Vietnam Stock Market

[HenryTo]

Hasn't been doing so well lately:

http://www.thanhniennews.com/business/?catid=2&newsid=30040

[HenryTo]

Local reaction to the pessimistic Merrill report on the Vietnamese stock market a couple of months ago:

http://english.vietnamnet.vn/biz/2007/07/718955/

[rffrydr]

How much is implied in that word, "market"? --And assumed.
_________________
Today is the Tomorrow you worried about Yesterday!

[HenryTo]

An update, courtesy of the WSJ:
-----------------------------------------------------------------------------------
Vietnam Market Swings Make
Even the Day Traders Queasy
By JAMES HOOKWAY
September 8, 2007

Hanoi, Vietnam

Vietnam's loosely regulated stock exchange has been one of the most volatile in the world in the past few years. In 2006, it rose about 144%.

Which is one reason why Dang Dung, 45 years old, sold his motor-scooter dealership a few years ago to become a full-time "day trader" -- making him one of countless thousands of small-time investors now playing stocks here.

But all this exuberance is beginning to unsettle even Mr. Dung. Like many emerging markets, Vietnamese stocks are prone to wild swings based largely on rumor and half-truths. "There are so many people chasing after relatively few stocks," he complains. The market "is getting very unpredictable now."

That is an understatement. After soaring in 2006, the VN Index plunged 30% in April alone, partly on chatter that the government was going to restrict stock investment. It didn't, and the market bounced back.

Then, in August, worries about a global credit squeeze triggered a further round of selling. On Friday, the VN Index was at 934.13, down 26% from its record of 1174.22 on March 12, but up from 751.80 at the beginning of the year.

Hanoi stockbrokerages can be crowded when stock prices are rising.
Compounding this instability, many Vietnamese companies regularly flout financial-disclosure regulations, and there is little enforcement of market rules. "I'd like to see the government introduce some tougher regulation," says Mr. Dung.

"Vietnamese companies have many bad habits," acknowledges Vu Bang, chairman of the State Securities Commission, the local equivalent of the Securities and Exchange Commission.

Mr. Bang ticks off the most common offenses -- or at least the ones that his tiny staff of 15 can detect: Many companies don't bother to appoint independent boards of directors, despite being required to. Others neglect to report to the authorities what their directors and other officials earn.

With fines as low as $4,000 an offense, Mr. Bang says it is easy for Vietnamese companies to ignore disclosure requirements. Mr. Bang is seeking government approval to raise fines to $4 million an offense.

The Finance Ministry also is encouraging some of Vietnam's largest companies to list a portion of their shares on overseas markets, such as Singapore, which would require them to improve their disclosure practices.

Brokerage firm Saigon Securities Inc. is one of the Vietnamese companies hoping to be the first to list in an overseas market, and expects to see its stock trade in Singapore sometime in 2008. Its chairman, Nguyen Duy Hung, founded the company in 2000 with capital of $400,000. Its market capitalization today is $1 billion.

Despite a surge of foreign investment into Vietnam, about half of nongovernment-controlled shares in listed companies are traded by local individual investors. Their appetite has pushed the VN Index, the benchmark of the main market in Ho Chi Minh City, up 10-fold in seven years; the index has doubled in the past 12 months.

The number of Vietnamese companies traded has climbed to 50 from just two when the stock exchange opened in 2000. At the end of 2006, companies listed on the main market had a combined market capitalization of $13.5 billion. While that still is small, compared with the $191 billion market in the Philippines or Thailand's $197 billion market, for example, it suggests that there is room to grow.

Thus, Vietnam's market continues to attract day traders. Regulators and traders estimate there are about 50,000 of them in Hanoi alone, and probably a greater number in the commercial hub of Ho Chi Minh City.

Some trade online through Internet brokerage accounts. Others dabble in Hanoi's informal over-the-counter market, where investors literally buy and sell stock certificates in unlisted companies in the sidewalk cafes dotting the city streets.

The shares of around 2,400 companies -- typically, small or midsize businesses -- are traded this way, according to Vietnamese stock brokers. Foreign analysts estimate that this over-the-counter trading volume could be 10 times higher than that of the formal market.

In Cafe Tonkin in Hanoi's old quarter, 27-year-old property developer Vu Hoang Linh sips coffee and keeps tabs on stock prices yelled back and forth across the room. Abba's "Money Money Money" booms from speakers behind the bar.

Mr. Linh has his eye on a small, up-and-coming hydropower company. But even he is worried about the sudden lurches in the market. He talks about buying into a company listed on the main market instead.

"That would be a more stable investment," Mr. Linh says.