OTC market warming up

Tuesday, April 22, 2008
OTC shares of real estate firms with high liquidity are being hunted by many investors, who are tired of the transactions on the official markets.

Over the last month, when the daily trading bands were set at 1% on the HCM City Stock Exchange and 2% at the Hanoi Securities Trading Centre, many investors ‘had no wave to surf’, which made them tired of making transactions on the official markets. As the daily trading bands were narrowed, the maximum profit the investors could get also decreased, which did not satisfy them.

A lot of the investors have turned to trading OTC shares, which do not require many procedures for transactions, while the share prices can go up or down many times within a day.

Some experts believe that it is the time to trade unlisted shares at this moment, which can bring high profit in the short term. Besides, as the prices of many share items have returned to the starting points, investors may feel safe to make long term investments.

N.T. Lam, an investor on Rong Viet Securities trading floor, said that the liquidity of real estate firms’ shares proves to be relatively high, therefore, they are being hunted by many investors.

Though the real estate market is now cooling down, the market, in the long term, keeps potential in long term, as the short supply will still exist, until 2010 at least, which also means that real estate firms will still flourish.

“I have purchased 20,000 HAGL at VND185,000/share,” Lam said. Meanwhile, an OTC broker also said that he received nearly 10 calls ordering the purchase of Vinaconex, HAGL at high prices.

Bank shares, which once nearly disappeared from the market for a period, have now returned. The bank share items which investors are most hunting now are Eximbank’s and Military Bank’s. An Binh Bank’s shares are offering at vND15,500/share, while Dai A at VND19,000/share.

N. V Quang, an investor on Rong Viet Securities trading floor, said that though banks are facing a difficult year this year, but they have great potentials to develop in long term. Therefore, many investors decide to buy bank shares, considering shares as the asset to save for one or two years.

Experts said that the OTC market’s ups and downs depend on the performance of the official markets. Besides, another reason behind the recently frozen OTC market was that investors felt risky with transactions, as laws do not protect investors in case of disputes.

However, the OTC market will be put under control of the Hanoi Securities Trading Centre soon, slated for the second quarter of the year. The Ministry of Finance is planning to set the daily trading band of +/- 20% for the market. Meanwhile, investors will not be allowed to purchase and sell the same items of shares within one day, in order to prevent investors from colluding with each other to control prices on the market.

Regarding the regulations on the OTC market management, some securities companies think that the State Securities Commission should not set up too strict regulations by prohibiting investors to purchase and sell the same share items within one day, since this will badly affect the liquidity. Instead of the strict regulation, the watchdog agency should push up the supervision over the market. (DTCK)