Enthusiasm weak on informal share trades

Friday, June 20, 2008
Prices of many shares rapidly have increased again in the first three trading days of the week. The stock market is expected in recovery after a long "hibernation" phase. However, the informal stock market doesn't "wake up" still. Though the pressure of selling out is reducing, the transparency of the formal stock market has not yet been better.

The reason investors apprehend securities investment in the informal stock market was simply that the transparency is very weak. Most of shares are traded not successfully. Mai Bich Phuong, the director of Empower Securities Co, said that the informal stock market is more eventful after some recovery days. However, the transactions are still difficult to come to success.

Buyers are not willing to buy with huge money amount due to the undecided attitude to observe the market whereas sellers want to sell at higher price. Some investors, who have to pay debt to banks, want to offload shares to return the debts, but it is not easy to trade successfully.

Real estate sector shares have seriously been affected by "frozen" of the domestic real estate market. Hoang Anh Gia Lai's share reduced down to 75,000-78,000 dong per share. In additional, there are few others being traded but with low trading value. Among them, Bao Viet Securities Co only saw 100 shares changing hands recently.

Bank shares are considered as the most tradable in the informal market, while investors are very cautious and prudential. Eximbank's share price was up from 21,000 to 27,000 dong/share on 17 June during three consecutive transaction days. Yet, in late same day, the share price stopped increasing and started to decline to 26,000 dong per share.

500,000 Eximbank shares have been traded in the last three trading days. Vietcombank's shares also started to increase and reached the price of 37,000-38,000 dong each. However, investors are still afraid of investing in this market.

The main reason is that monetary-tightening up policies make investors wonder about revenue and profit of banks this year. Practically, there are so many banks facing the difficulties even the affects have just started in the first half of 2008. Most recently, a slew of banks listed the optimistic business results in Jan-May. Such as Eximbank received a pre-tax profit of 588 billion dong and Sacombank earned 600 billion dong. But, it is not easy for small to medium size banks to get satisfactory profits in the first five months of 2008.

According to a director of a foreign investment fund operating in Vietnam, for foreign investors, the banking sector has developed potentially. Yet, it is required that investors must have long-term view because bank shares cannot recover in unstable markets.

The bank shares such as Eximbank, Eastern Asia Commercial Bank, Techcombank, and Military Bank, have attracted investors in the informal stock market except shares of small size banks. The heat of the formal market not only causes negative impacts but also leads to sharp declines in the informal market's shares.

Selling pressure burdened on the informal stock market as the listed stock market rallied. However, as brokerages said the investors' attitude is up and down. A lot of investors, who have money and think that the securities sector is at high potential, but are not willing to buy with huge investment capital.

Quan Duc Hoang, the president of board of director of I.A capital, said that securities investment at the moment is a big opportunity. "Foreign investors are paying much attention to Vietnamese stock market", he continued "but the banking sector is not their high demand, they interested in aquatic sector, mine ores industry, consumer products sector nowadays".

According to specialists, the banks' interest rate of 18-18.5% per annum attracted more funds from the stock market to banks. Many investors afraid of another decline of the stock market in the near future and they kept the money at banks to get high profit, affecting transactions on the informal stock market. The above reasons showed that the informal stock market is still frozen. (TBKTVN)