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OTC market stirs after long slumber
HA NOI — The over-the-counter (OTC) market rallied over the past week along with the HCM City Stock Exchange to the relief of numerous retail investors after six months of shockingly bad performance
The rebound revolved primarily around bank stocks, which accounted for 70 per cent of turnover in recent weeks.
The Viet Nam Export Import Commercial JSB (Eximbank) for example saw shares jump from VND65,000 to VND75,000 in the last ten days. Similarly, shares of Viet Nam Commercial Joint Stock Bank for Private Enterprises rose 34 per cent to VND49,000.
"The [OTC] market has performed well with bank and real estate stocks suddenly increasing," says Trinh Hoang Nam, head of OTC trading at Saigon Securities Inc (SSI).
The unlisted shares have far outperformed listed stocks on the HCM City exchange, with the VN-Index only rising 10 per cent in the same period.
The biggest factors influencing banks on the OTC were oddly Sacombank (STB) and Asia Commercial Bank (ACB), two companies officially listed on the HCM City and Ha Noi exchanges respectively, says Hoang Nam.
Trading activity in and prices of STB and ACB have recently climbed aggressively helped by upbeat earnings expectations for the third quarter and full year. Investors predict OTC banks will see similar profit gains.
"Many investors recognise bank shares dropped to their lowest level ever [over the past few months], and are now buying up banks after a long period of neglect," says HCM City-based expert Huy Nam.
Huy Nam says companies that have become more transparent and regularly publish financial reports have also helped defrost trading activity on the OTC.
Hai Ha Confectionery Co and Hoa Phat Group, for example, have submitted earnings results and petitions to officially list to bourse regulators, which as a result boosted share performance.
Hoa Phat has risen from VND77,000 to VND87,000 over just a week.
“This proves investors often pay more attention to companies with a high level of transparency,” says Huy Nam.
Transparency remains a problem not only for retail investors but also foreign players that demand a significant amount of information before making investment decisions, say analysts.
The State Securities Commission plans to create a management system for the OTC market, which should help create better clarity on the market.
According to a plan that has been under consideration for the last three months, all public companies are required to submit OTC shares with the Securities Depository Centre.
Investors will also have to keep their OTC shares with depository members and place all buy and sell orders through accounts with securities companies.
Nguyen Anh Dung, director of OTC trading at SeaBank Securities, says the commission’s new regulations spells greater disclosure and increased market oversight.
“Once the system comes into operation, trading on the OTC will increase and become more orderly,” says Dung.
VNS
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