Vietnam's Land Law Reform: Is it Enough?

Apparently no one, including its drafters, is entirely happy with the revision of Vietnam's Land Law that's been circulated for comment by the Ministry of Natural Resources and Environment. Experts, indigenous and foreign, have detailed problems they see with the current law and what needs to be done to fix it. The National Assembly argued about the draft for two days in October and may vote on a revised text in May. Another scenario has the arguments continuing until the legislature's next session late this year. Vietnam's newspapers have been full of reports and carefully calibrated comment, while in parallel a free-wheeling discussion animates the less well-supervised blogosphere. With all that as prologue, February 1 began an official two month period of public comment. The debate so far is lively, not an orchestrated propaganda exercise on the Stalinist model. It is addressing problems that bear importantly, perhaps decisively, on the vitality of Vietnam's political process and the health of its economy. Some commentators have argued that the process is a critical test of the Communist regime's ability to repair its mistakes, to "fix itself."

Vietnam Stock Movers: Becamex Infrastructure, HAGL, Mien Dong

Shares of the following companies had unusual moves in Vietnam trading. Stock symbols are in parentheses and prices are as of the 2:15 p.m. close in Ho Chi Minh City.

The VN Index (VNINDEX), the benchmark measure of the Ho Chi Minh City Stock Exchange, gained 1.2 percent to 468.26, the highest close since Sept. 15.

Becamex Infrastructure Development Joint-Stock Co. (IJC VN), which develops real estate, advanced 4.8 percent to 13,000 dong. The company will pay a dividend of 1,100 dong a share on May 22, according to a statement on the bourse’s website.

HAGL Joint-Stock Co. (HAG) , the country’s second-biggest listed property developer, jumped 4.2 percent to 32,000 dong, the highest close since March 8. The company will pay shareholders a dividend of 15 shares for every 100 shares they own, according to an exchange statement.

Mien Dong Joint-Stock Co. (MDG) , a construction company, rose 3.7 percent to 5,600 dong, the highest level since April 3. The company will buy back 1 million shares from April 23 to July 19, according to a filing with the bourse.

Vietnam loosens squeeze on real estate lending

Restrictions on real estate lending, which were tightened last year, have been lifted by the central bank, allowing even housing speculators to take out loans.

Nguyen Van Binh, Governor of the State Bank of Vietnam, said real estate loans were restricted last year in an attempt to control inflation.

“Now that liquidity has improved and inflation has eased, the restrictions need to be lifted gradually,” Binh told reporters at a press briefing in Hanoi Wednesday.

Home prices are now more “reasonable” and easing credit rules will help property developers clear their stock, he said, adding that more home sales will boost other sectors including cement and steel.

Binh said the restrictions have been “significantly eased” for both first-time home buyers and speculators. The central bank, however, will continue to limit lending to hotels, resorts and office building developers.

The State Bank of Vietnam on Wednesday cut its interest rates for the second time in less than a month. The refinancing rate was reduced by 1 percentage point to 13 percent, and the discount rate by the same amount to 11 percent.

The central bank also lowered the dong deposit cap for terms of one month and above to 12 percent from 13 percent.

Realty, banking stocks surge on new monetary policy

Real estate and banking shares have become the hottest stocks on the Vietnamese stock market after the State Bank of Vietnam signaled a loosening of monetary policiesto boost lending to realty developers and homebuyers.

By the close of the Thursday session, the benchmark VN-Index of the Ho Chi Minh Stock Exchange (HoSE) rose 6.52 points (1.42 percent) to 465.26 points.

The total trading volume rose sharply to 106 million units, with a total transaction value of over VND1.76 trillion.

The VN30 index shot up with an increase of 9.65 points (1.83 percent) to 537.28 points.

The total trading volume and value reached 35.1 million units and VND811 billion, respectively.

On the Hanoi Stock Exchange (HNX), the benchmark HNX-Index rose 1.03 points to 78.54 points. Liquidity in this market increased sharply from the previous session.

Total trading volume and the value of the market rose 121.7 million shares and VND1.185 trillion, respectively.

Most real estate stocks in the VN30 group continued to hit the ceiling prices, including shares subject to delisting warnings due to heavy losses like QCG of Quoc Cuong Gia Lai. The share hit the ceiling at VND12,300 per share with no remaining surplus stock.

According to HoSE, QCG shares today are placed under warnings due to negative post-tax profits of VND39.83 billion in 2011.

Other realty stocks, including DIG, ITA, KDH and SJS, peaked at their ceiling prices for another session with respective price increase of VND900, VND400, VND1,000, and VND1,700 per share.

In the morning session, most stocks rose strongly. In particular a strong cash flow, excited by the latest decision from the State Bank of Vietnam, was channeled into real estate stocks.

Most real estate stocks are heading up seamlessly from the morning session to their highest price, including DIG (4.6 percent), HDC (5.0 percent), ITA (4.3 percent), LCG (4.4 percent), NTL (4 percent), SJS (4.8 percent), and TDH (4.9 percent).

In addition, bank stocks also rose more sharply than the average rate of the market. Cash flow is returning a strong market.

According to technical analysis, both the VN-Index and HNX-Index are making breakout points and are ready to rise.

Taking a Bath in Vietnam Real Estate

Ho Chi Minh City got a 68-story skyscraper, Vietnam’s tallest, when the downtown Bitexco Financial Tower was inaugurated in 2010. The building, boasting a helipad at the 50th floor, can be seen from almost every part of the city.

It hasn’t been a celebration for the owner, however. Nearly 18 months later half of the building’s office space is still empty and none of the six retail podiums is open. Annualized interest rates reached as high as 23% late last year, and there are plenty of rumors that the owner is trying to sell the building to pay off construction loans. But the company dismisses them. “Bitexco Financial Tower is our pride; we are not selling it,” says Vu Quang Hoi, chairman of Bitexco, a private Vietnamese company that’s invested in more than a dozen other real estate projects, plus infrastructure, energy and mining. “This is a difficult time for businesses, but it is precisely why we need to continue to invest more.”