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Businesses still rushing into financial investments despite lessons
Within only one month, the HCM City Stock Exchange put 15 share items under control as the companies made losses with financial investments in 2008. However, other businesses still have not learned lessons from those experiences.
Financial investments too attractive?
There have been warnings about the risk of financial investments, but a lot of businesses still said that in their long-term business strategies, they will still seek businesses, with healthy finances, to make investments in.
Most of the businesses said that they will continue making financial investments in 2009.
Dang Van Thanh, Chairman of Sacombank, said that Sacombank has transferred financial investments to a belonging unit, Sacombank Securities (SBS), while the bank mainly makes long-term strategic investments in companies.
By the end of February 2009, Sacombank had made provisions of VND258 billion for securities investments (in 2008, it made provision of VND200 billion).
General Director of ACB Ly Xuan Hai also said that financial investments prove to be a kind of business that ACB group is very interested in. ACB’s prospectus showed that in 2008, ACB had an investment portfolio worth VND1 trillion and the bank made investments through ACB Securities.
SCB’s representative also said that in 2009, the bank will become the strategic shareholders of several businesses.
Double edge knife
It is undeniable that a lot of businesses have reaped big profits in the past with their financial investments. However, only a few businesses could make profit, while the majority of businesses had losses and suffered from their investments. Experts said that businesses should learn lessons from injecting money into their non-forte business fields.
Gemadept, a freight forwarding company, is an example. By December 31, 2008, the pretax profit was minus VND163 billion, thought the total turnover increased by 58% over 2007. The share item of the company has been put under control because of the financial investments.
GMD is not the only listed company that has financial investments and now has to bear heavy consequences from the investments, though they still make a profit with their main business fields. REE, SAM, HAP, KDC, ALP and PPC are facing the same situation.
Businesses which have financial investments now have to pay high prices for the things they did.
Representatives from Dragon Capital investment fund said that businesses should limit financial investments at this moment. If they really want to make financial investments, they should limit the investment capital and only disburse to the share items of the companies operating in the same business fields that they are confident in.
Experts said that REE and GMD can recover well this year as they can earn well from their business fields. However, other businesses, whose earnings from their main business fields are not high enough to offset the securities price decreases, will still suffer.
Therefore, experts said that companies need to be wary with financial investments. If businesses do not want to be bogged down in financial investments, they need to set up clear and wise investment strategies.
Quynh Chi
vietnamnet
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