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Companies afraid of… financial investments
In last year’s shareholders’ meetings, business leaders and shareholders felt highly enthusiastic about the financial investment plans. However, it seems that businesses do not want to mention the issue which is considered very sensitive at this moment.
Financial investments, the job which was once considered the hen that lays golden eggs, has become the burden of many companies. The continued falls of the stock market and the falling stock prices have made the investments unprofitable.
At Vinaconex shareholders’ meeting, Nguyen Hoang Hai, a shareholder, strongly protested the plan to make VND80bil ($15mil) capital contribution to a bank. He frankly said that if members of the management board still insist on the plan, they should call for capital contribution from relatives instead of using the corporation’s money.
At the shareholders’ meeting of Song Da 9 Company, many shareholders expressed the concern over the VND36.5bil capital contribution to Artex Securities Company.
Businesses are now so afraid of financial investments that they try not to mention the issue in any talk. Leaders of Habeco, in the recent meeting with investors, stated that they try to limit the investments in non-forte business fields. The corporation has injected only 2% of money in other fields, and it has only bought fixed term bonds with low risks.
Analysts said that at this moment, wise business leaders would not talk about financial investments, while they should draw the attention of investors in main business fields.
The share prices have fallen by 50%, while the real estate bubble is bursting, which has harassed the companies, which once gathered all strength for financial investments as losses are foreseeable.
The dramatic stock price decreases explained why investors are not interested in securities, though many enterprises have reported high profits in Q1, and many banks have promised attractive profitability.
In the context of the price storm, shareholders do not run after the profit they hope to get from financial investments any more, but decide to return to traditional business fields.
However, analysts said that many investors have become extremists when they turn their back to the shares of the companies which get involved in financial investments. When difficulties end, the finance sector will be the sector that will witness the strongest rebound. Ten years ago, when Asia fell into the financial crisis, some US banks spent money to buy stakes of South Korean banks, and the deals brought a lot of money to the US banks, when Asian economies recovered. As such, opportunities come to the investors with a firm risk.
VNN
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