The Vietnamese stock market has experienced 10 years plus of operations and has made many outstanding achievements. However, this remains a fledging, undeveloped market. However, to egg on value investment, it is not simply calling individual investors to cultivate knowledge but more importantly all market-concerned parties including authorities, intermediary financial institutions, listed companies and institutional investors amongst others must join hands to build a value-driven investment environment.
Indeed, individual investors have been more professional at stock investments and a proportion of them understands and excels at value investment. However, a large majority do not know value investments given that their dealings are driven by instant information, tread-water purpose and price-driven movements. These sorts of investment have led new and inexperienced investors to continuous losses and caused market volatility.
On the basis of generalising experience provided by investor relations departments of some listed companies in couple with international research experience, the Vietnam Association of Financial Investors (VAFI) has put forth several solutions to accelerate value investment movement.
Accordingly, listed companies should voluntarily provide in-depth information for investors for the purpose of helping investors understand company operations as well as assets structures.
Every month, listed companies should try to provide brief information about business operations, analyse good things and bad ones, and update information about major projects. Besides, they should review quarterly financial statements, aiming to enrich knowledge of accounting departments, create confidence of investors, avoid disparities between audited and unaudited financial data, and reduce the time for year-end auditing. In every 3-5 years, listed companies should have business valuation reports.
VAFI pointed out that as the country is still confronting inflation threats, exchange rate fluctuations, debts, macroeconomic risks and other woes, professional asset valuation is essential. This not only betters corporate financial management but also helps all investors understand deeply about every asset items that constitute corporate values. Then, investors can assess corporate assets on book value and market value.
For securities companies, VAFI said leaders of securities companies should carefully review and professionalise activities of brokers and consultants. If this activity is not attached proper importance, securities companies will not only lose its prestige but also have to pay for consultants.
In particular, according to VAFI, securities companies should be careful with publishing corporate valuation reports. This recommendation results from the release of poor-quality, groundless and subjective reports, let alone interest conflicts of reporters.
In addition, they also publish more company insight analyses to inform investors of price-driven movements on the market to protect their customers. Mr Nguyen Hoang Hai, Secretary General of VAFI, said, several companies are suffering loss or on the verge of bankruptcy or dissolution, their shares soar to incredibly high prices because some people with strong capacity deliberately do this. Many investors follow and suffer heavy losses.
“It is necessary to improve your listing standards on HOSE and HNX to eliminate poor-quality equities to minimise risks for investors, especially newcomers. Public offering must be underwritten by law to strengthen the accountability of consultants, then, investors will avoid buying securities at too high prices,” Hai said.
As regards authorities, according to VAFI, the Ministry of Finance should assign the State Securities Commission to compile a project for formation of credit rating companies, build legal frameworks, attract world-leading companies into Vietnam and build regulations on securities advance services, etc.
Hai Anh
Vietnamese
