Nov 29, 2012

Vietnam - Securities now as dirt cheap as onions

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VietNamNet Bridge – The Vietnamese stocks have become cheapest than ever. Investors now keep the wait-and-see attitude and look forward to the measures to rescue the market promised by watchdog agencies.

A report showed that 51 shares on the HCM City Stock Exchange now have the prices of less than 5000 dong per share (the face value of shares is 10,000 dong). Especially, some shares have been traded at less than 2000 dong per share.

The same situation is occurring with the Hanoi Stock Exchange the shares sold at below the face value in abundance.

Shares sold at next to nothing

On November 23, SBS shares of a big securities company, was traded at 1400-1600 dong per share. As such, an investor just needed to spend 14,000 dong to buy 10 shares. However, this is really a modest sum of money, if noting that the 10 shares have the value just equal to the value of a load of bread.

Especially, with 1600 dong, housewives could not be able to buy even some onions. A report showed that SBS has seen its share prices drop to the floor prices for the last 15 consecutive trading sessions (the floor prices are the minimum possible prices at which buyers and shareholders can make transactions).

Prior to that, SBS was considered a blue chip among the shares of the financial companies.

A lot of unprofitable securities companies have to shut down or accept weak liquidity. A lot of others have been put under the special control by the State Securities Commission.

The prices of real estate shares have plunged most terribly. On November 23, DRH shares were traded at 2200 dong per share. Meanwhile, the price of the share has always been hovering 2200-2400 dong per share in the last 20 trading sessions.

Nothing to do except wait

The atmosphere of a market at its closing has been pervading the stock market. Few transactions and weak liquidity prove to be the two biggest problems of the market. The main members of the stock market such as securities companies and investors have disappeared.

The quietness of the stock market can be measured by the gradual decreases of the sums of money funneled into the stock market. It is estimated that only 300 billion dong is injected in the market a day on both the Hanoi and HCM city bourses.

The figure is just less than 1/3 of that of the HCM City Stock Exchange in its golden age (1000 billion per trading session).

The UpCom market (market for unlisted securities) proves to be more tragic. On November 22, 118 million shares could not be traded because of no buyers.

Stock prices bottom out?

The VN Index has dropped dramatically to 383 points. Though shares have become dirt cheap, investors do not intend to buy shares, while securities companies themselves advised investors not to join the market at this moment.

Some analysts have warned that if investors venture to buy stocks now, they would have to “play with a sharp knife.”

“It is now the drought period, therefore, no farmer dares to buy stocks,” said Duong Thanh Khiet, Chair of the Phuong Dong Securities Company, said investors would only return to the market, once the policies are transparent.

Chair of the State Securities Commission Vu Bang said the Ministry of Finance and the State Securities Commission are considering a series of measures to rescue the stock market in 2013.

Manh Ha

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