|
Day traders chill blue chips in switch to small caps, IPOs pending
As several giant state firms are soon to offer their Initial Public Offerings (IPOs) and the outlook for blue chips is bearish, day traders are seeking quick profits in small caps, pushing their prices up.
This month and next, four state companies, the Bank for Foreign Trade of Viet Nam (Vietcombank), Bank for Investment and Development of Viet Nam (BIDV), Hanoi Beverage Company (Habeco), and Saigon Beverage Company (Sabeco), are to issue IPOs.
Thanks to the prestige status of each issue, so-called experts expect fund managers to withhold some of their share listings for the IPOs.
Investors, mainly day traders, in turn, have started switching from blue chips to penny shares, causing the latter to climb compared to the former.
In October, blue chips such as REE, SAM, GMD and ABC gained by only 20-30 percent while small caps like PAN, SD7, S55, TLT and GHA doubled or quadrupled in price.
GHA is a case in point. Issued by Hai Au Paper Joint Stock Company whose charter capital is only VND12.8 billion, GHA nevertheless saw its net profit per share-outstanding reach VND6,300 this year.
On October 29, GHA shares rose from VND40,000 to VND 129,000.
Factors contributing to the rise were a recent announcement that Hai Au would issue more shares and the fact there are only 300,000 GHA shares to be traded. Of 1.28 million GHA shares outstanding, 75 percent are held by Hapaco and others.
Although switching to small caps can bring quick profits for active traders, it is risky for the stock market, so-called experts warned.
If the trend continues, GHA could maintain its rise and eventually its price/earnings ratio (P/E) could even reach up to 50, an obviously overvalued ratio ominous of a dangerous bubble’s formation.
SGGP
|
