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Lending surge boosts property, construction sectors
Banks have resumed lending to an “astonishing” degree, reviving delayed property projects and boosting construction, investors including Vietnam Property Fund Ltd. said.
“A number of credit lines have reopened, resulting in a visible upturn in construction activity,” Vietnam Property Fund said in a note last week. “Dust-covered projects, inactive over the past 12 months, are going full-speed ahead, and companies are acting to secure material while commodity prices seem low.”
Total outstanding loans increased 15 percent this year through mid-May, Deputy Prime Minister Nguyen Sinh Hung told the opening of the country’s National Assembly on Wednesday, citing a loan subsidy program begun this year to stimulate the economy. Bank lending dried up in the second half of 2008, Vinacapital Investment Management Ltd. said in a note May 12.
The construction industry expanded 6.9 percent in the first quarter from a year earlier, compared with a 3.1 percent growth rate for the economy as a whole. Vinacapital said increased lending has helped fuel a gain in Vietnam’s key stock index this year that has now reached 30 percent, and would also support economic growth.
“The resumption of stable credit growth will help ensure that an economic growth rate of 3.5 percent to 4 percent for 2009 is achievable,”
Vinacapital said. “Looser credit conditions as well as ample liquidity in the private sector, notably from the large sale of private gold holdings in the first quarter, helped to fuel the stock-market rally in April.”
The government is targeting economic growth of at least 5 percent this year, and the International Monetary Fund expects a 3.3 percent expansion. The Ho Chi Minh Stock Exchange’s VN-Index jumped 15 percent in April.
The country is seeing an increase in “risk appetite,” UK-listed Vietnam Property Fund said. “Vietnam’s macro scene continues to improve” amid slowing inflation and “strong” retail-sales figures, said the fund managed by Dragon Capital.
thanhnien, Bloomberg
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