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LSX CEO blames holiday for stock price volatility
The value of BCEL and EDL-Generation stocks has recovered as investors resume trading after the Chinese and Vietnamese New Year, according to a top stock market official.
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| Lao Securities Exchange President and CEO, Mr Dethphouvang Mounlarat |
Lao Securities Exchange President and CEO, Mr Dethphouvang Mounlarat, said on Thursday the recent decline in Lao stock prices was due to local and foreign investors suspending trading over the holiday.
A large proportion of business people who trade stocks on the Lao Securities Market are Chinese or Vietnamese. Prices were affected when some chose to sell stock to pay for new year festivities or they simply stopped buying over the holiday, leading to a fall in demand and price, he said.
He stressed that the recent drop in stock prices was not due to politics, the economy or the business operations of the two public companies.
“We have not seen any other reason for the negative impact on the price of stock. The political situation is stable and no international political situation is affecting the price of Lao stocks,” Mr Dethphouvang told journalists after giving a live broadcast interview to Lao National Television.
“The economy is still stable, inflation is about 6 percent, the exchange rate is manageable and the interest rate has not changed.”
He also said the two public companies were profitable, adding that they made 174 billion kip (before tax) and 292 billion kip (after tax) in 2010.
The two companies expect to make profits of 212 billion kip and 550 billion kip respectively this year, according to the Lao Securities Exchange Commission.
The BCEL share price rose from 12,200 kip on Thursday to 12,800 kip on Friday while EDL-Generation shares rose from 7,000 to 7,350 kip over the same period. This recovery follows a week long drop in prices.
The BCEL share price reached its highest point of 15,400 kip at the beginning of February before dropping down to 12,100 kip on February 8. EDL-Generation stock reached its highest point of 8,800 kip, dropping to 7,250 kip over the same period.
Mr Dethphouvang said share price fluctuations were due to basic supply and demand in the market – when demand increases the price of stock will rise and when demand drops the price will drop.
He urged people who want to buy stocks on the Lao Securities Exchange to study information regarding the companies as well as the domestic economic situation before going ahead.
Buying stocks was different to buying lottery tickets, he said. Stock traders need to study company and economic data while lottery ticket buyers make a purchase based on a whim.
Lao Securities Exchange Commission Office Acting Secretary General, Ms Vattana Dalaloy, also believes the increase and decrease in stock prices is seasonal but said the commission will continue to monitor stock trades.
She said the inflow and outflow of foreign currency following the opening of the Lao Securities Exchange was at a manageable level.
vientiane times
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