Vietnam: Stock market keeps falling, stocks dirt cheap

 Securities investors say the stocks are now as “cheap as vegetables”. 105 out of 603 share items listed on both the bourses have market prices below the face values.

T, a securities investor earlier this week came to a securities company to reconsider his investment portfolio. In the first quarter of the year, T purchased a large volume of shares on credit. Now, as the stock prices keep decreasing, he has to put more money into his account, or the security company will have to sell his stocks to take back money.

“I cannot sleep for the last month. This is for the third time the securities company threatened to sell my stocks,” T said.

T’s investment portfolio was once worth five billion dong. However, as stock prices have been decreasing, the values of stocks have decreased by a half. T said he has “blue chips” – the stocks of big insurance companies and banks, but it is very difficult to find buyers nowadays, when the stock prices have become “as cheap as vegetables”.

“The shares are now like waste-papers. The dividends are just 3-4 percent per annum,” he said. Twice T had to put more money into his account (more than 400 million dong) in September in order to keep his investment portfolio.

Trinh Hoai Giang, Deputy General Director of the HCM City Securities Company (HSC), also said that stocks are now dirt cheap. 105 out of 603 share items listed on both the bourses now have the market prices below the face values.

On the HCM City bourse, for example, BAS is now selling at 5800 dong per share, CAD 6500 dong, HVX 5900 dong, MHC 5700 dong, while PRUBF fund certificate 5100 dong, TRI 5100 dong. On the Hanoi bourse, SHC is trading at 6500 dong, SVS 7700 dong, TTC 6300 dong and VTA 4200 dong.

According to stox.vn, 280 share items are being traded at the prices lower or equal to the book values, including blue chips.

Le C, a big stock investor said that he and many friends of his are “meeting troubles” because of the stock price decreases. They do not want to put more money into the accounts, and also do not want to sell stocks to take back money. They decide to “nourish” the investment portfolios, hoping stock prices may increase one day.

Head of the brokerage division of a securities company has revealed that the number of repo contracts of his company has been decreasing sharply.

“They have withdrawn money to make bank deposits. Instead of asking me to give advices on stock prices, they ask me to help update gold and dollar price information,” the broker said.

He added that securities investors do not make transactions these days. They just keep the wait-and-see attitude.

According to Le Dat Chi, MA, a securities analyst, the average trading value has been very low since the beginning of November, at 700 billion dong per trading session. This shows that the majority of investors have been staying out of the market.

Analysts say the stock market remains gloomy because investors still cannot see positive signs of the macro economy, while there are signs showing that the cash flow will be tightened towards the year end. Securities investors have been advised to keep cash until the signs about development become clearer.

Giang said that HSC has been mostly selling its stocks since the beginning of the year. It continues selling stocks now to keep cash and hopes that it will not take a loss.

According to Le Dat Chi, securities investors now feel insecure. The cash flow is still running into gold, foreign currencies and bank deposits as the deposit interest rates have been increasing.

Securities investors are awaiting information about CPI in November to decide what they have to do next. If the CPI keeps increasing, the cash flow will keep away from the stock market.

Source: Saigon tiep thi

http://english.vietnamnet.vn/en/business/1656/stock-market-keeps-falling--stocks-dirt-cheap.html

Vietnamese Stock market: are there any opportunities for long term investments?

Stock market: are there any opportunities for long term investments?
VietNamNet Bridge – The sickly stock market has been testing stock investors’ patience for many months. Other stock markets have recovered but when will Vietnam’s stock market bounce back?

PVGas could only sell 64 percent of the volume of shares it offered at the IPO (initial public offering) on November 17. The IPO average price of PVGas’ share was 31,000 dong per share.

Becoming shareholders of the enterprise which is leading Vietnam’s gas industry, the key industry in Vietnam’s national economy which decides the development of other industries such as power, fertilizer and steel, is really the dream of many investors. Andy Ho, Investment Director of VinaCapital, said that becoming the “owners” of state-owned general corporations is a golden opportunity which does not come regularly.

However, contrary to previous thoughts, the shares were not selling like hot cakes. Of the 1057 investors who successfully bought the stakes, 12 institutions and 1045 individuals bought 4.244 million stakes out of nearly 61 million of stakes sold.

Money exhausted

A lot of companies reported they could sell only 6-10 percent of the volume of stakes offered. At a recent auction of 7.32 million stakes of a LPG firm in the north, only five individual investors registered to buy 0.6 percent of the volume of shares.

According to Huynh Anh Tuan, General Director of SJC, as money is becoming scarcer investors are becoming more cautious with their investment decisions.

Cash is not flowing into the stock market because of many reasons. Tuan said that there are not many expectations on medium term investments, because the market is still awaiting macroeconomic problems to be solved, including the gold and dollar price fever, and it is still awaiting information about the consumer price index (CPI) in November. The increasing bank interest rates have been creating difficulties for enterprises while investors dare not borrow money and mortgage their shares for the loans.

Many enterprises have licenses to issue shares to increase their chartered capital. However, the enterprises still cannot fix the list of shareholders, because shareholders do not want to spend more money on stakes.

Are there any opportunities?

According to some securities companies, institutions and funds have planned for the disbursement. In October, for example, VF1 fund disbursed, lowering the cash proportion from 10 percent to 7 percent of NAV, and sold all the bonds in its investment portfolio. VF4 also disbursed, while the proportions of cash and other assets have decreased from 7.2 percent to 2.4 percent.

According to Tuan, domestic institutions have disbursed because of the cheap stocks, but they also can see the uncertainties.

“At this moment, they dare not spend too much money. The main force in the stock market is individual investors who account for 80 percent of the trading volume,” he said.

So far this year foreign investors’ net sale has reached over 10 trillion dong or 500 million dollar. According to Au Viet Securities Company, the figure is not big, because in the first quarter of 2008 alone, they incurred a loss of up to $1.3 billion.

Why do foreign investors keep purchasing? According to AVSC, foreign investors always target long term investments (3-5 years), and it is still early to explain their investment strategies.

The advice for investors is to maintain high proportions of cash. However, some analysts believe that if investors have idle money, they should think of medium term investments, because they can expect opportunities when the cash flow of $600 billion is pumped into the US economy and a part of the sum may flow to Vietnam.

Source: Saigon tiep thi

http://english.vietnamnet.vn/en/business/1805/stock-market--are-there-any-opportunities-for-long-term-investments-.html

Vietnam: Oversupply in resort real estate market

VietNamNet Bridge – The Ministry of Planning and Investment has requested local authorities to check the resort real estate development projects in their localities and report back to the ministry. The move has been understood by the public as the warning about the possible excess of the resort real estate projects.

The wave of developing resorts

Market surveys all show that in the past five years, the resort real estate market has been developing rapidly and going beyond the expectations of the management agencies.

Five years ago, there were only several resorts, namely Mui Ne Domaine, The Nam Hai (in Binh Thuan province), or Olalani, Indochina Riverside Tower in Da Nang, and some in tourist cities of Nha Trang and Vung Tau. Most of them were foreign invested projects.

However, the market has welcomed a lot of new investors, both foreign and domestic, over the past five years. The investors hope for big profit.

According to CBRE Vietnam, a real estate service provider, by the end of 2010, Vietnam will have some 55 resort real estate projects which will provide 5318 villas and 6601 apartments.

The figures make people believe that the resort market has become too hot.

In the region, Thailand is considered to have developed resort marketvery early. However, in Phuket, a famous tourist site for the past 20 years, there are only 5624 resort villas and apartments. Meanwhile, in Vietnam there are already 3745 apartments and villas in the central region. In fact, the number of high grade apartments and villas there is even higher than that in Phuket, 253 vs 135.

General Director of CBRE Marc Townsend described the investment wave as the “tsunami” which has landed in Vietnam.

It seems that people now prefer injecting their money in real estate projects to other investment channels, such as gold or securities, because they believe that real estate development can bring larger profit.

More harm than good

An expert from CBRE said that it seems that Vietnamese real estate developers have been too busy to develop the number of villas or apartments, not paying much attention to the quality.

Once the supply far exceeds the demand and goes beyond the management capability, this will be a big trouble.

An official from the Ministry of Planning and Investment said currently Vietnam has nearly no more land left along the coast, especially the localities with good infrastructure such as Da Nang and Binh Thuan.

This seems to be the blunder made by local authorities in the past. They hurried to call for investment by allocating beautiful land plots. many investors were allocated the land, even when they were not capable of carrying out their projects.

Under the current regulations, investors have to obtain permission from the Government only if their resort projects cover more than two hectares. Therefore, investors only register the projects with less than two hectares. As the result, the beautiful seaside has been divided into small plots.

The excessive development of the resort real estate sector, according to experts, may do more harm than good. Investors should be informed that the number of foreign guests and secondary investors is not has high as expected, as only 15 percent of resort real estate projects have been sold to foreigners, according to CBRE.





http://english.vietnamnet.vn/en/business/1819/oversupply-in-resort-real-estate-market.html

Vietnam Real estate bubble – the accessory to inflation

Real estate bubble – the accessory to inflation
VietNamNet Bridge – The real estate bubble is the accessory to inflation, and it should be considered as the “dangerous germ” which must not be allowed to live together with a healthy economy.

Minh, a securities investor, who went bankrupt due to the continued drops in stock prices, has unexpectedly got rich again. Several days ago, he came to a friend’s party as a real estate billionaire. Minh related that after he lost big sums of money on the stock market, he decided to sell all the remaining stocks he had. With the sum of money from selling shares, he bought 200 square meters of land near the Bao Son Paradise area in Hanoi at 30 million dong per square meter. Now he can sell the land plot at 60 million dong per square meter. If he sells the land plot right now, he will get a huge profit of six billion dong – the dream of many businessmen.

Living on virtual values

In theory, Minh’s sum of money has increased by two times. Meanwhile, the 200 square meter of land will still be the same and it has not been enlarged. The increased value can be described as a pumped ball that will return to its initial shape when it goes flat.

However, in urban areas, hundreds of thousands of people are living on the “bubble”.

The real estate fever not only has attracted professional real estate traders, but also individuals, both Vietnamese and foreigners. Even regular employees in state agencies have also jumped on the bandwagon.

Wealthy people rush to purchase land and keep land as valuable assets. People with lower income rush to purchase land to resell land later for profit. As for many ordinary workers, the money from trading land, not daily wages, is now the main income for their families.

No official statistics have been released, but it is estimated that the volume of traded land has reached several millions hectares with the added value of 30-40 percent. The value of the land may reach tens of trillions dong which obviously accounts for a big proportion in GDP.

The real estate bubble is feeding millions people.

People have their pockets picked

While millions people are getting richer thanks to the real estate bubble, another millions people are losing their opportunities to have accommodations.

A civil servant related that he has nearly one billion dong now deposited at banks. He has been saving money for the last 20 years and he hopes he can buy a mid-class apartment in the suburb area. However, he could not imagine that the real estate price would increase so dramatically. At the beginning of the year, an apartment in the area was priced at 20 million dong per square meter. Meanwhile, the price has jumped to 30 million dong. As such, with his sum of money, he would only be able to buy 30 square meters instead of 50 square meters as he previously thought.

According to experts, a reasonable sale price of apartment in multi-storey buildings (25-30 stories) is about 20 million dong per square meter which is high enough for real estate developers to cover expenses and generate profit. However, in fact, apartments are selling at 30 million dong per square meter.

As the price of real estate keeps rising, regular employees are getting poorer. Previously, they could purchase an apartment after 10 years of working, but now, they need 15 years or 20 years to buy an apartment.

The real estate price increases have brought about the increases of all other kinds of goods. House tenants have to pay higher rents, while the prices of materials, equipments all increase. The service fees of education, healthcare and transport all increase accordingly. The “price storm” is attacking every corner of society. It is obvious that the real estate bubble is the accessory to inflation.

A dangerous germ

In 2008, the US witnessed the worst financial crisis in the last 80 years. The crisis originated from a swelling real estate bubble.

Experts have warned that recently the real estate market in Vietnam recently has shown characteristics similar to the US real estate market during the crisis.

People are still rushing to purchase real estate which in turn is leading to virtual growth (the actual value does not increase). If the situation does not improve the real estate bubble is due to burst in a matter of days.

In the world, every family spends 33 percent of their monthly income to pay debts for their house. Meanwhile, in large urban areas in Vietnam, the figure may reach 80 percent.

Experts have warned that a debt crisis is likely to occur in a economy where people have to spend most of their income on accommodation.

Phan The Hai

http://english.vietnamnet.vn/en/business/1854/real-estate-bubble---the-accessory-to-inflation.html