Vietnam should apply securities short-sales, says specialist

With the 35-year working service at ABN Ambro Bank, Jeroen Sanders is the specialist of corporate finance and investment banking. From 1988 to 1993, he worked as the general director of Francois Dufour Kernvern Securities Co headquartered in Paris. He arrived Vietnam as the strategic consultant for Au Viet Securities Co He shared his point of view on Vietnamese stock market with Dau Tu Chung Khoan in the following interview.

What is your comment on Vietnam's stock market?

Vietnamese investors now build up investment portfolio mainly based on psychological factors instead of basic analysis. Thus, they only can gain earnings when the stock market goes up. Because of this, there will be few buyers as the market goes down. The phenomenon will be changed when the market's supply and demand are higher.

State Securities Commission is studying to allow the securities short sales to upgrade the market transparency. Do you please propose when Viet Nam can apply the specification?

I hope that Viet Nam will apply the securities short sales early. Currently, stock investors can only wait for an expected increase in prices and cannot earn profit as the market slumps. To carry out the short sales, there must have the scheme of borrowing securities for sales and then buying back by applying derivative contracts, term contracts or future contracts. The transparency of the market will be limited if not allowing securities short sales.

What do you think about affects from US big banks' bankruptcy to Vietnamese stock market?

The US financial upheaval has been influencing to Vietnam. Previously, many investors were interested in the developing markets especially Vietnam. US finance sector is stepping in the transition stage like in Vietnam presently but each country is in a different level.

The finance market in US is regarded as perfect. In such a perfect market, the profitability ratio is very low so US banks were propelled to find out complex investment products but they could not estimate all potential risks of these products. When the market was collapsed, investors' share bailing out to withdraw capital and wait for a stability has pulled down the market more. I think that it takes about 6-9 months for the market to restore. Hopefully, after the affects of US economic depression to Vietnamese stock market, your market will surge again in 2009. But in all cases, Vietnamese investors should not bail out shares.

A lot of investors are worried that the securities supply will be under high pressure because a line-up of businesses announced to list on the stock market from now to the year end. Should businesses list at this time?

As for enterprises that had shares on the informal stock market, so their listing naturally is to move from the free market to the formal market. Thanks to this, that enterprise's transparency will be better. In my opinion, now is not right time to make IPO.

Viet Nam now has nearly 100 securities brokerages. What is your assessment on the development prospect of the small sized companies?

With the current services, such a high number of securities brokers are not suitable. I expect that the number will be reduced.

A small sized broker totally can develop more if upgrading service quality and launch different services, especially by buying back other brokers with business inefficiency. (DTCK)