Investors trapped with market reports, stock experts say

Investors watch share prices at the Ho Chi Minh Securities Corporation (Photo: Minh Tri)

The Ho Chi Minh City Stock Exchange’s VN-Index may climb as high as 700 “at some point during this year,” and return within two years to the 1,000 level that it last touched in 2007, Kevin Snowball, chief executive of PXP, said in an interviewin July.

But financial experts said the fund’s analysis was unreliable as the gauge of 270 companies and five mutual funds listed on Vietnam’s biggest stock marketremained gloomy, closing at 439.85 pointson Thursday.

PXP Vietnam Emerging Equity Fund Ltd.is among the big sellers this month. According to the Ho Chi Minh City Stock Exchange’s website last week, the fund failed to sell its shareholding in Southern Seed Corporation(SSC), Binh Thanh Import Export Production and Trade Joint Stock Company(GIL) and Transforwarding Warehousing Joint Stock Corporation(TMS) because of plunging share prices.

VN Direct Securities Ltd. last week warned in its report that the market was experiencing “a short-term panicky time” due to increasing interest rates and pressures on repaying loans against shares. Therefore some brokers and investors will sell shares strongly, the Hanoi-based broker said.

“There is no way to know which amounts of money flowing on the market are individual investments or loans against shares. So how could VN Direct be sure that the market is under pressure on repaying loans against shares?” a stock market analyst, who wants to be unnamed, said.

He also said securities firms shouldn’t release incorrect analysis, which could hit the market’s sentiment.

Some big shareholders in listed companies announced on the Ho Chi Minh City Stock Exchange that they would buy back shares as share price is pretty low, according to the exchange’s website.

But financial experts said some listed companies’ directors tried to restore investors’ confidence by negotiating with big shareholders, buying back shares from to sell shares at low prices and then sell out when the market recovers.

Investor confidence was also anxious by market analysis of brokers, which are run by listed companies.

Petro Vietnam Securities Incorporation (PSI) early last week recommended investors to buy PFL shares of the PetroVietnamFinance Land JSC, which was predicted to increase to VND18,559 per share. The construction firm, listed on the Hanoi Stock Exchange, remained unchanged at VND12,000 on Thursday.

Many investors however didn’t buy the broker’s recommendation as they were afraid it was trying to help PFL shareholders to sell out in the recent slumping market. “Both PSI and PFL are subsidies of the gasoline maker Petro Vietnam, which sold its holdings in listed subsidies recently. So I think there will be a strong selling of PFL shares soon,” said an individual investor in Ho Chi Minh city.

A director of a HCMC-based broker disclosed many securities firms tended to release optimistic market reports in an attempt to keep their clients.