Stock price are falling to their lowest prices since the beginning of the year.
Stocks worth little more than a cup of tea
Vietnam used to rank second worldwide in terms stock market growth rate for the first four months of 2012. Now there are stock codes worth only several thousands of VND.
Some stock codes that used to top the stock market like IDJ, PFL, DCS, PVL are just worth more than VND4,000 (USD0.2) per stock.
The most expensive stocks are now are QNC, SHB, SD9, ICG, SCR, KLS, PVX, VND, HUT with prices ranging from VND7,000-9,000 (USD0.3-0.4) per stock.
The stock codes on Hanoi stock market were assessed to have good liquidity, with sensible business models and good operations. But they have still suffered a steep deline, now the price of each stock worth less than VND4,000.
On Ho Chi Minh Stock Market, the situation isn’t any different with many stock codes having prices less than VND5,000 per stock.
Since the middle of May to July 9, stock index plunged 20% , with theVN-Index down from 490 to 408, and HNX-Index down from 84 to 68. If they further drop, the market will repeat its 2011 low point again.
Despite a steep decline in stock prices, demand has remained quite low. In the transaction session on the morning of July 10, the VN-Index and HNX-Index decreased with total transaction value of these two codes less than VND400 billion (USD19.1 million), equal to 30-40% of the total transaction value 2-3 months ago.
Many investors expressed their disappointment about the current situation.
Banking bad debts are also confusing investors. With bad debt rates at 4%, released at the end of April 2012, equal to VND110 trillion (USD5,258 million). Recently, that number was raised to 10%, according to the Governor of the State Bank to the NA at the end of June 2012, which surprised the public. The latest number released was assessed to be more realistic, and matched the predictions made by international financial institutions like Fitch. This bad information worsened the psychology of investors.
Many people are worried that the stock market will remain in the doldrums for a long time because banks are being strictly supervised over their decision to pump capital into stock companies. Many State-owned companies continue to withdraw from non-core businesses according to the government’s requirements.
However, there are many investors who think that the worst moment is also the best time to buy stocks. Some optimistic signs of stock market have appeared, with some inclined to buy big on the basis that shares will return to their true values in the future.
Some economists claimed that Vietnamese economy has passed its worst period, some indices showing positive signs, like the economic growth index, credit ratings, decreased import rates and declining inventories. They predict that the stock market will repeat its highest record of growth rate set in last April.
According to economist Le Dang Doanh, it would be inaccurate to use the stock market as an index to evaluate the health of an economy because it’s just a reflective mirror. Moreover, Vietnam’s stock market still lacks sufficient regulation, suffers from opaque transactions, and weak supervision by management agencies. Therefore, the Vietnamese stock market still contains many risks, which need to be resolved to meet the demand of long-term investment in the future.