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Stock investors trust to luck
Stock trading is not the same as gambling but some people are now buying shares in the same way as they would buy lottery tickets, hoping to get lucky.
Stock traders at the Lao Securities Exchange (LSX) said last week that such people did not use local or internationally supplied economic data before buying and selling shares in BCEL and EDL-Generation.
“I studied BCEL's and EDL's prospectuses but not the political situation or economic data when buying stocks,” 38-year-old Mr Somvang Inthavong said in an interview with Vientiane Times on February 18.
Although prospectuses contain useful information that can help investors to buy shares during an initial public offering (IPO), stock traders are advised not to use information contained in them as a reference for buying and selling in the secondary market as it has not been recently updated.
Stock investors need to study the latest information, including company information, local and international macro economic data such as the inflation rate, exchange rate and economic growth rate as well as current and expected government policies toward corporations.
A Japanese economic and financial journalist from Nikkei Inc, Mr Masakata Maeda, said stock traders need to study such information otherwise they face a higher investment risk.
He also said that gambling and stock trading were very different, pointing out that gamblers just trust to luck to win whereas stock traders need to study the companies they plan to invest in and assess the business climate in order to make a profit.
Successful investors continually update their knowledge so they can make the right decision to buy and sell stock as prices fluctuate in accordance with investor confidence, which is in turn influenced by company information, he said.
Lao Securities Exchange CEO Mr Dethphouvang Mouralat also warned of the higher risk facing investors who buy stocks as a lottery.
Mr Somvang, who owns about 5,000 shares in BCEL and EDL-Generation, said he did not think local or international economic data, or the political situation, would influence the price of Lao stocks as happens in other countries.
He said most Lao people did not have access to such information. “Stock price volatility is due to supply and demand,” he said, adding that when demand for the stock is high its price will rise, and vice versa.
He could not explain what caused higher or lower demand for stocks in Laos, although he saw demand for Lao stocks changing every day.
vientiane tímes
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