On October 8, Vietnamese real estate tycoon Zhang Meilan, who once cooperated with Li Ka-shing , was suddenly arrested. The police said that his related company was suspected of illegally issuing bonds and raised trillions of Vietnamese Dong .
The news caused an uproar in the industry, which not only caused large Vietnamese banks to suffer bank runs, but also caused the Vietnamese stock market to collapse.
Since the beginning of this year, the Vietnamese government has set off a financial anti-corruption storm and has stepped up efforts to rectify the real estate market. Against this background, many Vietnamese real estate tycoons, including Zhang Meilan, were sent to prison.
. As Vietnam's policy and financial environment continue to tighten, which company will be the next one to crash?
Vietnamese Chinese The richest woman was arrested, and a large bank suffered a run
Zhang Meilan, the fourth generation of Vietnamese Chinese, whose ancestral home is Shantou, Guangdong Province, is the founder of Wanshengfa Group. The group's business covers real estate, transportation infrastructure and other fields. It is the largest private real estate enterprise in Vietnam.
Since Wan Shengfa Group has not been listed yet, no one knows how much money Zhang Meilan has, but she is generally called the richest female Chinese in Vietnam.
On October 8, Vietnamese police announced the detention of Zhang Meilan and other relevant personnel, saying that he was suspected of illegally issuing bonds between 2018 and 2019 and raised trillions of Vietnamese dong.
After that, rumors about Saigon Commercial Bank (SCB) related to the case spread on Vietnamese social media, triggering a run against the fifth largest bank in Vietnam.
To appease the market and depositors, Vietnamese regulator said on Saturday that it would conduct a "special review" of the SCB, which raised the interest rate to re-attract depositors.
Vietnam Central Bank Governor Nguyen Thi Hong immediately came forward to explain that SCB has confirmed that Anton Company (a company related to Zhang Meilan’s illegal bond issuance) is not a shareholder of SCB Bank, and Zhang Meilan does not hold a management position in the bank. Therefore, Zhang Meilan's arrest will not affect the normal operation of SCB Bank.
Nguyen Thi Hong said that the bank has taken "necessary measures" to ensure the normal operation of Saigon Commercial Bank and the liquidity of the bank.
The endorsement of the central bank temporarily calmed the run, but Zhang Meilan's arrest highlighted the serious risks facing the entire Vietnamese economy.
Real estate tycoons were arrested one after another
In fact, before Zhang Meilan, many real estate tycoons had been arrested in Vietnam for illegal acts, and related real estate groups were successively in full swing. The two most famous cases were the New Huangming and FLC Group.
At the end of 2021, Xinhuangming Group won the bid for a land auction organized by Shoutian New District, Ho Chi Minh City for 2.45 trillion Vietnamese Dong.
Before the auction, Xinhuangming Group issued bonds nine times, with a total value of up to 10 trillion Vietnamese dong. However, the buyer is Xinhuangming Group itself. Xinhuangming packaged these bonds into derivatives that can be invested in, and then lured investors to buy by promising high returns and other means. Less than two months after the successful bid for
, Xinhuangming Group quietly announced its withdrawal from the transaction, resulting in the loss of investors who purchased the product.
htmlOn April 4, the Vietnam National Securities Commission canceled the issuance of these 9 bonds on the grounds that the public information is inconsistent with the actual situation and the issuance information is hidden. On April 5, the Vietnamese Ministry of Public Security investigative agency prosecuted and detained Du Yingyong, chairman of Xinhuangming Group and six related people on the grounds of "fraudulent and possession of others' property."Since the Xinhuangming incident, the Vietnamese government has set off a financial anti-corruption storm and has begun a comprehensive review of various bond issuing companies. Against this background, Zhang Meilan was arrested.
In addition, in addition to Du Yingyong and Zhang Meilan, the chairman of Vietnamese real estate developer FLC Group Zheng Wenjue was arrested in March this year for suspected manipulation of the securities market.
House prices are out of control, and the government has accelerated the tightening of credit
As the government vigorously rectifies the real estate industry, Vietnam's real estate prices are almost out of control.
According to an earlier report from Securities Times , in the first half of 2022, the housing price increase of Ho Chi Minh, the largest city in Vietnam and the capital Hanoi squeezed into the top ten in Asia, among which Ho Chi Minh City increased by more than 20% in the first half of 20, with an average price exceeding RMB 35,000. Some media also reported that in April 2022, Ho Chi Minh City's housing prices had reached a record high in 10 years.
In recent years, with the accelerated growth of Vietnam's economy and the continuous development of manufacturing, a large number of hot money poured into the real estate market, and land prices and housing prices continued to soar.
In order to cool down the real estate market, the Vietnamese government has begun to tighten credit policies.
In May 2022, the Ho Chi Minh City Branch of the Central Bank of Vietnam required that all credit institutions in the city should strictly control credit approval in the real estate sector. In addition, Vietnam Foreign Trade Bank, Vietnam Technology and Commercial Shares Bank and other banks have also announced that they would restrict the issuance of loans related to real estate business.
In August 2022, Vietnamese Vice Prime Minister Li Wencheng said that he would strengthen supervision of real estate companies' bond sales to avoid speculation and price manipulation.
In September 2022, Vietnam's Deputy Governor Tao Mingxiu made a clear statement that the central bank will strengthen the review of bank loans, especially in risk areas such as real estate projects.
Bank bad debt rate rebounded, capital adequacy ratio fell, and the financial industry was full of hidden dangers
Zhang Meilan's arrest highlighted the risks of Vietnam's real estate, and also exposed the fragility of the financial industry in this Southeast Asian country.
Ring Asia Economic Data (CEIC Data) data shows that the capital adequacy ratio of banking in Vietnam has continued to decline in recent years. By June 2022, the capital adequacy ratio of Vietnam's banking has dropped from a high of 14.3% in May 2013 to 11.5%, of which the asset adequacy ratio of state-owned banks is only 8.9%.
Bank bad debt rate has also begun to rebound.
According to data previously provided by Tao Mingxiu, Vietnam's bank bad debt rate in 2021 was about 1.9%, higher than 1.7% in 2020. According to media reports, as of June this year, the non-performing loan ratio of of Vietnam listed banks has slightly risen to around 2.1%.
In 2012, the lending boom and poor regulation led to a surge in bad debts in Vietnamese banks, arrested senior bank executives and stock markets plummeted. The non-performing loan ratio was 17% at that time.
VIP DongExchange rate continues to depreciate, debt risks climbing
In addition, Vietnam's economy, households and businesses are rising.
As of the second quarter of this year, Vietnam's total debt was approximately US$160 billion, and the debt scale was 1.5 times that of forex .
On Monday, the Vietnamese central bank announced that it would expand the trading range of the Vietnamese dong against the US dollar from the previous 3% to 5%. This shows that Vietnam is willing to tolerate the further weakening of the Vietnamese dong.
Since the beginning of this year, the aggressive Fed interest rate hikes have put general pressure on emerging market currencies, and the Vietnamese Dong cannot be avoided. Although the economy has provided some support for the exchange rate, the Vietnamese Dong-USD exchange rate has fallen by nearly 7% so far this year and is currently operating at its historical low.
In order to defend the exchange rate, the Vietnamese central bank was forced to raise interest rates sharply and sell out a large number of US dollars.
After the Federal Reserve raised interest rates by 75 basis points in mid-September, Vietnam's central bank stabilized its domestic foreign exchange market, and announced an emergency rate hike of 100 basis points on September 26, the first rate hike since the outbreak of the epidemic in September 2020.
Vietnam has been selling US dollars in recent months. As of September, Vietnam's foreign reserves have dropped from 109.6 billion yuan at the beginning of the year to 101.4 billion US dollars.
This article comes from Wall Street News, welcome to download the APP to view more
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-