purchased 10% Masan Consumers share at USD 159mil; Diageo purchased 30% Halicos share Especially, many foreign enterprises purchased domestic firms such as Marico purchased ICP, Fortis Health Care purchased Hoan My clinic; Unicham purchased Diana; CJ GGV purchased Megastar, Kirin Holidng purchased Interfood

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Economic Financial report 2011

STOCK MARKET
There are two main points in this trend. Firstly, it is Due to a high interest rate and tightened credit a considerable cash flow into consumption goods policy, 2011 witnessed money scarcity. Hard to (Vinamilk, Masan Consumer, ICP, Diana, borrow or a high expense, unable to mobilize in Interfood) which has expressed an impressive stock market in terms of additional issuance, high growth recently and been under little effects from inventoryare outstanding difficulties of SMEs. economic circles. Secondly, it is Japanese firms to Decreasing revenue, rocketing expense purchase Vietnamese enterprises. Revenue experienced a lower than 5% growth They showed up a great deal in M&A activities, when inflation went high causing increases in specifically Unicharm purchased Diana, Kirin expenses such as salary, interest, management, Holding purchased Interfood, Orix purchased finance. This tightened enterprises income. Nutifood, Daio Paper purchased Sai Gon paper In terms of financial statements in quarter III, total and upcoming is Mizuho Bank purchasing 15% market revenue fell by 25%. To year end, many VCBs share at a record value of USD 600mil. asked shareholders for a decrease in year plan.

Enterprise news
More than 50% listed shares remained a lower than book value A weakening stock market led to a fall in market value of more than 50% listed shares to below VND 10,000 and much lower than net book value. Facing merging pressure, many decided to leave trading floors.

Failure in purchasing treasury shares An incessant fall in stock price defeated intentions to slow down price decrease or create capital surplus on purchasing treasury stocks. New price bottom which was formed due to a capital shortage in the concept of a new hard year for capital mobilization made enterprises come to selling treasury stocks at cheap price. Specifically, SHN sold its shares at half of

A falling market value also exerted hindrance purchased price; NDN sold at 15% lower, SDH towards capital raise. Many big offers were planned to sell at 70% lower, FBT planned to sell unsuccessful such as Nghe An petrol construction when market price stayed below purchased level in (PVA), Dong Hai Ben Tre (DHC) many others the middle of 2009. ceased their plans despite being approved by Sacombank: Opening question of acquisition shareholders meeting such as Anvifish (AVF), In quarter III, there were rumors on Sacombank Ticco (THG), Di An machinery (DZM) being acquired, especially when Dragon Capital High leverage, rising inventory, hard capital and even wife, daughter registered selling a great mobilization deal of shares. The rumor went high when According to financial statements in quarter III, subsidiaries (possessed by STB and other there are 14 enterprises with Total Debt/Total benefiters) registered buying plus unexpected asset at higher than 90%; 50 with Debt ratio at 80purchase of over 100 mil treasury shares. 90% and 80 at 70-80%. Capital leverage reached Vinancafe Bien Hoa Merging trademark in 2011 1:9 (1 capital: 9 debt). Masan Consumer completed its offer and holding Inventory balance at the end of quarter III rose by 50.11% chartered capital of Vinacafe Bien Hoa over 30% against same period. A high inventory (VCF), remarking an acquisition in terms of public resulted in slow asset rotation and inefficient offer in 2011. This took Masan Consumer about capital utilization.
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Economic Financial report 2011

STOCK MARKET
VND 1,100bil. This is regared to bring back mutual benefits. Changing senior staff Changing SJSs General Director, appointing of board members at ORS, changing old leaders at SBS are examples of senior staff change. Many enterprises made changes upon a change in big shareholders such as VCF, FBT replaced its leaders after its capital being mainly held by Masan Consumers and HVG. Securities market cut down staff, operating scale due to a weakening market. In 17 current securities companies, there are 3,417 staff, falling by 370 9.8% against 2010. Their senior staff was also replaced. Out of these above reasons, many made changes due to internal requirements with silent movements in terms of a Decision of Inform such as PGT, TCT, KTT, SEC, DCC, VSP, BPC, BTS, DTC, HNM, TVD, NDN, MKV Restructure became essential Market difficulties and a weak internal systems enhanced restructuring, mainly in terms of staff change, asset liquidation and expense cut. Asset liquidation was strongly seen with SHC, VNA,VOS, VFR, TLC Others chose to reduce number of inefficient branches; many restructured operating regime such as ALP, VCG

REAL ESTATE
2011 depicted a gloom market with weakening supply demand, low liquidity, decelarating price. Price movements favored downward trend with average 30%-40% in Ha Noi and 510% in HCM against beginning of the yera.

Market
Real estate price in Ha Noi significantly climbed down: In 2 months from April to June, ground price in 70% new urban area fell. Noticeably, western projects witnessed a 20-30% decrease such as Kim Chung Di Trach, Gelexinco Le Trong Tan, Van Phu, Van Canh Up to present, regarding to the direction of pushing outstanding loan balance to 16%, banks have accelerated their debts tightening. A new real estate sell-off drove price downward which was started when PVL (Petrol real estate JSC)s investor reduced apartment price by 35%, then Private construction enterprise 1 decreased its price by VND 5-7mil/m2 in VP3 Linh Dam and CT6 Xa La in Bemes Cau Buou. Massive bankruptcy related to real estate: 2011 witnessed continuous bankruptcies of real estate. The first to mention is Nguyen Thi Cuc ( Phu Xuyen, Ha Noi) who used to be notorious for borrowing VND 250bil (VND 10bil/month interest) for investment around Ha Noi. Another is Bui Thi Quyen and Ta Viet Quang (Phung, Dan Phuong, Ha Noi) who initially borrowed VND 200bil with interest up to VND 2,500/1,000,000/day. The case of Nguyen Thi Dau once stirred Ha Dong district, Ha Noi. Nguyen Thi Minh Tam and Nguyen Chi Viet director of Hai Ha real estate company in Bac Ninh also borrowed VND 130bil on a high interest for purchasing villas in Bac Ninh and Ha Noi.

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REAL ESTATE
Conflicts in advanced apartment blocks: 2011 marked a tough year for advanced apartment segment with various sues. In the case of projects under construction, investor disputed with residents on progress, interest, etc, in the case of projects already transferred, participants found it hard to agree upon service fee. 4 most wellknown cases in 2011 include Keangnam Landmark Tower for service fees, Golden Westlake for general and private area, European Vietnam foreign villa for high interest, Quoc Cuong 1 for late transfer without any refunding. FDI on real estate strongly plunged: FDI on real estate in 2011 remarked 5 year lowest. While 2008 hit USD 23.6bil, 2009- USD 76.bil, 2010 USD 6.8bil, 11 month figure in 2011 was recorded at only USD 464mil. This is due to financial hardship encountered by foreign investors and funds which restricted market extension but completed projects in progress. Besides, taking into account current issues such as liquidity, price, real estate market showed no appealing to investors. Low income houses faced hard consumption: Investors showed little excitement towards low income houses projects while customers found these unaffordable. At present, there are several projects receiving registration such as Dang Xa, Dai Mo and Sai Dong, however, with fainted attention. Main reasons include high price (VND 13mil/ m2), intense payment, complicated profiles with obligations on ownership, transfer time, approval. M&A: In the concept of a negative market, merge and acquisition among projects was proved obvious. Analysts stated a strong upcoming growth. Regardless of loans granted from banks, there are considerable options for capital supplementation on finding appropriate partners. These include selling the whole project to a third party, looking for capital contributors, selling
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apartments in big amount, selling trade centre and offices in terms of ground. Holding great land resource, many investors can consider partial selling for capital contribution.

Outstanding policies
Decision 11 on tightening real estate credit: In 02/24/2011, government issued Decision 11 and on 03/01/2011, State bank governor issued Instruction 01. Accordingly, banks tightened credit, reduced outstanding loan on non manufacturing sector, especially real estate against 2010 ( outstanding loan on non manufacturing sector/total balance at maximum is 16%). This tremendously affected real estate market as this is main funding source for projects, leading to great plunge in price and supply demand imbalance. Approving of Ha Nois general plan: On 07/27/2011, Prime Minister approved of General Planning for Ha Noi 2030 and vision 2050. Accordingly, national administrative political center will be moved to My Dinh and West Lake. No change is made towards Departments at Ba ViAlso, central urban areas from belt IV to inner parts are recognized as advanced political, cultural, service, health and educational centre nationwide. Besides, there are 5 satellite urban areas including Hoa Lac, Son Tay, Xuan Mai, Phu Xuyen Phu Minh, Soc Son and eco areas. Specially, there are green corridors between centre and satellites. According to specialists estimation, USD 300 bil, even 400 is needed to process this planning which is about 4 year national GDP. Categorizing real estate into non manufacturing sector: In Nov, SBV released credit institutions from non manufacturing sector except for 4 real estate groups. Forwardingly, Prime Minister issued Directive 2196 partially on widening credit margin for real estate loans in terms of construction of social houses, lending for new houses for people in real needs This directive somehow lightened a way out for real

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Economic Financial report 2011

REAL ESTATE
estate firms and banks, however, it takes time to evaluate effects market. Rescuing real estate: A short while after SBVs issuance of Document 8844, Prime Minister issued Directive 2196/CT-TTg on enhancing real estate market management, clearly signaling about loosening credit margin towards this sector. Prime Minister required SBV to conduct, coordinate with Ministry of Construction and local authorities in revising, maintaining loans towards projects to be completed and express adequate capability to recall capital in 2012.

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Appendix 1: Stock data 2011

1. Market overview
Market scale Index - excluding BVH, VIC, MSN,VNM Newly listed figure - newly listed in December Capitalization (VND bil) % possessed by foreign investors P/E P/B
- excluding BVH, VIC, MSN, VNM

HOSE 351.6 (27.5%) 203.9 305 30 454,563 15.3% 7.90 1.69 6.26 1.31

HNX 58.7(48.6%) 393 29 88,131 9.2% 7.64 0.99

_ _

Upcom 33.8 (25.3%) 131 32 22,731 1.9% _ _

_ _

Closing 2011, all 3 indexes strongly climbed down, significantly HNX Index with 50%. There were only 91 newly listed enterprises (33% against 2010). Excluding BVH, MSN, VIC and VNM, VN-Index at 12/30/2011 was recorded at 203.9, P/E and P/B on HOSE hit 6.25 and 1.31.

P/E P/B
(*) Data updated to 12/31/2011

Stock and money supply, demand in 2011 Dividends paid in cash (VND bil) - December separately Issuance for capital raise (VND bil) - December separately Stocks gained on additional issuance - December separately No of successfully bid stocks 29,942 2,715 15,061 1,348 2,988,119,396 174,572,225 166,310,911

While dividends paid in cash reached approximately VND 30 thousand bil, gains on stock issuance only hit VND 15 thousand bil. Accounting for 2.23bil newly listed shares and shares through capital raise as well as successfully bid figure, total stock supply in 2011 was marked at VND 5.4bil.

Sector Sector figure also favored downward trend, averaging 30% of prior year. Industry and Real estate & construction remarked outstanding decreases by 45.3 and 42.8%. Consumption goods remained upward trend with 3.2% as two highest proportioned stocks (VNM and VCF) strongly rose in 2011. Technology Industry Oil Public service Consumption service Consumption goods Finance Fundamental materials Healthcare

Change (+/- %) -30.8% 31.2% -31.1% -12.9% -9.0% -45.3% -39.1% -42.8% -19.6%

P/E 3.4 10.1 6.1 9.5 6.6 7.7 6.4 7.8 5.6

P/B 0.9 2.3 0.7 3.1 1.2 0.6 1.0 0.9 0.8

Roon left 71.0% 31.8% 75.2% 51.9% 44.3% 78.8% 76.3% 78.9% 79.1%

Cap rate 5.4% 10.9% 4.5% 47.5% 1.4% 2.4% 4.7% 18.9% 1.6%

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2. Stock price HOSE

Code VCF (*) VTF GIL AGD VNM MCP LCM (*) NSC APC PNJ % rise 82.0% 59.9% 57.9% 55.5% 53.2% 47.1% 44.4% 35.5% 30.6% 26.2% Average trading volume 16,522 2,315 25,521 17,725 77,704 6,912 44,636 6,186 54,419 127,493 Code SBS VES KSA HQC BGM
(*)

% fall -90.6% -90.1% -89.3% -87.8% -86.3% -86.3% -83.0% -83.0% -82.5% -81.1%

Average trading volume 100,815 30,048 111,738 504,074 149,375 257,905 25,213 16,932 13,347 21,596

To last trading day on HOSE (12/31), VPL (Vinpearl) experienced biggest rise by 91%. However, due to its listing cancellation for merging with VIC, VCF (Vinacafe Bien Hoa) replaced with 82%. Opposite trend recognized SBS of Sacombank securities JSC with a 90.6% decrease. In December, SBSs price fluctuated around VND 3,000/share VNM biggest market cap stock in the whole market (updated to 12/30/2011) remained one of strongest rise with 53.2

NVT VKP STT

(*)

BAS KSH

(*) Newly listed in 2011

HNX
Code SVN (*) KTS CVN HTB FLC (*) SDG IDV DNP CTB DHT % rise 135.8% 90.1% 63.1% 62.7% 60.8% 48.3% 42.0% 35.5% 34.9% 28.9% Average trading volume 12,791 968 32,508 3,628 67,055 2,143 820 19,372 227 8,013 Code SDU SME NHA ORS V11 SHN SSS APS TIG SJM % fall -87.8% -87.6% -84.3% -84.3% -84.0% -83.8% -83.8% -83.7% -83.5% -83.5% Average trading volume 41,533 86,367 16,320 186,339 16,420 1,134,006 7,395 91,536 83,348 16,594

Similar to HOSE, HNX recorded its strongest rise in 2011 with a newly listed enterprise SVN (Solavina) of 136% against its initial level on 07/26. KTS (Kon Tum sugar) hit the 2nd with exceptional 266.7% separately in December 30 shares showed an over 80% decrease during the year. Many remained low liquidity with averagely hundred shares/ session. (**) Including Upcom, strongest rise and fall recognized in 2011 is accounted to GDW (Gia Dinh water JSC rose by 305%) and SGS (Sai Gon sea transport JSC fell by 93.6%)

(*)Newly listed in 2011

HOSE Blue: Index value; Red: Trading volume

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HNX

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Economic Financial report 2011

3. Foreign trading scale

2011 witnessed 3 exceptional sessions on 2 floors with net buying of 5 mil VND on 02/08 and 6.6mil VNM on 06/27 and net selling of 13mil VIC and STB on 12/21. In 4 year period, net buying and selling value in 2011 remained lowest with VND 1,811bil (65% of HSX) 11.2% against prior year.

Biggest buying/selling in 2011 (VND bil) Code VNM FPT CTG KDC VCB PVD PNJ VCG REE ITC MBB PVS SSI DHG VND Floor
HSX HSX HSX HSX HSX HSX HSX HNX HSX HSX HSX HNX HSX HSX HNX

Net buying 951.3 819.4 577.0 404.4 354.0 239.4 194.5 165.8 163.8 154.4 142.5 122.1 111.9 102.4 98.1

Code VIC STB CTD HAG CII TTP SAM HVG ITA NTL HSG CSM PPC TDH ABT

Floor
HSX HSX HSX HSX HSX HSX HSX HSX HSX HSX HSX HSX HSX HSX HSX

Net selling -1,819.5 -1,017.4 -214.3 -212.2 -122.1 -86.5 -55.6 -53.8 -48.1 -44.7 -40.6 -38.4 -35.4 -33.4 -33.0
(*) v: t ng

VNM, FPT and CTG located themselves as top 3 largest net buying in latter half of 2011 with VND 951.3bil, 819.4bil, 577bil respectively. VIC incessantly remarked biggest net selling value in 2011. STB unexpectedly experienced a VND 900bil net selling in quarter IV, forwarding exceeded nd VIC to hit 2 position.

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Appendix 2: Outstanding real estate projects

No

Project

Investor

Value

Area

Location

Progress

Description

Times City

Vingroup

VND 5,800 bil VND 10,000 bil

364,500 m2

458 Minh Khai Hai Ba Trung Ha Noi Phuc Loi, Phuc Dong, Viet Hung, Gia Thuy, Long Bien, HN Dong Nam, Tran Duy Hung, Ha Noi

Infrastructure and crude construction

The project includes 9 slots 7 for houses and supporting services; 2 for Vinmedicare international hotel. Buildings are planned to be of 22-35 floors. The project includes 1000 villas on 38.2ha, traffic 50ha, trees and water areas 60ha, Vincom Centre trade centre 45,000 m2, Vinmec2 hospital and offices, apartments area, The project includes 4 apartment buildings of 25-29 floors with total 1008 luxury houses and trade centre additionally, Construction area for trade centre, offices, houses is 52.31ha 2.53%. Resident area is 341.66ha 16.51%. Green park area is 1,092.54ha 52.97%,

Vincom Village

Vingroup

183.5 ha

Villa transfer

Mandarin Garden

Golden Gain Viet Nam

25,886 m2

7th floor construction

Dream City

Viet Han

VND 5,800bil

2,069.28 ha

Tam Nong, Phu Tho

Son river

Long Bien real estate company

VND 4,575 bil

117 ha

Hoa Binh, Giang Dien, Trang Bom, Dong Nai

Infrastructure construction

Construction area is 56.5ha including single villas, adjacent apartments and dormitories. Public area is 9.89ha, 29.2ha is for traffic, 15.22ha for green park sport area, 6.19ha for river, lakes. The project includes 2 areas, district 1 lies on the seaside of Truong Sa street of 30ha of seaside villas, hotels, apartments, district 2 of 21.5ha of street

The Empire Thanh Do Group

VND 10,000

51.5 ha

Truong Sa street, Hoa Hai ward, Ngu Hanh Son district,

Infrastructure construction. Planned

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Economic Financial report 2011 bil Da Nang completion in 2018. houses, villas, hotels, Commencement was on 07/24/2011. As planned, streets for walk, houses and infrastructure of district 2 will be completed in quarter 2/2013; villas in district 1 and basic foundation of villas in district 2 in quarter 2/2014; hotels and complex buildings in quarter 4/2016. 8 Phuoc An urban area HUD group VND 6,000 150 ha Nhon Trach, Dong Nai Under construction The project is located on two sides of Nhon Trach new citys traffic axis, with front side on street 1 of 53m wide, adjacent to Administrative centre, 25km away from HCM through 25C street. Housing area is 66ha with 512 single villas, 836 duplex villas, over 1000 adjacent ones. Construction intensity 44%. The project includes 300 street houses with 1 2 basement, 2 floors and upper yard. Each is on 125 m 145 m2, constructing area 381.5 m2. Traffic system in Golden Hills constitute 25.5% with internal, inter, main and separate lanes of 7.5m; 11.5m; 13.5m; 15.5m; 30m; 33m wide respectively. Trung Nam is currently accelerating construction of area As internal lanes.

IJC Becamex IJC Commercia l Town Golden Hills Trung Nam Group

VND 450bil

43,923 m2

New city Binh Duong

Deployment

10

USD 1.67bil

400ha

Hoa Hiep Nam, Hoa Hiep Bac, Hoa Lien, Hoa Vang villages, Lien Chieu district, Da Nang province Center of Binh Duong new urban zone

Traffic infrastructure progress

11

UNI Town

Becamex -TDC

VND 1,300 bil

54,503 m2

Under construction

There are 285 street houses with various areas: 105, 108, 110, 131 and 148 m2, opening at VND 4.8bil/apartment.

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Disclaimer: The information herein is collected and edited by CafeF from public sources believed to be reliable, proved to be valuable for investors. However, we take no charge in any risk exposed to investors on using this report.