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New rules will recharge OTC market: brokers
The over-the-counter (OTC) market will rebound given pending governmental regulation and positive macroeconomic signs, local stock brokers have projected.
Companies that want to list on the regulated OTC market must deposit shares at the Hanoi Securities Trade Center (HASTC) in addition to being audited and having to publish financial information, the State Securities Commission said.
“The regulation will help increase market transparency and reduce investors’ risks, making the OTC market more attractive,” according to the Saigon Securities Inc., the country’s largest brokerage firm.
It will also expand the playing field for investors since the number of firms traded on the OTC market is greater than listed ones, Saigon Securities Inc. said in a recent report,
Some 40 firms, mainly financial organizations, are scheduled to deposit shares at HASTC.
“The formality for depositing OTC shares at HASTC is completed. We are just waiting for the Prime Minister’s decision to mandate the proportion of foreign ownership for the shares,” Chairman of the State Securities Commission Vu Bang told Thanh Nien Daily. “The deposit regulation will be implemented once the decision is issued.”
Well-run companies that are about to list, such as the Joint-Stock Saigon Hanoi Bank, PetroVietnam Joint-Stock Finance Corporation and real estate and furniture manufacturing group Hoang Anh Gia Lai, will be attractive to investors, said professional OTC broker Ly Manh Hung.
Positive macroeconomic trends will also help the OTC market rally along with the country’s official stock exchanges, Hung added.
The country’s consumer price index (CPI) saw a month-on-month rise of 1.56 percent in August, higher than the 1.13 percent in July but lower than the 2.14 percent in June and 3.91 percent in May. Investors had expected a much higher CPI due to the 31 percent hike in fuel price on August 14.
As a result, the VN-Index, the gauge of 158 leading firms and four closed-end funds listed on the Ho Chi Minh Stock Exchange, peaked at 561.85 points on August 27, while share prices on the OTC market increased on average by 60-70 percent during the month, Hung said.
“In 2008, Vietnam is estimated to post economic growth of 6.5-6.7 percent,” Chairman of the Government Office Nguyen Xuan Phuc said at a recent press briefing.
Prime Minister Nguyen Tan Dung has asked localities and sectors to strive to achieve gross domestic product (GDP) growth of 7 percent while holding the year-on-year inflation rate to around 25 percent, Phuc added.
Nguyen Duy Hung, chief executive officer of Saigon Securities Inc., said the VN-Index is likely to surpass the 600 mark late this year if GDP growth reaches 7 percent and inflation stays below 30 percent.
Some local stock experts said stocks will be an attractive investment alternative as gold and property markets have slowed down.
Gold prices in the domestic market decreased to VND16.9 million (US$1,000) per tael Monday from VND19.5 million ($1,160) per tael on July 15, after gold price in the world market slipped to the lowest level in the past year on September 11.
“The OTC market has recently warmed up with the climb of several unlisted banks’ shares,” said broker Hung. Shares’ price of the Military Bank has increased by 78 percent to VND19,600 ($1.2), while those of Saigon Hanoi Bank and VP Bank have respectively risen by 107.1 percent to VND14,500 ($0.9), and by 22 percent to VND12,200 ($0.7).
The Saigon Hanoi Bank has recently received approval for share flotation on HASTC, paving the way for it to become the country’s third listed bank.
However, Hung also cautions that only companies who have shown strong business performance, implemented simple stock transfer regulations, or planned to list in the near future are flourishing on the OTC market.
Thanhnien
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