Shares of the Market Vectors Vietnam ETF (NYSE:
) are trading higher by 1.9 percent Thursday and are residing
near the highs of the day after Prime Minister Nguyen Tan Dung
told a state-controlled media agency that his country has room to
lower interest rates.
Vietnam's struggles with inflation have not only hampered the
central bank's ability to cut rates, but also prompted a series
of currency devaluations in years past. Vietnam's full-year
inflation could come in around seven percent for 2012, below the
7.5 percent goal of the government,
Reuters reported, citing the Vietnam Economic
Vietnam's benchmark interest rate, currently nine percent, has
not been cut in more than two years. With high lending rates
charged by banks to businesses and a slowing Vietnamese economy,
banks, business owners and market participants in Hanoi have been
clamoring for the central bank to cut rates.
While VNM is sporting an impressive year-to-date gain of about
19 percent, most of that upside was accrued in the first quarter.
The ETF proceeded to struggle in the second and third quarters
following the arrests of multiple Vietnamese banking luminaries
and news of a rising number of bad loans.
ETF has been showing signs of life in recent
. In the past month, VNM is up 10.6 percent and today's move to
the $17.30 area is the first time VNM has resided in that price
range since August.
The Reuters piece highlights the fact that Vietnamese banks
have "ample funds," something Benzinga noted in the second
when reporting that Vietnamese banks had $575
million in excess cash
Strong bank balance sheets and improved sentiment toward
Vietnamese financial services are two factors critical for VNM's
potential upside heading into 2013. The ETF, which has almost
$277 million in assets under management, devotes a combined 47
percent of its weight to banks, real estate firm, insurance
providers and companies classified as diversified financials.
Adding to the ebullience for VNM on Thursday is the ETF's
volume. At a time of year when traders are away from their desks
and trading volume across many asset classes slows to a crawl,
nearly 183,000 shares in VNM have changed hands today. That is
more than 28 percent above the daily average.
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