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When is the right time to buy shares?
As with anything there are optimists and pessimists and, when investing, both could be right at any given time when there is a turnaround in market performance.
Our original opinion about the Initial Public Offerings by companies on the Lao Securities Exchange remains unaltered.
When BCEL Banking and EDL. Gen Electricity listed, the IPO share prices had some compelling factors written into the offerings. First observation was that the share price at 5,000 and 4,300 kip respectively was affordable in US$50 lots to most Lao people.
In fact we saw the IPOs at “bargain basement prices”. This leads us to our second assumption that the share price would never be cheaper than when they listed. All this has been confirmed and that our market sentiment was the correct call as is that in the past two weeks when both stocks have had meteoric daily appreciation to new highs.
Opinions always differ as to when is the right time to invest. But experience is a great teacher. Having followed the markets as facilitator and as an investor in Asia and Australasia, nothing stands out more than you must do your research first and never take advice from anyone more mixed up than yourself.
Your research should seek out shares that have growth potential in sale, revenue, profits and assets with affordable debt to finance growth.
This information can usually be found in the annual reports. You should examine at least the last 2 years company reports usually accessible on the companies or brokers website. You don't have to be a commerce graduate or a chartered accountant to read a report and find the key result areas we mentioned.
Laos remains on the IMF list as one of the poorest developing nations but it is moving and achieving projected Millennium Development Goals. Laos also has great stability in government and the local currency controlled by the Central Bank has low volatility. That promotes a very favourable investment climate apart from hydropower and resources development at unprecedented levels.
Fundamentals assessing that information says the timings are still right and opportunities continue to present themselves.
So far investors in the LSX stocks of BCEL and EDL.Gen represent a case of “make more hay while the sun shines”. The investments are doubling in just 2 weeks. That's impressive but there is a lot more growth to be factored in yet. Depending on the resistance level it could be at least another 30 to 60 percent over the short term. In market jargon that's “bullish” and outstrips the contrary distractions the old school have about bank interest or dividends which can never ever double over the same period.
Both stocks therefore still represent a value buy consideration and the daily turnover confirms local investors have an appetite for both stocks. Our first point of stocks reaching resistance [leveling out of prices] has almost been reached on Friday's share prices. We set our original forecast at around 16,000 kip (US$2) for BCEL and 9,000 (US$1) for EDL. This now has to be revised because market and investor sentiment [trends] have demonstrated continual support for the shares.
If you missed buying the stocks at the initial public offering you have to date missed huge percentage gains and maybe with some homework, analysis and consultation and decision-making the time is still right to buy.
Current trends if they continue will easily see achievable gains in excess of 15 to 20 percent for February. Beyond that it is a cautionary one step at a time. Let's see the Feb performance before we attempt to crystal ball the LSX or share performance.
In conclusion the brokers IPOs marketing was a huge success with the stocks on today's performance possibly underpriced but strategically priced to remain attractive to local investors. I never invest for one week month or year. My strategy is to buy investments for tomorrow [the future] and if you buy right you can always ride out economic cycles that can occur at anytime.
Foreign investors have another set of circumstances to worry about and that is additional foreign investor regulations which can include variables in the law treatment of taxation and sovereign risks investing can be risky and complex. Before investing, retain the basics, keep it simple and look to companies that can grow and perform over the time [go long].
vientiane times
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