Here is our Weekly Foreign Fund Flows report. In it, you'll find comprehensive details on what foreigners are buying and selling in Vietnam. | Foreign Fund Flows Commentary | Reacting to the currency devaluation, foreigners turned net sellers of Vietnamese equities with a total value of VND474.2bn (USD21m) after having injected USD18.6m in the last review period. Foreigners represented 11.4% of total trading compared to 9.4% last week.   Foreign ETFS were net buyers of USD3.7m worth of shares this week, after withdrawing USD1m in the previous week. The Van Eck Market Vector was selling USD6.9m worth of shares, while the DB x-Tracker ETF ejected USD10.6m.   Foreigners focused on buying DPM VND19bn (USD887k); HSG VND17.8bn (USD794k); HHS VND16.7bn (USD744k) and selling PVD VND91.8bn (USD4.1m); SBT VND48.7bn (USD2.2).   As the latest sign of stress in Asian exchange rates following China's depreciation of its Yuan last week, Vietnam devalued the Dong, for the third time this year, by 1% and widened the trading band to +/-3%;.   The widening of the Dong's band came a day after China's surprise policy shift heightened the risk of a currency war. Vietnam posted a trade deficit of USD300 million in July as export growth slowed to 9.5% in the first seven months of 2015, compared with 14.1% a year earlier.   | Fixed Income | The VND devaluation during the reviewed week pushed G-bond yields to rise. China devalued the RMB over three consecutive days starting August 11, forcing other countries, including Vietnam, to effectively devalue their currencies to support exports. The State Bank of Vietnam widened the dollar trading band from +/-1 percent up to +/-2 percent, on August 12^th. Almost immediately the VND/USD exchange rate reached its new ceiling price. Investors lost their appetite for government bonds, prompting both issuing volume in the primary market and trading value in the secondary market to plummet. At the same time, interest rates in the interbank market surged, reaching nearly the same rates as the open market. Outlook: Next week, bond yields are expected to rise further. Please click on this link for the full report   | In the News | Vietnam set to finalise policy on scrapping foreign ownership limits Source: MergerMarket Thiensurat [BKK:TSR], a Thailand-based water purifier distributor, plans to form joint ventures in Vietnam, Indonesia and the Philippines, Thunhoon reported. Citing Director Ekarat Chaeng-u, the Thai-language report said that the company will study the investment plan to distribute its products to other ASEAN nations through joint ventures with local partners. Thiensurat targets revenue to reach THB 1.5bn (USD 42.31m) in 2015, according to the report.   VPBS Equity Research Summary   Our Research department issued three reports in the last week. They published an initiation on Sacombank (HSX: STB) with a HOLDrecommendation and a target price of VND17,700. They also published a macro update and a special report; the first was on the impact of the VND devaluation and the second was on the impact of oil prices on the O&G sector. Sacombank - A leader in retail banking with the largest branch network awaiting to the merger with Southern Bank (PNB). (Initiation, HOLD, VND17,700, STB VN) Click HERE to download the Initiation Report At its current price of VND17,100 per share, STB is trading at 1.03x our EPS and 8.54x our book FY15E estimates. We recommend a HOLDon STB as we believe the stock valuation is pretty cheap with its PB (8.54) twice lower than its peer (15.88), although the PNB's NPLs will hurt STB balance sheet. Investment thesis:

• STB has a strong history: Over the past 20 years, STB has been a leader in retail banking with the largest branch network and a history of innovating new products, such as Chinese language branches, international payment systems and credit card products
• STB has lagged behind strong gains in other banking stocks: Bank stocks have outperformed the VN-Index on expectations of higher credit growth, improving asset quality, an M&A boom, and increased FOL room. However, STB appears to be lagging behind its peers, rising only 1.67 percent y-t-d
• Burdens from PNB merger cloud profit growth outlook: Due to financial burdens from the merger with PNB, STB forecasts PBT to decline at a CAGR of -22.17 percent from 2015 to 2017. VPBS's forecast is even more conservative at -29.3 percent, chiefly because of extraordinary provision expenses.
• PNB NPLs will hurt STB balance sheet: PNB has an NPL ratio of 9.98 percent, restructured loans of about VND7,000 billion (USD318 mn), interest receivables of over VND14,000 billion (USD636 mn), VND4,500 billion (USD204 mn) of receivables from stock repos, and other amounts owed. We assume a minimum NPL ratio for the next few years of three percent for STB and a surge in investment which will actually be disguised restructured loans.
• Controversy surrounding major shareholders has required SBV intervention: SBV has required the Mr. Tram Be will not run STB post-merger. Despite a number of BOD and BOM member of the new bank being PNB ex-executives, SBV representatives on the BOD and BOM of the bank post-merger will likely help to ensure that the bank will operate safely and efficiently.

Neutral short-term trend: News regarding PNB and STB has been out for more than a year but STB stock price remain relatively stable over the same period. We expect STB's stock price to remain stable or even increase over short-term to midterm horizon Please feel free to contact me should you like to learn more about this investment opportunity.   SBV adjusts the exchange rate for the third time this year Click HERE to download the Macro Report   On August 19, the State Bank of Vietnam (SBV) increased the average interbank USD exchange rate by one percent from VND21,673 to VND21,890. The SBV also increased the trading band from +/- 2 percent out to +/- 3 percent. As a result, the ceiling price is now VND22,547 while the floor price is VND21,233 per USD.   These moves followed last week's moves on August 12, when the SBV expanded trading band from +/- 1 percent to +/- 2 percent. The SBV had stated at the end of last year that it would not increase the exchange rate by more than two percent this year. But it had already used up this quota by increasing the interbank exchange rate by one percent on January 7 and again on May 7.   Today's moves therefore bring the total increase in the reference rate to three percent this year. Furthermore, the widening of the band actually allows for a five percent devaluation year-to-date to the new ceiling price.   However, in our opinion, the exchange rate adjustment this time is a correct, reasonable and timely decision, following the new movements of the market.   This year, several key currencies have been devalued against the USD, including the JPY, RUB. Perhaps most significantly, China devalued the Yuan (CNY) by 4.6 percent over a period of three days this month. Devaluations this year through August 18 have included: JPY (-3.24%), RUB (- 12.04%), CNY (-5.44%), while a few currencies have recovered from their poor performances last year, including: EUR (+8.15%) and AUD (+9.25%).   Global Oil Glut and Impacts on Vietnam's Oil & Gas Sector Click HERE to download the Special Report   Global Oil Glut Oil price has gone down by almost 30 percent since the beginning of 2015 and by over 60 percent since its five year's peak in 2011. Earlier this year, it rebounded to above USD60 per barrel and there was talk of a recovery but now it has declined back toward USD40. There is talk among many economists that the price could even head toward USD20. This has severely decreased the number of oil rigs in operation on a global scale and markedly discouraged investments into this sector. We therefore thought it important to discuss the implications of lower oil prices for the global economy, the Vietnam economy and on companies in Vietnam's oil & gas sector. Oil & Gas Sector Conditions in Vietnam Due to difficult sector conditions, especially since mid-2014, the O&G sector in Vietnam has been affected to a certain degree, depending on certain segments within the O&G sector. This has adversely influenced not just profit levels of many O&G companies but also depressed their stock prices on the market. In our opinion, upstream O&G companies such as GAS, PVD have been most seriously affected. Then come midstream companies such as PVS, PVC, PGD, and the least affected are downstream companies like PGS, CNG, PGC. In fact downstream companies may even benefit from production materials dropping in price faster than selling price of their final oil and gas products causing their profit margin to potentially improve. Summing it up, unpredictable and unfavorable oil price movement causes an overall pessimistic view by investors on all O&G stocks and shrinking bottom lines for some companies, causing the entire sector to underperform compared to VNIndex at least in the short term. UPSTREAM SEGMENT

• GAS - Gross profit declines as selling prices fall faster than input costs
• PVD- Short term prospects affected by falling drill rates and lower workload

MIDSTREAM SEGMENT

• PVS- Profitability remained steady despite falling oil price
• PGD- Benefiting from new input price mechanism, profitability improved
• PVC- Revenue from drilling fluids segment shrank, profit suffered

DOWNSTREAM SEGMENT

• CNG- Increasing volume from new gas field, profit margin stable despite oil drop
• PGS- CNG segment continues to do well, LPG segment sees shrinking profitability
• PGC- Input price decreased faster than selling price, profit margin improved

  Please feel free to contact me should you like to learn more about these investment opportunities.

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