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Inaccurate share analysis hampers market, say experts
Analyses of listed companies and their shares are becoming more widely available, meeting the growing demand of investors for information about Viet Nam’s developing stock market, but a recent controversy surrounding the inaccurate analysis of one blue-chip company underscores the need for such analyses to be performed accurately and reliably.
Securities firms worldwide analyse listed shares as a reference for investors, generating reports that combine financial data on a listed firm with commentary by securities analysts, including the short-term outlook for the analysed share.
An analysis helps make listed firms more transparent to investors as there is a more profound analysis of financial data about the firms available, according to Le Hai Tra, a member of the HCM City Stock Exchange’s management board.
As the market develops, demand has grown for greater sources of information and reference, according to a recent dispatch from the State Securities Commission, and it has become necessary to develop the amount of analysis being generated from intermediary financial institutions.
But such analyses only serve as a sound reference, if securities firms establish a good relationship with listed firms, Tra said, in reference to a recent report from the HCM City Securities Co on Tan Tao Industrial Park Group (ITA), a blue-chip share listed on the HCM City Stock Exchange.
ITA had asked the HCM City Securities Co to make a fix in its report on the company, but the resulting data and analysis, ITA complained on October 20, was inaccurate as the securities firm has not made any contact with the group in writing the report.
The report had a negative impact on ITA’s reputation and share prices, the group said, and caused confusion for ITA shareholders and investors.
HCM City Securities confirmed it had spoken with ITA before issuing the report and said that, in making its analysis, it relied on quarterly financial reports and accounting data consistent with the Securities Law.
"As the market surged, ITA’s price lost 55 per cent of its value from its peak of VND169,000. At the time the report was produced, ITA’s price was at VND64,000. It is impossible to say that the analysis made ITA fall," said the brokerage in a letter issued on October 22.
But, Tra noted, local analysts have seemed hesitant to contact listed firms for information, relying instead on a firm’s published prospectus and quarterly financial reports to make their analysis of shares, reducing the quality of insight they can provide to investors.
"In the US, securities analysts maintain a very close relationship with listed firms they analyse," he added. "This results in a professional report which provides investors with accurate information.... If good co-operation is established between listed companies and securities firms, there are no controversies like this and the analysis is done more professionally."
Ho Quoc Tuan, a financial expert who has studied in the UK, suggested that market regulators should build a legal framework for analysis, aiming to develop it as a professional skill in the securities business.
VNS
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