Judgment day for many foreign backed stocks

For example, Chang Yih Ceramic Joint Stock Company shares (code CYC) must postpone transactions on the Ho Chi Minh Stock Exchange (HoSE) since the company incurred losses in two consecutive years.

Before that date, CYC shares were transacted much lower than the par value and it fluctuated around VND4,000 per unit from early April, 2011 until the date of postponement.

The Full Power Joint Stock Company shares (code FPC) were in the same situation. When the shares were allowed to resume transactions after postponement the share value plummeted to around VND2,200 per share on the May 31 trading session and currently fetches around VND3,000 per unit.

The shares of some other listed foreign-invested firms though transacted normally on both stock exchanges have had their transacted values not much better than the above shares.

The value of Taya (Vietnam) Electric Wire and Cable Joint Stock Company shares (code TYA) shed to record low VND3,700 per unit in May, 2011. That of Mirae Joint Stock Company shares (code KMR) plunged to less than VND5,000 per unit in late May. The share value then rallied to VND5,600 per unit on June 21, 2011 after it was said that the firm issued and listed depository certificates on the South Korea Stock Exchange (Kosdaq).

The shares of Taicera Ceramic Joint Stock Company (code TCR) are currently transacted at around VND7,500 per unit. However, the share value will be revised lower on June 23 because the firm will pay its 2010 cash and stock dividend to the shareholders on that day.

Of listed foreign-invested firms, the sugar producer Bourbon Tay Ninh Joint Stock Company shares (code SBT) are transacted beyond the par value and stayed at VND10,600 per unit on June 21.

According to industry experts, the stocks of listed foreign-invested firms are less liquid than those of local firms because at these firms foreign founding shareholders often manage a large percentage of shares so that the actual circulated share volumes in the market remain modest, partly diminishing their attraction in the eyes of securities investors.

According to a securities firm report, 259 listed firms (one-third of total listed firms in both stock exchanges) saw their share values fall bellow the par value as of May 27, 2011. Of them 36 firms reported losses in the first quarter of 2011 while 80 other saw profit margins of less than VND1 billion ($48,000) and 121 firms saw profits ranging from VND1-VND35 billion in the first quarter of 2011.