1. LOGO Vietnam Inflation and Investment Strategies Investment Department Jul 2011

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

3. What is Inflation ?

4. INFLATION

5. What is Inflation ? INFLATION

6. What is Inflation ? INFLATION

7. What is Inflation ? INFLATION

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

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

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

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

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

13. Vietnam CPI Basket

14. 186234 Vietnam CPI Basket Housing & construction 10.01% Food and foodstuffs 39.93% 9 10 57 11 11 key items

15. Vietnam CPI Basket 186234 Vietnam CPI Basket Housing & construction 10.01% Food and foodstuffs 39.93% Transport 8.87% Family appliances and tool 8.65% Medicament health 5.61% Textile footgear and hat 7.28% 9 Drink and cigarettes 4.03% 10 Communication 2.73% Education 5.72% Entertainment and tourism 3.83% Other 3.34% 57 11 11 key items

16. Vietnam CPI Basket 186234 Vietnam CPI Basket Housing & construction 10.01% Food and foodstuffs 39.93% Transport 8.87% Family appliances and tool 8.65% Medicament health 5.61% Textile footgear and hat 7.28% 9 Drink and cigarettes 4.03% 10 Communication 2.73% Education 5.72% Entertainment and tourism 3.83% Other 3.34% 57 11 11 key items

17. Vietnam Inflation Overview

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

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

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

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

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

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

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

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

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

27. Investment strategies Vietnam US market CPI current 1978

28. Investment strategies 1978 current Vietnam US market CPI

29. Investment strategies 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 ? 1978 current Vietnam US market CPI

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

31. Vietnam US market CPI 10ys bond yield Investment strategy for 15 coming years (from US experiences) 1.Bonds investment ~ 184% Investment strategies current

32. Vietnam US market CPI 10ys bond yield Stock index Investment strategy for 15 coming years (from US experiences) 1.Bonds investment ~ 184% 2.Stock investment ~ 580% Investment strategies current

33. Vietnam US market CPI Stock index 10ys bond yield Real estate index Investment strategy for 15 coming years (from US experiences) 1.Bonds investment ~ 184% 2.Stock investment ~ 580% 3.Real estate investment ~ 5% Investment strategies current

34. Vietnam US market CPI Stock index 10ys bond yield Real estate index Investment strategy for 15 years coming years (from US experiences) 1.Bonds investment ~ 44% 2.Stock investment ~ 580% 3.Real estate investment ~ 5% Stock Investment strategies current

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