A tough year squeezing many brave investors

“Oh please say no more about securities. Let’s talk about something more interesting,” Van Minh Hoang, an investor with An Binh Securities, cried out in a Hanoi café with crooked smile after being asked about his investing.

The reaction is typical of many individual investors when conversation turns to the Vietnamese stock market. After a sketchy 2010, 2011 was even tougher squeezing the life out of many investors.

“The year 2011 exhausted me and many others. After huge losses in 2010, I entered 2011 with a fresh mind, determining to gain back all I have lost. And now, I have lost all that I had remaining,” said Hoang.

Hoang said he tried to keep an unlisted stock with annual dividend of 40 per cent, including 20 per cent paid in cash. However, he deposited the stock to borrow cash for trading other stocks. The stocks he traded fell continuously and he was forced to sell his prized stock.

“I am too tired now and I want to relax for a while,” he lamented. Nguyen Nguyen Thanh, an investor working for a Hanoi-based bank, saw most of his portfolio sold a few months ago. Thanh had kept VND400 million ($19,200) for stock investment since early 2011 with a positive thought that “the market has never been so cheap, it’s an opportunity appearing once every 10 years.”

Another investor Nguyen Quan Hong, who used to be a successful investor and a senior manager of a reputable  brokerage firm, revealed he was “deeply disappointed”. “All the investors around me are in difficult situation now,” he said. Leaving the securities business, Hong set up a small restaurant and usually called himself as “anh ban com” (the guy selling food) for joke.

While 2010 had excluded a mass of retail investors, especially amateur investors, from the stock market, 2011 even beat the most enduring and professional investors like Hoang, Thanh and Hong.

Vietnam’s stock market VN-Index closed 2011 30 per cent lower at 346.84 points, compared to its highest of 1,173 points in 2007 and lowest 234 points in February 2009, after witnessing many ups and downs during the last four years. Many retail investors have given up stock trading.

Around 25 securities firms out of 105 suffered losses in 2010, but the figure jumped to 80 in 2011. Around 30 fund management companies out of 47 suffered losses in 2011, according to unofficial statistics. In 2011, only 68 companies debuted shares on bourses, compared to hundreds a year some years ago, according to the State Securities Commission (SSC) statistics.

These days, at major Hanoi-based brokerage firm, SeaBank Securities, there were only around 15-20 investors on the firm’s trading floor compared to hundreds a few years ago. At nearby brokerage Tan Viet Securities, there was time we saw no investors but only brokers looking at an electronic board.

So far, the market has dried out with trading value this year of just around VND600 billion ($28.8 million) a session, a sharp decline of over 40 per cent compared with 2007.

The sombre macroeconomic landscape with sinking domestic consumption demand and high bank borrowing costs took its tolls on the stock market. Meanwhile, investors could hardly access credit for securities trading due to the central bank’s tightened monetary policy. Notably, investors’ confidence in listed companies has faded due to the firms’ lack of transparency and poor corporate governance.

Weighing even more on the market’s downturn, stinging problems regarding Vietnamese securities market’s operations like poor safeguards for investors and uncontrolled brokerages’ insolvency are also eroding investors’ confidence.

“Let’s see how investors are safeguarded here. Listed companies raised funds freely whenever the market slightly went up to pickpocket shareholders. Brokerages became insolvent continuously without any warning. Price manipulators and rogue listed companies still abuse their power,” said an investor with Lien Viet Securities.

Analysts said Vietnam’s stock market had never been more challenging. However, that conclusion sometimes implies that the market in 2012 could not be worse. “Markets will be hard to predict in 2012, but I think the situation cannot become worse,” said Hoang.

There are still investors waiting opportunities patiently at brokerages, looking at electronic stock trading boards everyday, keep watching stocks moving up and down to secure opportunities.
“I am a loser now, but the stock market is a part of my life.

That is why I go to SeaBank Securities every day. I think a lot of investors will come back when the bulls return,” said Nguyen Van Quy. Quy was among the biggest losers who went to the SSC asking the country’s stock market watchdog to shut down the market so as to prevent it from breaking down during the 2008 free fall crisis.

“I do not think too much about 2012’s outlook but when opportunities emerge, I will buy stocks again,” said Thanh. Several financiers are still attempting  to find opportunities amid a gloomy market outlook.

Nguyen Van Viet, who left a brokerage firm recently for establishing a domestic fund management company with his former colleagues, said in the context that the domestic market indexes fell sharply in 2011 and financial investors tried to escape the current situation, industry investors had a golden chance to now cash in.

Viet said that due to economic recession in developed countries, international investors tended to act as vultures and find cheap assets in developing countries for bargains. Many companies have to sell stakes for survival and that is why he bought an investment fund management company to match possible deals.

“It’s easy for me to get a more stable job such as in a bank, but financiers strongly attached to stock market like us need motivation. That feeling is ingrained in our blood,” Viet said.