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Vietnam Inflation and Investment Strategies

Vietnam Inflation and Investment Strategies. Investment Department Jul 2011. 1. 2. 3. Inflation introduction. Vietnam Overview. Investment Strategies. Contents. What is Inflation ?. What is Inflation ?. INFLATION. What is Inflation ?. INFLATION. What is Inflation ?. INFLATION.

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Vietnam Inflation and Investment Strategies

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  1. Vietnam Inflation and Investment Strategies Investment Department Jul 2011

  2. 1. 2. 3. Inflation introduction Vietnam Overview Investment Strategies Contents

  3. What is Inflation ?

  4. What is Inflation ? INFLATION

  5. What is Inflation ? INFLATION

  6. What is Inflation ? INFLATION

  7. What is Inflation ? INFLATION

  8. What is Inflation ? • In Economics, Inflation is a rise in the general level of prices of goods and services in an economy over a period of time

  9. What is Inflation ? • Method to measure inflation is CPI (Consumer Price Index) Month over month CPI Year over year Year to date

  10. What is Inflation ? • Method to measure inflation is CPI (Consumer Price Index) Vietnam 1.17% 22.16% 14.61% Month over month CPI Year over year Year to date

  11. Meaning of Inflation • For Government fiscal & monetary policies • For enterprises expenses, salary policies, … • Investors real profit • Employee real income • For countries the living index

  12. 1. 2. 3. 4. Inflation introduction Vietnam Overview Investment Strategies Contents

  13. Vietnam CPI Basket

  14. 1 2 8 9 3 11 10 4 6 5 7 Vietnam CPI Basket Food and foodstuffs 39.93% 11 key items Housing & construction 10.01% Vietnam CPI Basket

  15. 1 2 8 9 3 11 10 4 6 7 5 Vietnam CPI Basket Food and foodstuffs 39.93% 11 key items Housing & construction 10.01% Other 3.34% Transport 8.87% Vietnam CPI Basket Communication 2.73% Family appliances and tool 8.65% Entertainment and tourism 3.83% Textile footgear and hat 7.28% Drink and cigarettes 4.03% Medicament health 5.61% Education 5.72%

  16. 1 2 8 9 3 11 10 4 6 7 5 Vietnam CPI Basket Food and foodstuffs 39.93% 11 key items Housing & construction 10.01% Other 3.34% Transport 8.87% Vietnam CPI Basket Communication 2.73% Family appliances and tool 8.65% Entertainment and tourism 3.83% Textile footgear and hat 7.28% Drink and cigarettes 4.03% Medicament health 5.61% Education 5.72%

  17. Vietnam Inflation Overview

  18. Vietnam Inflation Overview Hyper inflation Phase: 1976 – 1981 % Initial stage after the war REFORM period Wrong economic policies • 1976 – 1981 ~ 60%

  19. Vietnam Inflation Overview Hyper inflation Phase: 1981 – 1988 % Initial stage after the war REFORM period Wrong economic policies • 1976 – 1981 ~ 60% • 1981 – 1988 ~ 514%

  20. Vietnam Inflation Overview Hyper inflation Phase: 1988– 1992 % Initial stage after the war REFORM period Wrong economic policies • 1976 – 1981 ~ 60% • 1981 – 1988 ~ 514% • 1988 – 1992 ~ 46%

  21. Vietnam CPI Overview Phase: 1992 – 2011 Government boosted GDP ASEAN countries financial crisis • 1992 – 2000 ~ 8.2% • 2000 – 2011 ~ 9.4%

  22. Vietnam CPI Overview • Current CPI remain at high level • Tighten monetary and fiscal policies Top ten highest inflation Countries as of Jun 2011

  23. Reasons of Inflation 1. HIGH credit growth for non manufactory industry Credit growth vs CPI Higher credit growth -> higher inflation Delay time: 5 – 8 months

  24. Reasons of Inflation 2. LOW investment efficiency Vietnam ICOR vs CPI

  25. Reasons of Inflation 2. LOW investment efficiency Vietnam ICOR vs other peers countries Vietnam ICOR vs CPI Average line LOWER investment efficiency => HIGHERinflation

  26. 1. 2. 3. . Inflation introduction Vietnam Overview Investment Strategies Contents

  27. Investment strategies 1978 US market CPI current Vietnam CPI

  28. Investment strategies 1978 US market CPI current Vietnam CPI

  29. Investment strategies 1978 US market CPI current Vietnam • Correlation between Current Vietnam and US 1978: • CPI was twice at its peaks within 3- 4 years • US CPI gradually decreased • => VN CPI also gradually decrease in the next 15 years ? CPI

  30. Investment strategies 1978 US market CPI current Vietnam Investment strategy for 15 coming years (from US experiences) CPI

  31. Investment strategies US market 10ys bond yield CPI current Vietnam • Investment strategy for 15 coming years (from US experiences) • Bonds investment ~ 184% CPI

  32. Investment strategies US market Stock index 10ys bond yield CPI current Vietnam • Investment strategy for 15 coming years (from US experiences) • Bonds investment ~ 184% • Stock investment ~ 580% CPI

  33. Investment strategies US market Stock index 10ys bond yield Real estate index CPI current Vietnam • Investment strategy for 15 coming years (from US experiences) • Bonds investment ~ 184% • Stock investment ~ 580% • Real estate investment ~ 5% CPI

  34. Investment strategies US market Stock index 10ys bond yield Real estate index CPI current Vietnam • Investment strategy for 15 years coming years (from US experiences) • Bonds investment ~ 44% • Stock investment ~ 580% • Real estate investment ~ 5% CPI Stock

  35. Thank You !

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