Friday, October 19, 2007

Stock market sees new fever of securities company’s shares

As many securities investors are busy hunting bank shares, they do not realise that securities company’s share prices have soared considerably.

After saying goodbye to the Hanoi Securities Trading Centre on October 29 to list at the HCM City Stock Exchange, Saigon Securities Incorporated (SSI) saw its price increase for one month. SSI was traded at VND160,000/share in August, and the price rose to VND260,000/share on October 12.

Investors pay high for SSI because they believe the company can get high profit when the stock market bounces back at the end of the year. It reported the post tax profit of VND668bil in the first half of the year, though it was the gloomiest period of the stock market.

Bao Viet Securities Company’s share price (BVS) has nearly reached VND600,000/share, an increase of VND120,000/share over the October 2 trading session, remaining the most expensive share item on both Hanoi and HCM City trading floors.

BVS also had very high pre-tax profit in the first 8 months of the year: VND202bil/VND150bil of chartered capital.

Meanwhile, the price of Hai Phong Securities Company’s shares has also unexpectedly soared to VND140,000/share after a long time of staying below VND100,000/share.

The three share items all are the hottest securities items on official trading floors.

Dao Thi Xuan, a freelance securities broker on Nguyen Cong Tru securities market in district 1, HCM City, said that the price increases of securities companies’ shares had been anticipated. Investors well understand that securities companies can make high profit from the warmed up stock market, and it would be wise to bank on these companies.

The warm stock market will bring fat profit to securities companies, as an investor on the market. Moreover, the companies can also pocket big sums of money from transaction fees. SSI, for example, can collect VND2bil worth of fees every day, ACBS VND800mil, while VIS, which has just begun operating, can collect VND200mil.

According to Tran Ngoc Nam, an analyst, investors believe that securities companies’ prices now are very ‘soft’ if compared to the price levels in March 2007, just equal to 50-60%.

However, Bui Ngoc Tuoc, another analyst, has warned that investors should think carefully before injecting money in securities company’s shares. He recalled the story of the Chinese stock market in 2001-2005, when many securities companies went bankrupt when the securities index plunged from 2,245 to 998 points.

He said that only 10 of the 62 licenced securities companies had good business results. Those have earned attractive profit and hold 85% of the market share. It is understandable why some securities items are selling well, while Thien Viet, APEC’s, KBS’s are selling at VND30,000/share only, and APS cannot find investors to buy at VND25,000/share.

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