The State Bank of Vietnam reportedly sold US$2 billion worth of US dollars last week in order to keep the dong from devaluing, according to Nguyen Duc Khang, Head of Analysis at Pinetree Securities Company and reported by Dau Tu Online. This would reduce the bank’s current foreign exchange holdings to around US$82 billion about two-and-a-half months’ worth of imports which is concerning in that the IMF recommends countries hold enough to cover three.

Of note, Khang is also quoted as saying that the SBV holds a sizable amount of its reserves in US Treasury bills and that if the SBV doesn’t want to sell these at a loss it can only really sell around US$12 to US$14 billion worth of its current reserves.

For some additional context, Hai Quan Online is carrying comments from several key economists with Tim Leelahaphan from Standard Chartered advising the firm is expecting a .5 percent increase in interest rates next year, and Michael Kokalari from VinaCapital predicting a 3 percent decline for the dong next year.

State Bank continues aggressive open market operations

The State Bank of Vietnam, alongside selling US dollars, has also continued to carry-out open market operations. Specifically, there were US$2.9 billion worth of reverse repos outstanding as of close of business December 26 and US$3.56 billion in treasury bills outstanding.

Media news

Netflix blocked from showing ‘unscripted’ television shows in Vietnam

Netflix has been prohibited from showing scripted television programs on its platform in Vietnam and will only be able to offer films that have been approved and classified by the Vietnamese authorities. Netflix has reportedly already complied with the request.

Of note, it had first been reported that it had been barred from showing television programs altogether but this appears to have been incorrect. The narrative that is circulating now, according to VN Express, is that companies streaming television programs need a local office whereas streaming sites that show only films do not. Though VN Expresst doesn’t say this explicitly, it seems that the difference between a television program and film is determined by whether it is scripted or not.

This is the latest in a series of moves made by the Vietnamese authorities to push Netflix to open a local office. The firm was reportedly set to do so at the end of last year, however, this never materialised and this latest development makes it seem that it is unlikely that it will. That said, Google, which is in a similar situation, is set to officially open its local office earlier next year which could offer some insights into what Netflix might expect should it follow the same path.

Real estate news

Land values in Hanoi increase by up to 270 percent on new land laws

Land values have skyrocketed in Hanoi by as much as 270 percent in some places in line with moves to increase land values to be more in line with their actual market value, through reforms to Vietnam’s Land Law. The most expensive part of Hanoi was found to be Hoan Kiem where the land value has been set at 695.3 million VND per-square-metre.

Official land values have been depressed in the past by laws through which the central government would set land prices once every five years. This, however, caused problems in that officially land values would fall largely out of step with their true market value with buyers either paying extra off the books or land owners refusing to sell altogether.

This has now changed to local governments setting prices annually, however, the gap between the past official value and real market value has blown out in recent years which means there are big jumps in prices now being made.

Stock market news

Challenges surface from revised securities regulations

Vietnamese securities firm, Vietcap Securities, has notified the Securities Commission that the Netherlands’ Aegon Custody BV has failed to make payment on a trade completed on its behalf by Vietcap on December 17. Vietcap is currently footing the VND 4 billion bill.

For context, changes to the Securities Law via Circular 68, that kicked in at the start of November, overturned previous regulations that required foreign investors to make payment at time of purchase. The change has made it so that now the responsibility for the payment falls on the securities firm conducting the trade.

This was actually a significant change in that the former pre-pay requirement was one of several criteria preventing the local stock market from being upgraded from a frontier to a secondary emerging market. With this in mind, this latest development speaks to the practical outcomes on the ground and how the Securities Commission responds, if it chooses to do so, could speak to how further changes to the Securities Law might be made moving forward.

Foreign traders continue to exit market, net-sell US$12.7 million

Over the last five trading sessions to the close of business on December 26, foreign investors net-sold US$12.7 million worth of HCMC Stock Exchange stocks. This is in line with months of mass withdrawals from the exchange by foreign investors. Specifically, foreign traders this year have net-sold just shy of US$3.58 billion.

Foreign trader activity, last five trading days

	Buy		Sell		Change
Date	VNDbns	US$	VNDbns	US$	VNDbns	US$
20/12	2,435	$95,734,225	2,405	$94,554,747	30	$1,179,477
23/12	1,256	$49,380,775	1,536	$60,389,227	-280	-$11,008,453
24/12	1,718	$67,544,722	1,673	$65,775,506	45	$1,769,216
25/12	1,527	$60,035,384	1,279	$50,285,040	248	$9,750,344
26/12	1,303	$51,228,622	1,668	$65,578,927	-365	-$14,350,305
Total	8,239	$323,923,727	8,561	$336,583,448	-322	-$12,659,721

Source: Vietnam Stock Market Tracker

The week ahead

There are a handful of events coming up. For more information see the: Doing Business in Vietnam: Events Directory 2024

Also, Vietnam is a dynamic market that is changing rapidly. To keep updated to date with the business environment and how it is evolving make sure to subscribe to the-shiv.

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