VNStockNews.com - The local stock market is falling into oblivion, with no light seen at the end of the tunnel, while foreign funds are staging an exodus, experts said at a seminar in Hanoi on Friday.
All experts at the seminar titled “Impacts of the Stock Market on the Financial Market: Proposals for Policies” cast a downbeat view on the local equity market, saying recovery would take a long time. The seminar was organized by the National Financial Supervisory Committee, with Saigon Times Group as the media sponsor.
Bottom still unfathomable
Le Xuan Nghia, vice chairman of the National Financial Supervisory Committee, said the stock market was now mired in its bottom.
“The stock market is now in its bottom. Some people have raised two scenarios for the equity market: either it will recover, or will continue the downtrend and approach the brinksmanship of collapse. I am of the view that the market will recover, but it will take a long time,” Nghia told the seminar.
Other high-profile speakers, from vice chairwoman of the State Securities Commission Vu Thi Kim Lien to Hanoi stock market’s vice director Nguyen Vu Quang Trung and the prominent fund manager Dragon Capital’s CEO Dominic Scriven, all showed grave concerns over the equity market prospects.
“I hope it is now the bottom of the market. Otherwise (the prospect) will be terrible,” said Nguyen Vu Quang Trung.
Vu Thi Kim Lien of SSC pointed the finger at the economy.
“Many people would ask me ‘why is the stock market so dreary?’ and I will always say ‘it is just mirroring the economy but in an amplified way,’” Lien said.
Her statistical figures discouraged participants.
Lien said 46% of 813 listed companies have share prices lower than the nominal value, while 74% of listed firms have share prices lower than the book values.
“Such figures show difficulties facing the economy and the lack of trust among investors. The stock market is in the midst of a confidence crisis,” she noted.
On the northern bourse, said Nguyen Vu Quang Trung, the number of companies facing falling revenues in 2010 was 83, or 22% of the total, compared to 67 in 2009 and 24 in 2008. The number of companies incurring losses in 2010 also rose to 13 compared to eight in 2009.
Dominic Scriven gave an updated account, saying that as of July, 60% of those having issued financial statements had incurred losses. “The harsh reality is that investors have been losing 7% a year since 2006,” he commented.
An exodus
Scriven said 11 foreign funds operating on the local stock market are suffering losses, and many wanted to stage an exit.
“I’ve learned that most of the funds will withdraw capital from the market in the coming time,” he said, adding his own fund had allowed investors to withdraw 10% of their investments in every six months, but this was not easy due to the market’s low liquidity.
Nghia of the National Financial Supervisory Committee added that most of such foreign funds were losing money, with some seeing losses of 3-5% and some others as high as 40%. “If no new investors come in, or if existing foreign funds do not stay back, what will become of the market?” he posed the question.
Scriven, in illustrating the investor scare, cited the case of two international giants among the world Top Five who had mulled opportunities to invest up to US$500 million in an IPO of a State-owned company. However, one has taken flight and the other was weighing to withdraw itself from the market, he said.
All the speakers at the seminar agreed that macro-economic stability would be the right cure for the stock market.
