Seeking opportunities even when markets slide down

Thursday, May 15, 2008
The falling stock market has been disappointing investors. However, experts said that opportunities appear even when the market falls; however, investors have to look for them.

Dinh The Anh, Head of the Analysis and Investment Division under the Saigon Securities Incorporated SSI

The stock market fell by 48% from January 2, 2008 to may 13, 2008. On average, the P/E of the share items on HCM City Stock Exchange is hovering around 12x, while its peak was 30x in March, when the market was hottest.

There are two groups of investors, the ones who have low capital cost and have high expectation on the market, and the ones who have high capital cost, especially domestic individual investors. As for the investors of the former group, it is now the right time for them to seek their opportunities. Meanwhile, I cannot say that the investors of the latter group are seeking business opportunities at this moment.

Investors should understand that when the prices of many commodities, including construction materials, farm produce, are increasing, many listed companies would recieve benefits from the price increases.

For example, we think that natural rubber companies are deserved to be interested in as analysts have forecast about the rubber shortage, while the price has increased by 10-30% so far this year.

Dr Hoang Xuan Quyen, Investment Analysis Director under Tan Viet Securities Company

With the VN Index at 475.5 points yesterday and HASTC Index 144,85 points, the average P/E has reduced to 11-12 in both Hanoi and HCM City.

This P/E is low enough to bring investors the profit equal to bank interest rate if investors keep shares to get dividends. That explains why many investors think that it is now the right time to buy shares, especially foreign investors, who have been keeping purchasing shares with the purchase volume bigger than sale volume.

However, small investors dare not take this opportunity to buy shares at this moment. It is partially because their capital is exhausted, and the share liquidity has become weaker in the last two months.

Only brave investors, who have long term capital and accept to hold shares until the end of 2008 at least, dare purchase shares now.

Brave investors that accept high risks to get high profit, would choose cheap share items of banks, seafood, real estate and woodwork companies, while cautious investors would choose the shares of pharmacy, healthcare, transport, trade service companies, which are not greatly influenced by the market fluctuations.

Dr Nguyen Duc Thanh, Lecturer at the Economics University

Opportunities will come only to the investors who really have vision and capital. It seems that not many investors have all these conditions.

Domestic investors are frightened when their accounts become scanty and they try to sell shares out. No one is brave enough to buy shares at this moment to balance share prices. Only foreign investors are trying to take advantage of the opportunity.

Ngo Minh Duc, Analyst of EuroCapital Securities Company

I think that there are not as many opportunities for individual investors as there latent risks.

First, the stock market has been falling continously, and investors are trying to sell shares.

Second, the VN Index has dropped by 60%. A lot of banks and institutions have to sell mortgaged shares, leading to share supply increases.

Third, the financial reports of listed companies are not attractive.

Fourth, the market liquidity has nearly been lost.

Fifth, the national economy is encountering many difficulties. The CPI increased by 11.06% in April.

Sixth, companies all try to increase chartered capital by issuing more shares, which has led to the share dilution. (TBKTVN)