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Lifted foreign ownership cap fails to buoy OTC market
Trading in over-the-counter shares remains listless despite a Government attempt to breathe life into the market by lifting the cap on foreign ownership in unlisted public companies from 30 per cent to 40 per cent.
After the decision was announced, trading in the OTC market became more active, but interest faded after only three days, according to Bien Viet Securities.
"It wouldn’t be true to say that the decision has had no effect on trading in the OTC market, but the effect seems small," said DaoVan Khanh, an analyst with Agribank Securities.
"The market is still in hibernation," he added. "The fact is, if the cap had been lifted two years ago, it might have helped. Now it seems too late."
Sacombank Securities general director Huynh Anh Tuan said that there were many other factors holding back growth of the OTC market. Many domestic investors already faced paying back bank loans at a time when credit and higher interest rates precluded taking out new loans. More players on the OTC market were selling than buying in order to raise capital.
Meanwhile, foreign investors are approaching the OTC market with caution.
Dai Viet Securities analyst Lam Minh Chanh noted that banking shares on the OTC market, including Vietcombank, were losing as much as 40 per cent of their original value.
"Real estate shares, those most favoured by foreigners, are also losing liquidity," Chanh said, pointing to Quoc Cuong Gia Lai, a well-known real estate development company in the Central Highlands province of Gia Lai. Its shares fell from VND80,000 before the lunar new year to about VND50,000 at prresent.
A few analysts are looking forward to the Ha Noi Securities Trading Centre assuming management of the OTC market at the end of this quarter to boost activity in unlisted shares.
"When the OTC market is under control, cap opening will have more effect than now. And the opening should be lookedat in the long term rather than in the short term," Khanh said.
VNS
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