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10/06: Daily updates of the Lao Securities Exchange
1. Executive Summary
The Lao Securities Exchange
It is sometimes dramatic how far the Lao stock market can bend downward like a spineless bridge. EDL-Gen collapsed all the yesterday’s gains and restarted again at 5,350 Kip (-3.6%). Trading volume split into smaller pieces, from 83K shares to 72K shares, as turnover broke down LAK 387 million (-16%). BCEL was the only one standing, but poor liquidity has drained all of its mobility. The public bank managed to keep its base price of 8,100 Kip, while its volume weathered down to almost nothing, only 535 shares (-64%). As a result, turnover folded into a single-digit number of only LAK 4 million.
Weekly changes: Compared to last week, the ending index might have projected a better image, surging 2.19% from 1,087 points to 1,112 points, but its underlying wellbeing showed various symptoms of disorder. One of the most apparent signs is the deteriorating volume, from an accumulated 327K shares down to 304K shares (-6.81%); the major trading proportion shifted back to EDL-Gen with 77 percent. The combined turnovers also took a hard hit and plunged 18.4% to LAK 1,831 million.
Fish farmers suffer from foreign competition
Fish farmers are struggling with the second price drop since Lao New Year (Pi Mai) because of growing competition from overseas fish farmers operating in Vientiane. In April the price of fish bought at farms was 19,000 -20,000 kip per kg and last month it fell to 17,000-18,000 kip. This month the price has dropped again to 12,000-13,000 kip per kg. Farmers are taking a loss because the total cost of production is around 15,300 kip per kg.
2. The Lao Securities Exchange
The Lao stock market
A torrent of demand was pouring onto BCEL, but its supply side still hesitated to bring out the big bucket. The foreign sector stepped up their buying effort, streaming total demand upward to 72K shares (+178%). The supply side participated with only 16K shares, which was still a fivefold figure compared to yesterday. Stiff negotiations have been going on for 3 weeks already, and the suppliers have not submitted to an easy concession, hence there is no obvious reason for them to shatter now.
EDL-Gen was not able to sustain a constant flux of trades. The demand hike yesterday looked like a candle in the wind today. The generation company withered its total demand down to 75K shares (-44%) and its total supply to 88K shares (-40%). There is a saying that stocks grow out of investors’ suspicion. There is also the other saying that if you give them too much benefit of the doubts, they will start doubting your benefits. EDL-Gen should make clear to investors all the benefits, perhaps starting with a financial statement. Three months ago, EDL-Gen was in a sticky spot where it can neither go up nor down, and now BCEL is being put in the exact same shoes. Historical data showed that a prolonging flat-period will be immediately followed by a downward trend; however that scenario might not happen to the public bank considering its different situation regarding the amount of outstanding shares, the proportion of foreign ownership, among others.
The LSX Index 1,111.74 -33.57 [-2.93%]
The morale boost wore off, the Lao index returned to its former self of 1,112 points (-2.93%). Total trades scaled down to 73K shares (-14%), ejecting only LAK 392 million in market’s turnover, a 17% decline compared to yesterday.
lanexang securities
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