New airline set to join Vietnam’s congested skies

SHANGHAI: Chinese investors flocked into money-market products at a rate outpacing equities and bonds last quarter, adding to what is already the biggest segment of the nation’s mutual fund industry.

Mutual funds investing in low-risk, shortterm debt instruments grew 5.4% last quarter to 7.7 trillion yuan (US$1.1 trillion), compared with the 3.7% increase in bond funds and a drop of 1.3% in equity funds, data compiled by the Asset Management Association of China show.

After a shadow banking crackdown shrank the pool of investment products in China, money market funds are seen as a safer investment as trade war uncertainties weigh on stocks, while offering returns close to those of bonds.

While Chinese equities have rebounded from their lows and corporate notes jumped last month amid a government shift toward easing, analysts say money-market funds will continue to be attractive to retail investors.

“Money market funds offer high risk-ad- justed returns and provide good liquidity to retail investors,” said Huang Li, a Shanghaibased fund analyst at Fitch Ratings.

“Annualised returns of around 4%, against the backdrop of poor performances in stocks and bonds this year, is very attractive. This relative value isn’t likely to change much for the rest of the year.”

China’s money-market funds have nearly doubled in size from 2016, making it the world’s second-largest market behind the United States. — Bloomberg HANOI: Vietnam’s more crowded.

With state-owned Vietnam Airlines JSC and budget carrier VietJet Aviation JSC serving one of the world’s busiest routes, property developer FLC Group JSC wants a piece of the action with a new airline, operating 37 routes in the country after its inaugural flight in October.

Called Bamboo Airways, the new airline still needs a government aviation licence before operating and is seeking to capitalise on the nation’s growing middle class and rapidly expanding tourism industry.

The International Air Transport Association (IATA) forecasts Vietnam will be among the world’s top five fastest-growing air travel markets in the next 20 years.

The route between Hanoi and Ho Chi Minh City is already the world’s sixth-busiest in terms of passenger numbers last year, according to IATA.

The aviation industry handled 23.6 million passengers during the first half of the year, a 15% increase from the same period last year, according to Hanoi’s General Statistics Office.

“With a good investment, well-prepared staff and new aircraft, we will become a giant right after we launch the airline,” chairman Trinh Van Quyet said in an interview.

The Civil Aviation Authority of Vietnam said the company has met “sufficient conditions” required to be able to fly in October and the flight license is forthcoming, he added.

Shares of FLC surged as much as 2.5% yesterday trading while the benchmark VN Index was little changed. Stock rose 0.9%, poised for highest level since January.

Bamboo Airways’ proposal is being reviewed, according to a transport ministry official.

Still, the startup airline may struggle to crack Vietnam’s aviation market, which also includes Vietnam Airlines’s budget carrier unit and joint venture with Jetstar Pacific.

“Anybody coming into the market now is late,” said Brendan Sobie, a Singapore-based analyst at CAPA Centre for Aviation.

“You have a domestic market becoming saturated. The international market will probably slow down in a couple of years.”

Vietnam’s annual domestic seat capacity growth has slowed to single digits in the past 18 months after posting increases well above 20% annually the four prior years, according to Sobie.

International seat capacity growth is accelerating, reaching about 20% a year in the past three years, he said.

Quyet said Vietnam’s growing middle class and the government’s efforts to make tourism a major industry would be enough to create room for the new carrier to succeed. — Bloomberg skies are about to get