Web stories-r1:AMM grid in qxp 12/24/09 9:30 AM Page 18
Calyonforesees2010fixedincomemarketvolatility
FrédéricLainé,Calyon’sheadoffixedincomemarketsforAsiaex-Japan,
discussesthebank’splansfornextyearandchallengestowatchoutfor.
Asiamoney.com[AM]:Whatdoyouexpectfor FL:Oneofthethingsforusistogrowourareasof
2010foryourbusinesses? strength.We’reanetworkbankinAsiaandhave
localimplementationandaccesstolocalcurrency
FrédéricLainé[FL,pictured],headoffixed [inmanycountrieshere].Oneofourstrengthsis
incomemarkets,Asiaex-Japan,Calyon:The thelocalcurrencybusinessinAsia.
sametimelastyearwewereveryfocusedoncred- Thisissomethingthatworksinourfavour.
itriskandthatislessofaconcerntoday,butI Becauseofthecrisis,Chinahasbeenmassively
wouldliketoaddawordofcautiononhowthe stimulatingitseconomyandasaresultisamas-
Dubaistorydevelops.Fromnow,marketrisks siveimporterwithinAsia.Thatmeanscross-bor-
andvolatilitymightbegreaterissues. dertransactionshaveincreased.
Whatmightcausethat?Thereisafeelingthat WithinChina,ourmedium-tolong-termplan
interestratescouldmovefasterinAsiaasthe istoparticipateintheeconomicgrowthofthe
Asianeconomyisexpectedtoreboundearlier countryandlocalcurrencydevelopmentaswell.
thantherestoftheworld.Also,we’reseeing WearealsogoingtoaddtoourDCM[debt
recordsinassetssuchasgoldpricesandalsothe capitalmarkets]andcommoditiesteams.We’rea
yen.Marketriskwillcomebacktotheforefrontin balancesheetbanksowehavesignificantrela- FL:Newplayersaregoodforliquidityinthemar-
2010. tionshipswithourclientsandwewanttobeable ketplace.Nobankwantstobeasoleplayerinthis
Thereneedstobeabalanceofthat.Ifthere toofferawholespectrumofproductsfromstruc- businessbecausewetransferriskfromoneplace
isn’tenoughvolatilityit’sgoingtobehardforus turedfinancingtovanillasegmentsthroughloans toanotherthroughtheinterbankmarket.
togenerateincome.Butifit’stoovolatile,Iwould orbonds. Inanotherway,thefactthatsomeotherplay-
sayitwouldbetooriskyandtoodifficulttoman- erswanttoincreasetheirpresenceisvalidation
ageprofitably. AM:Therehavebeennewplayerstryingtoget thatthisisprobablyarightmarket.However,you
intothefixedincomemarketinAsia.Whatdo havetobecautiousaboutovercrowdingandprice
AM:Whatareyourplanstogrowthebusiness? youmakeofthecompetition? competition.
VietnamurgedtofocusonFDItoachievestability
Economistsarguethatpolicy-makersinVietnammustencourageFDItofinancethetradedeficit.
Greaterforeigndirectinvestment(FDI)and growingtradedeficit,whichhitUS$10.2billion toattractthenecessaryFDI.“Iftheycanachieve
sounderfundamentalsholdthekeytoVietnam fromJanuarytoNovember. thatresult,itwouldbeanimpressiveoutcome,”
achievingstabilityinthelongerterm,says Robinsonbelievesthatthegovernmentneeds hesays.
Moody’
sEconomy.com. toencourageFDI,whichwouldhelptoshift FDIintoVietnamhastakenahitthisyear
Thenation’seconomicprogresshasbeen relianceawayfromportfolioflowstofinancethe becauseofthefinancialcrisis.Itdropped10.4%
calledintoquestionaftertheStateBankof country’stradedeficit,asportfolioflowscan toUS$9billioninthefirst11monthsof2009
Vietnam,thecentralbank,decidedtodevaluethe moveoffshoreatthefirsthintoftroubleandcan fromthesameperiodayearbefore.
dongby5.4%to17,961againsttheUSdollaron bedestabilisingtotheeconomy. Someinvestorshavealsobeenwaryofinvest-
November25. “Thereislingeringuncertaintyofwhatcould inginVietnambecauseofinflation.Prices
Thismovecaughtsomeinvestorsbysurprise happeniftherewasaverymarkedanddisorderly increasedtoasix-monthhighof4.4%year-on-
andhasheightenedconcernsaboutinvestingin exitofalotofcapitalfromtheeconomyandit yearinNovember.
thecountry. raisesquestionsaboutfinancingthecurrent Toattractlonger-termmoney,Vietnamwill
Thedevaluationwasdesignedtocurba accountdeficitandbeingabletomaintainforeign havetogetitshouseinorder,saidRobinson.
wideningtradedeficit,butsome,suchasMatt reservesstability,”saysRobinson. “There’snosubstituteforsoundeconomicfunda-
Robinson,aneconomistatMoody’s Theoverwhelmingissueiswhetherthe mentalswhenitcomestoFDIlookingforadesti-
Economy.com,believethatencouraginggreater Vietnamesegovernmentwillbeabletoencourage nation,”hepointsout.
FDIflowsisofgreaterimportanceforpolicy-mak- foreigndirectinvestment. Inadditiontocontrollinginflation,Robinson
ers. Robinsonbelievesthatthegovernment’spoli- believesthegovernmentneedstoreducethered
ForeignportfolioflowsandFDImakeupfor- cy-makerswillneedtotreadafinelinebetween tapearoundinvestinginthecountry.“Igetthe
eigninvestmentinflows.Thisisasourceoffor- depreciatingthecurrency,dampeninginflation impressionthatthisissueiscertainlyintheminds
eigncurrencyandhelpsVietnamtooffsetits pressuresandraisingdomesticinterestratessoas ofpolicy-makers,”hestated.
18 DEC2009/JAN2010 ASIAMONEY
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