Despite the falling VN Index and decreasing stock prices, a lot of stake trade deals have still been made on the OTC market. Stock buyers are the ones who put high expectations on Vietnam’s stock market.

In late January 2011, Halico, an alcoholic beverage company and Diageo, owner of Johnnie Walker brand name and the biggest liquor producer in the world. reached a cooperation agreement. Under the agreement, Diageo will spend 33 million pounds, or 52.6 million dollars to purchase 24 percent of stakes in Halico. Though “shaking hands” with Halico in a cooperative agreement, Diageo will still carry out its separate activities to push up business in Vietnam. It will popularize and trade Johnnie Walker, Smirnoff and Baileys products in Vietnam. A source said that the agreement was reached after three long years of negotiations.

February 28, 2011 witnessed the “marriage” of German insurer ERGO with Vietnamese GIC through a cooperation and investment contract. Under the agreement, ERGO purchased 10 million GIC shares to become a strategic partner of the insurance company. The investment deal worth 380 billion dong brought ERGO to a 25 percent ownership ratio. Besides, ERGO has also committed to give technical support GIC worth 46 billion dong.

Explaining the decision to make investment in GIC, a representative from ERGO said that the French insurer can see the great potentials of Vietnam’s non-life insurance market. The total revenue from non-life insurance market reached 700 million dollar last year and the 20 percent growth rate has been maintained in recent years.

GIC’s deal to sell stakes to ERGO once caught special attention from the public, because it was a surprise that GIC could still sell stakes at relatively high prices, while other insurers still find it hard to look for stake buyers to increase capital as per the request by the Ministry of Finance. In the non-life insurance sector in Vietnam, GIC is considered a middle-class company in both market share and brand name.

VNPost’s deal to contribute capital to Lien Viet Bank with VPSC Company, the savings service provider, also caught special attention from the public. VPSC is a subsidiary of VNPost and has the chartered capital of 163 billion dong.

Making capital contributions to an entity with a company’s value is not regularly seen in Vietnam. It is easy to calculate company’s book value, but it is very difficult to quantify the value of brand name and business advantages.

It is expected that after the deal is completed, Lien Viet Bank’s chartered capital will increase to five trillion dong. Besides, more than 10 trillion dong worth of capital mobilized by VPSC will also be transferred to Lien Viet Bank for use. Lien Viet will inherit the rights, duties and benefits of VPSC.

Analysts said that a clear trend could be seen in 2010 when enterprises contributed capital to profitable enterprises. The capital contribution allowed them to obtain seats in the board of directors and get involved in the restructuring of enterprises, thus making the enterprises more valuable. After that, the capital contributors would withdraw capital from the enterprises.

Analysts still believe that this will still be a major trend in 2011 because the listed market is still unstable due to the macroeconomic problems.

In the latest news, the Hong Kong and Shanghai Banking Corporation HSBC has lowered its predicted GDP growth rate of Vietnam from 7.5 percent to seven percent. The adjustment was made after the government released a message that curbing inflation, not obtaining high growth rate, will be the top priority task in 2011. In order to curb inflation rate, the government will have to tighten fiscal and monetary policies.  Tightening policies is believed to slow down economic growth rate.

HSBC has predicted that the consumer price index CPI in 2011 will drop to one-digit level by the end of 2011 from the 13.2 percent in 2010.

Source: VNN