CLMV economy and financial market. Research department Last updated February 2015

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1 CLMV economy and financial market Research department Last updated February 2015

2 CLMV economy and financial market Economic fundamental Money market Capital market

3 Economic fundamental CLMV Economic Heat Map (Data are as of 2013) Remarks Thailand Cambodia Laos most Myanmar Vietnam vulnerable vulnerable less vulnerable least vulnerable I. Growth Real GDP growth (%) < -3% -3%-0% 0%-3% > 3% Export growth (%) < -3% -3%-0% 0%-3% > 3% II. Fiscal Policy Indicators: Fiscal balance (% GDP) < -3% -3%-0% 0%-3% > 3% Government debt (% GDP) > 60% 40%-60% 20%-40% < 20% III. Domestic Vulnerability Indicators: Inflation rate (%) > 8% 5%-8% 3%-5% 0%-3% Unemployment rate (%) > 8% 6%-8% 4%-6% 2%-4% Credit growth (%) n/a 12.5 > 20% 10%-20% 5%-10% < 5% IV. External Vulnerability Indicators: Current account balance (% GDP) < -3% -3%-0% 0%-3% > 3% External debt (% GDP) > 40% 30%-40% 20%-30% < 20% International reserves (#months of imports) < > 9 3

4 Economic fundamental Economic size and growth 2014 Gross Domestic Product GDP growth (billion USD, estimates) (%YoY, estimates start after 2013) Cambodia Laos Myanmar Vietnam Thailand GDP, USD 380 million Cambodia Laos Myanmar Vietnam Source: International Monetary Fund 4

5 Economic fundamental Economic structure 2013 Economic structure by sector 2013 Exports and Imports to GDP (% of GDP) (% of GDP) Cambodia Laos Vietnam Agricultural Industry Service Thailand Agriculture : Industry : Service, 12 : 43 : 45 Source: World Bank Note: No information of Myanmar Cambodia Laos Vietnam exports of goods and service imports of goods and service Thailand exports : 74, Imports : 70 5

6 Economic fundamental International trade Volume of exports of goods and services Volume of imports of goods and services (% YoY, estimates start after 2013) (% YoY, estimates start after 2013) Cambodia Laos Myanmar Vietnam Cambodia Laos Myanmar Vietnam Source: International Monetary Fund 6

7 Economic fundamental Foreign direct investment Foreign direct investment net inflow and major investors (million USD) 1 Malaysia 25%* 2 China 12% 3 Taiwan 8% 6 Thailand 4% 1 Vietnam 25%** 2 China 18% 3 Thailand 16% 4 Korea 4% 1 China 25%*** 2 Thailand 18% 3 Hong Kong 16% 4 Singapore 4% 1 Japan 15%**** 2 Singapore 13% 3 Korea 13% 17 Thailand 3% 8,900 7,6007,430 6, , ,5202,255 1,079 Cambodia Laos Myanmar Vietnam Thailand FDI 2013, USD 12,650 million Source: Foreign direct investment net inflow value from World Bank * Council for the Development of Cambodia, percentage of total cumulative registered investment value, August 1994 to November 2012 ** Department of Investment Promotion, percentage of total cumulative registered investment value Y2000 to September 2012 *** Directorate of Investment and Company Administration, percentage of total cumulative foreign registered investment value Y1988 to April 2014 **** General Statistics Office of Vietnam, percentage of total cumulative foreign registered investment value until December

8 Economic fundamental International tourist arrivals International tourist arrivals (thousand) 7,572 6,848 6,251 5,050 4,210 3,584 2,882 2,508 2,140 1,670 1, International tourist receipts (% of GDP) Cambodia Laos Myanmar Vietnam No. of international tourists in Thailand in 2013, 26.5 million Source: Asian Development Bank Cambodia Laos Vietnam International tourist receipts of Thailand in 2013, 10.8% 8

9 Economic fundamental External stability Current account balance (% of GDP, estimates start after 2013) External debt (% of GDP) Cambodia Laos Myanmar Vietnam Source: Current account from International Monetary Fund External debt from World Bank Cambodia Laos Myanmar Vietnam 2013 Thailand current account balance, -0.6% of GDP 2013 Thailand external debt, 35% of GDP 9

10 Economic fundamental Internal stability Inflation (% YoY) Unemployment (%) Cambodia Laos Myanmar Vietnam Cambodia Laos Myanmar Vietnam 2013 Thailand inflation, 2.2% 2013 Thailand unemployment, 0.7% Source: World Bank 10

11 Economic fundamental Fiscal policy Fiscal balance General government gross debt (% of GDP) (% of GDP) Cambodia Laos Myanmar Vietnam Cambodia Laos Myanmar Vietnam 2013 Thailand inflation, -1.8% 2013 Thailand government gross debt, 45.8% Source: World Bank 11

12 Economic fundamental ICT Infrastructure Internet user (per 100 people) Fixed broadband internet subscribers (per 100 people) Cambodia Laos Myanmar Vietnam Cambodia Laos Myanmar Vietnam 2013 Thailand internet user 28.9 per 100 people 2013 Thailand fixed broadband internet subscriber 7.36 per 100 people Source: World Bank 12

14 Money market Domestic credit Credit Credit growth (% of GDP) (%YoY) Cambodia Laos Vietnam Cambodia Laos Vietnam 2013 Thailand domestic credit 94% of GDP 2013 Thailand credit growth 10.5% Source: National Bank of Cambodia,Bank of the Lao PDR, The State Bank of Vietnam 14

15 Money market loan to deposit ratio and interest rate 2013 Loan to Deposit ratio (%) 2013 Interest rate (% annual) Cambodia Laos Myanmar Vietnam Cambodia Laos Myanmar Vietnam deposit rate lending rate 2013 Thailand loan to deposit ratio 96.5% 2013 Thailand deposit rate 2.25%*, Lending rate 6.9%** Source: National Bank of Cambodia,Bank of the Lao PDR, The State Bank of Vietnam, World Bank, Report: Myanmar s Financial Sector, A Challenging Environment for Banks; Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH *average 12M deposit rate of 5 large commercial banks, **average MLR rate of 5 large commercial banks 15

16 Money market Banking segment Number of bank in Cambodia foreign branch 100% foreignowned Specialized Private State-owned Laos 35 representative office of foreign banks in Myanmar and will be licensed 99 5 foreign branch subsidiary 25 Private joint venture Private Semi-govern 10 State-owned* 4 State-owned 7 Myanmar Source: National Bank of Cambodia,Bank of the Lao PDR, The State Bank of Vietnam, World Bank, Report: Myanmar s Financial Sector, A Challenging Environment for Banks; Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH * Lao state-owned bank include 1 policy bank ** Vietnam data as of 2012, Vietnam state-owned bank include 2 policy banks 49 4 Vietnam 100% foreignowned Foreign Branch Joint Venture Joint Stock State-owned** 16

17 Money market Banking segment Market share of the largest segment in 2013 (Market share by total asset: % share) The largest bank Cambodia Acleda Bank Plc. (asset share 18%) Laos Banque pour le Commerce Exterieur Laos public (BCEL) (loan share 26%) Myanmar Myanmar Agricultural Development Bank (in terms of loan) Cambodia Laos Myanmar Vietnam State-owned Private Vietnam The Vietnam Bank for Agriculture and Rural Development (asset share 12%) Source: National Bank of Cambodia,Bank of the Lao PDR, The State Bank of Vietnam, World Bank, Report: Myanmar s Financial Sector, A Challenging Environment for Banks; Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH 17

19 Capital market Market size and sector Market capitalization (million USD, % of GDP; Data as of Feb 13, 2015) 26.7% 50,123 PPWSA (water supply) 62% Cambodia Grand Twins (garment) 38% LWPC (exhibition hall) 4% EDL-Gen (energy) 79% Laos PTL (energy) 8% BCEL (Banking) 9% 0.9% 11.5% 146 1, % 6,562 Cambodia Laos Hochiminh Hanoi SET market capitalization USD 469,916 million, 123% of Y2014 GDP Sector weight Sector weight Financial 35.4% ICT 1.7% Manufacturing 23.1% Agriculture 0.7% Electricity, gas 16.2% Admin and Support Service 0.2% Real estate 12.6% Arts entertainment 0.1% Wholesale and Retail trade 3.3% Accommodation and Food service 0.1% Construction 2.5% Professional 0.1% Transportation 2.2% Water supply 0.0% Mining and quarrying 2.0% Hochiminh Source: Cambodia Securities Exchange, Lao Securities Exchange, Hochiminh Stock Exchange, Hanoi Stock Exchange Note Hanoi Stock Exchange has not show market capitalization by industrial sector 19

20 Capital market Market performance 2014 Index movement Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 YTD Index movement Data as of Feb 13, Dec-14 Jan-15 Jan-15 Jan-15 Jan-15 Feb-15 Feb-15 Hanoi Thailand Laos Hochiminh Cambodia Thailand Hochiminh Hanoi Laos Cambodia 18% 15% 13% 6% - 25% 7.9% 7.6% 2.9% 0.2% - 9.1% Source: Bloomberg 20

21 Capital market Market liquidity Daily average trading value (million USD, data for Jan 2 - Feb 13, 2015) 2014 Investor proportion by trading value (%) Cambodia Laos Hochiminh Hanoi 2014 YTD2015 Cambodia Laos Hochiminh Hanoi Local Foreign SET daily average trading value USD 1,282 million Source: Cambodia Securities Exchange, Lao Securities Exchange, Hochiminh Stock Exchange, Hanoi Stock Exchange 21

22 Cambodia Laos HOSE Vietnam Officially open Share holder Regulator Capital market Stock exchange background Cambodian government 55% The Korea Exchange 45% Securities and Exchange Commission of Cambodia (SECC) Bank of the Laos PDR 51% Korea Exchange 49% Laos Securities Commission Office (LSCO) No. of Member 11 3 Top market share* BCEL-KT Securities Company Limited (82%) Government-owned HNX Government-owned Ministry of Finance (MOF), The State Securities Commission (SSC) 91 Top 3 by market share** 1.Saigon Securities (13%) 2. Hochiminh City Securities (12%) 3. Viet Capital Securities (6%) 89 Top 3 by market share** 1.Sai Gon Ha Noi Securities (8%) 2. Saigon Securities (8%) 3. Hochiminh City Securities (7%) Source: Cambodia Securities Exchange, Lao Securities Exchange, Hochiminh Stock Exchange, Hanoi Stock Exchange * Data as of 2013 ** Data as of 3Q

23 Capital market Counter parties Cambodia Laos HOSE Vietnam HNX Clearing house Depository center CSX acts as clearing house which refer to Securities Depository Center's roles as Central Counterparty CSX Securities Depositary Center LSX perform transaction confirmation netting of settlement obligation payment amounts and deliverable securities. Laos PDR Securities Depository Center The Vietnam Securities Depository (Wholly State-Owned Limited Liability Company) Securities registration LSX Settlement bank Acleda Bank; Canadia Bank and Bank of Investment and Development of Cambodia Bank of Laos No information Custodian bank No custodian bank Bank of Laos Bangkok bank the first custodian license (custody service) in Laos (Feb 20,2015) No information Source: Cambodia Securities Exchange, Lao Securities Exchange, Hochiminh Stock Exchange, Hanoi Stock Exchange 23

24 Capital market Product and Listed companies Product and Listed Cambodia companies Laos Eligible securities Stocks Stocks Index CSX Index LSX Composite Index No.of listed companies* Industrial Sector* HOSE Vietnam HNX Stocks, Investment fund certificates, Stocks, Government bond and ETFs Corporate bond and Government bond VNAll Index; VN30 Index; VNMid Index; VNSML Index; VN100 Index No sector classified No sector classified 15 Top 3 largest sectors by Mk.cap. 1.Finance, Banking & Insurance (35%) 2. Manufacturing (23%) 3.Electricity, gas, stream and air conditioning supply (16%) HNX Index; HNX FF Index; HNX30 Index; HNX(Large, Mid, Small) Index; HNX Finance Index; HNX Construction Index; HNX Manufacturing Index, UPCoM Index (Unlisted public company) 365 listed stock market 173 UPCoM market 11 (listed stock market) Top 3 largest sectors by listed value 1.Finance (40%) 2. Manufacturing (15%) 3. Mining and quarrying, Oil & gas(15%) Source: Cambodia Securities Exchange, Lao Securities Exchange, Hochiminh Stock Exchange, Hanoi Stock Exchange * Data as of Feb 13,

25 Capital market Trading and clearing (1/3) Trading hour Minimum trading unit Daily price change limit Cambodia 08:00 11:30. Opening call auction runs from 08:00 09:00, followed by continuous trading from 09:00 11:00 and closing call auction is held between 11:00 11:30. Laos 08:30 11:30. Opening call auction runs from 08:30 09:00, followed by continuous trading from 09:00 11:20 and closing call auction is held between 11:20 11:30. HOSE Stock Morning Session: Afternoon Session: Bond Morning Session: Afternoon Session: Vietnam HNX Listed stock Morning session: Afternoon session: UPCOM Morning session: Afternoon session: Bond Morning session: Afternoon session: share 1 share 10 shares 100 shares within ±5% of previous day s closing price within ±10% of previous day s closing price within ±7% of previous day s closing price within ±10% of previous day s closing price Source: Cambodia Securities Exchange, Lao Securities Exchange, Hochiminh Stock Exchange, Hanoi Stock Exchange 25

26 Capital market Trading and clearing (2/3) Cambodia Laos HOSE Vietnam HNX Tick size (local currency) < 4,000 = 10 4,000 - <20,000 = 20 20,000 - <40,000 = 50 40,000 - <100,000 = ,000 -<200,000 = ,000 -<400,000 =500 >400,000 =1,000 <10,000 = 50 10,000- <50,000 =100 50,000- <100,000 = 200 >100,000 = 500 <50,000 = , ,000 = 500 >100,000 = 1,000 Tick size (in THB) < 32 = <160 = <320 = <800 = <1,600 = ,600 -<3,200 = 4.00 >3,200 = 8.00 <40 = <200 = <400 = 0.8 >400 = 2.0 <80 = = 0.80 >160 = 1.60 Source: Cambodia Securities Exchange, Lao Securities Exchange, Hochiminh Stock Exchange, Hanoi Stock Exchange 26

27 Capital market Trading and clearing (3/3) Trading commission levied by stock exchange (% of trading value) Trading fee levied by securities companies (% of trading value) Cambodia Laos Stock : 0.15% Stock : 0.15% Bond : 0.015% Varies between broker 1.2% for seller 0.9% for buyer (When a trade has been executed, customers (Investors) shall pay less than 3% of trading value to securities companies.) Settlement cycle T+2 T+2 HOSE Vietnam HNX Stock and Investment fund certificate : 0.03% Government and Corporate bond : % 0.15% T+3 rolling settlement. for stock and investment fund certificates T+1 for fixed income instruments (Effective from Sep 4, 2012, VSD shortened equity settlement and clearing timelines, with cash funding to be available by 16:00 on T+2 and securities to be settled by 8:45 on T+3.) Source: Cambodia Securities Exchange, Lao Securities Exchange, Hochiminh Stock Exchange, Hanoi Stock Exchange 27

28 Capital market Vietnam Bond market Bond outstanding (billion USD) Sep-14 Govt.bond outstanding (LHS) Corp.bond outstanding (LHS) % total of GDP (RHS) (% of GDP) Source: Asian Development Bank Note: no formal information of Cambodia Lao P.D.R. and Myanmar 28

29 Capital market Laos Baht Bond lot Date Issue size (billion baht) Tenor Coupon rate 1 Sep Y 4.5% 2 Dec Y 5Y 3 Oct Y 5Y 7Y total 9.0 Twin Pine Consulting Co.Ltd., the Thai advisory firm assist bond issued. 4.6% 5.2% 4.76% 5.2% 5.5% Source: Various source 29

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31 Appendix 1 Myanmar banking sector 31

32 Appendix 2 Lao PDR banking sector 32

33 Appendix 3 Vietnam Settlements and securities administration detail (1/2) I. Organization and institutions For both Hochimint and Hanoi Clearing House The Vietnam Securities Depository (VSD), Wholly State-Owned Limited Liability Company. Central Depository On May 3rd 2006, VSD took over all the securities registration, depository, clearing and settlement functions from Sucurities Registration Hochiminh Securities Exchange and Hanoi Stock Exchange Participants: 131 (as of 31 December 2013) - Securities companies - Domestic custodian banks - Foreign custodian banks - Domestic commercial bank as direct account holding members Capital: VND 1,000 billion of charter capital (app. USD 47,169,811) II. Clearing and Settlement System Clearing system Novations and CCPs Settlement Cycle Settlement Method VSD (Immobilized) On Nov 22, 2012, VSD held a roundtable to discuss the idea of a CCP for the Vietnam market. The CCP is expected mainly to serve the derivatives market which will be launched in T+3 rolling settlement. for stock and investment fund certificates T+1 for fixed income instruments Effective from Sep 4, 2012, VSD shortened equity settlement and clearing timelines, with cash funding to be available by 16:00 on T+2 and securities to be settled by 8:45 on T+3. Settlement of STC transactions is centralised in the Bank of Investment and Development of Vietnam (BIDV), which is a state-owned commercial bank 33

34 Appendix 3 Vietnam Settlements and securities administration detail (2/2) Depository System Depository Account Type III. Post Trade fee and charges IV. Risk and Default Management Securities Lending and Borrowing Lender as the last resort Buy-in Reserve Fund Clearing Fund Immobilization. Omnibus Account All securities traded on both market are held in the name of the registered owners at the VSD. Custody is based on a central registration book entry system. Normally, at securities companies, investors mus pay brokerage fee and depository fee. Brokerage fee is paid when a securities transaction is executed at the request of the investor. Depository fee is charged so that the securities is deposited. Even when there is no trading activities, when there is any securities in the account, the investor has to pay the depository fee. Securities lending and borrowing is currently not available in the Vietnamese securities market VSD is developing the infrastructure and a SBL system to support the trading of ETF certificates. The penalty is 1% per day for the first 5 days based on the value of the borrowed securities and 6% per day from the sixth day onwards. The value of the borrowed securities is calculated as the closing price of the previous trading day multiplied by the quantity of the borrowed securities. There are no buy-in procedures - Upfront: 120 million VND - Annual: Securities Companies: 0.01% brokerage revenue of securities listed and registered for trading at stock exchanges of the previus year, but no more than 2.5 billion VND per annual. Commercial Banks: 0.01% brokerage revenue of securities listed and registered for trading at stock exchanges which is setlled through commercial banks of the previus year, but no more than 2.5 billion VND per annual. Maximum contribution: Depository member who is commercial bank; 15 billion VND 34 Depository member who is securities company having brokerage function; 20 billion VND