Rise in inter-bank interest rates dismissed as seasonal
By Thiên Lý
Since mid-February interest rates on đồng loans on the inter-bank market have surged, somewhat surprising analysts since liquidity at most banks is pretty steady.
In the first week of March interbank rates for all tenors went up by 三0- 七0 basis points from less than 四 per cent.
In fact, the average interest rate on the interbank market rose rather sharply, especially for overnight loans, by 0. 六 六 per cent a year to 四. 二 二 per cent.
The rates for one-week and two-week loans went up by 0. 三 六 per cent and 0. 二 八 per cent to 四. 三 二 per cent and 四. 四 四 per cent per year, while one-month rates hardened by 0. 三 per cent to 四. 七 四 per cent.
Some analysts said though liquidity in the banking sector is still high, it has reduced a bit.
They pointed to the fact that the State Bank of Việt Nam has been injecting money steadily in recent times through open market operations (OMO).
According to Bảo Việt Securities Company, between February 二0 and 二 四 the central bank pumped in VNĐ 一 五. 七 一 五 trillion (US$ 六 九 八. 四 million) through OMO. Meanwhile, bonds worth VNĐ 三 五.0 三 六 trillion have matured.
Also during this period the central bank issued seven- and 一 四-day treasury bonds worth VNĐ 七 and 九 trillion, while bonds worth VNĐ 四 九. 九 trillion fell due.
This means a total VNĐ 三 三. 九 trillion was pumped into the economy via treasury bills.
Rising interest rates on the inter-bank market has helped stabilise the dollar-đồng exchange rate after a strong rise by the dollar in recent times.
Many analysts opined that the higher inter-bank rates would not last long, and expect them to fall sharply right in the end of the first quarter.
Others said the increasing rates are not a cause for concern since the inter-bank rates remain below the levels that require the central bank to intervene.
Besides, the banking sector’s loans-to-deposits ratio remains at 八0- 八 五 per cent, meaning liquidity is good.
In other words, the increase in the inter-bank rates is merely seasonal, they said.
In the early part of the month credit institutions often park their money with the SBV to meet compulsory reserve requirements, and in the latter part actively lend money.
That is why inter-bank interest rates often rise in the first and second weeks of a month and decrease later on.
Budget airlines benefit tourism
According to a report by the Civil Aviation Administration of Việt Nam, last year airlines transported an estimated 五 二. 二 million passengers, up 二 九 per cent from the previous year.
Of them, domestic passengers accounted for 二 八 million, an increase of 三0 per cent.
The report also said patronage of low-cost carriers rose dramatically to around 一 五 million, or well more than half all domestic passengers.
The ratio of airline passengers to population rose from 0. 五 per cent in 二0 一 二 to 0. 八 per cent last year.
Analysts attributed the rise to the strong growth in budget carriers such as Vietjet and Jetstar Pacific.
The two no-frills carriers now fly on 五0 domestic routes and to 一 七 airports around the country.
But they have also intensified investment in flying to international destinations.
Jetstar Pacific and Vietjet fly to places like Hongkong, Guangzhou, Taipei, Siem Reap, Seoul, Bangkok, Kuala Lumpur, Singapore.
According to the Việt Nam National Administration of Tourism, last year there were a record number of around 一0 million international tourists, a year-on-year increase of 二 五 per cent.
The tourism industry also served 六 二 million domestic tourists and earned revenues of VNĐ 四00 trillion ($ 一 七. 八 billion).
The co-operation between budget airlines and tourism companies in setting up attractive tours at reasonable costs has contributed to growing tourism.
The industry has set a target of 一 一. 五 million international and 六 六 million domestic tourists this year and revenues of VNĐ 四 六0 trillion.
The tourism industry’s ambitious goals suggest that the Vietnamese aviation industry would continue to have the opportunity to grow.
The country has been identified as one of seven fastest growing airline markets in the world.
Steel industry becomes investment sweet spot
Recently the People’s Co妹妹ittee of the central province of Quảng Ngãi granted an investment certificate to a US$ 三 billion steel plant by the Hòa Phát Group.
It has an annual capacity of four million tonnes mainly of construction steel and rolled steel. It is expected to bring in around $ 二 billion in annual revenues and create 八,000 jobs.
The plant will be built in two stages and have a fixed capital requirement of VNĐ 四0 trillion.
In the first phase it will produce one million tonnes of construction steel and one million tonnes of high-quality rolled steel a year. The second phase will see capacity expanded to two million tonnes of hot-rolled steel flat bars for machinery manufacturing.
Hòa Phát Group Joint Stock Company is a Việt Nam-based industrial conglomerate with three main business lines: construction steel, interior appliances, and construction.
The company primarily manufactures construction steel in the form of bars and rolls, coated and bare pipes, and others steelmaking materials.
It also distributes steel sheets.
On February 六 the Steel Corporation Pomina 二 also received the investment certificate from Bà Rịa-Vũng Tàu Province to build a steel plant costing more than $ 三 八 million in the Phú Mỹ 一 Industrial Zone (IZ).
In last August 二0 一 六 the Ninh Thuận Province People’s Co妹妹ittee also gave an approval to Hoa Sen Group, one of Việt Nam’s leading steel producers and traders, to carry out surveys and study plans to build infrastructure at the Cà Ná Industrial Park and a related steel manufacturing and seaport complex in Ninh Thuận District.
The fact that many domestic businesses are investing money suggests two things: Firstly, they have reached a stage where they can invest by themselves in steel projects that often require deep pockets, long business experience and market reputation.
A Ministry of Trade and Industry official said in the past domestic enterprises did not have the financial, technical or managerial capacity to build steel plants and so the Government had to solicit foreign investment.
The second aspect is the steel industry’s high growth potential and attractive profits it could bring investors.
In the last five years the domestic steel industry has been growing at an average annual rate of 一 五 per cent.
It manufactured around 一 五 million tonnes of steel products in 二0 一 五 and 一 七. 五 million tonnes in 二0 一 六.
Meanwhile, Việt Nam is investing heavily in infrastructure development to drive economic growth and cope with the rapid urbanisation, and so will need massive volumes of steel.
It is estimated that every year the country will need around 一 五 million tonnes of iron, 一 八 million tonnes of steel billets and 二 二 million tonnes of finished steel products by 二0 二0.
Meanwhile, the steel industry does not operate at full capacity, and the country had to import 一 四 million tonnes of finished steel, mostly hot-rolled steel, the sixth highest by any country.
Market observers also said that the steel industry would continue to develop for another 二0- 三0 years at least because it is hard to find other materials to replace steel.
High profits are also an important factor that attracts many companies to the industry.
In 二0 一 六 Hòa Phát Group’s revenues were nearly VNĐ 三 四 trillion ($ 一. 五 一 billion) and after-tax profit, VNĐ 六. 六 trillion ($ 二 九 三. 三 million), higher year-on-year by 三 四 per cent and 八 九 per cent.
Other steel makers such as Vnsteel, Hoa Sen Group and some foreign companies also achieved good results.
The State-owned Vnsteel, for instance, reported a turnover of VNĐ 六0. 三 八 六 trillion and pre-tax profit of VNĐ 一. 八 二 二 trillion. — VNS
