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16/02: Daily updates of the Lao Securities Exchange
‘Every dark cloud has a silver lining.’ The market can still see the budding hopes amid raining prices. The amount of sell-offs has been significantly reduced for both stocks. BCEL was merely trading with 68 percent of the yesterday volume, while its supplying surplus barely rounded off to 52 thousand units, down from the previous 406 thousand. On the contrary, the liquidity of EDL-Gen slightly eased upward by 17 percent, sensing a stopping point for this stock. The size of excessive sells on EDL-Gen also uttered a similar melody by narrowing 72% to only 359 thousand units. All indications are pointing at the imminent turnaround of the Lao Securities Market, the remaining question is when?
1. Executive Summary
- The Lao Securities Exchange: The sedative Lao Securities Market could not break out of the Wednesday trance and fell deeper into its bearish stage. BCEL was able to secure a slippery 12,400 Kip per share as another 600 Kip evaporated from the yesterday closing price. Its turnover boiled down to only 1.3 billion Kip, densifying by 37.84 percent. EDL-Gen was soaking in a fairly large trading volume when its price submerged to 7,000 Kip per share. Its total trading value filled up to 2.9 billion Kip, which was 11 percent higher than yesterday.
- Plastic goods prices stable as raw material costs rise: Despite fuel price fluctuations pushing up imported raw material costs, plastic products manufacturers in Vientiane are still doing a brisk trade amid growing demand. Raw materials now cost between 14 million and 16 million Kip (US$1,800 and US$2,000) per tonne. They were only 11 million and 12 million kip (US$1,400 and US$1,500) in November last year. Saplast Vientiane Company, capturing about 70% of the market, has managed to maintain both production and prices at the same level as last year. Their products are actually about 10 to 15 percent cheaper than imported plastic products. The company's products include plastic chopsticks, spoons, forks, napkin holders, cutlery holders, chairs, bowls and toothpicks. Another pipe producer, Tien Phong SMP, adjusted its service fees slightly upwards last week due to increased transport costs resulting from the recent fuel price increases. There are seven plastics producers in Laos, six of which are located in Vientiane and the other in Savannakhet province.
- Laos has potential for SMEs development: According to a Japanese business development specialist, the existence of heavy industries such as mining and hydropower in Laos would create opportunities for local and foreign businesses to set up SMEs. Lao government policy is to add more value to domestically produced goods before exporting them. At present, Laos had the potential to establish SMEs such as electrical cable factories and jeweler makers. However, Laos exports all of its gold bars, copper concentrate and most of its copper bars to the world market. Currently, only the Sepon Gold and Copper Mine supplies copper to an electrical cable plant in Vientiane. Jewelry makers have demanded to buy locally made gold from the two mining companies in Laos. However, the mining companies claim they cannot supply gold to domestic jewelers because it would need to be further refined; a process that would not be commercially viable. Overall, the major challenges for Laos include the development of a skilled labor force and the introduction of modern technology.
2. Exchange Rates: 16/02/2011
Exchange rates, quoted for the Lao Kip, by the Lao Development Bank
3. The Lao Securities Exchange
The Lao stock market
‘Every dark cloud has a silver lining.’ The market can still see the budding hopes amid raining prices. The amount of sell-offs has been significantly reduced for both stocks. BCEL was merely trading with 68 percent of the yesterday volume, while its supplying surplus barely rounded off to 52 thousand units, down from the previous 406 thousand. On the contrary, the liquidity of EDL-Gen slightly eased upward by 17 percent, sensing a stopping point for this stock. The size of excessive sells on EDL-Gen also uttered a similar melody by narrowing 72% to only 359 thousand units. All indications are pointing at the imminent turnaround of the Lao Securities Market, the remaining question is when?
The LSX Index 1,502.16 -74.58 (- 4.73%)
After thrusting 14 percentage points away from the bottom, the depleted LSX benchmark started to drift backward, almost holing through its 1,500 mark. The Lao Composite Index struggled as another 75 points went down the drain. Not until EDL-Gen is able to regain its stance will the LSX fully recover; the market might see better prospects at the end of this week as stock prices are returning to a more comfortable position.
Appendix
* Market Data
LSX Index
EDL-Gen
BCEL
Lanexang Securities
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