11:27:21 AM | 16/5/2006
On May 15, the Hanoi stock market will increase its sessions from three to five per week to meet the increased demand of investors and raise the professionalism of the market.
At present, the Hanoi trading floor has three sessions per week on Monday, Wednesday and Friday with ten of commodities, half of the figure comes from small-sized enterprises, capitalised at less than VND 50 billion. However, according to many investors, the transaction value of the Hanoi trading floor is quite high, at around VND 15 billion per session. The Ho Chi Minh City trading floor had a value of between VND 3 billion and 5 billion per session when it had ten commodities as the Hanoi floor does at present. Tran Van Dung, director of the Hanoi Securities Trading Centre, said that the Hanoi floor would propose the State Securities Commission to increase the minimum volume of negotiable transactions from 1,000 stocks to 5,000. The reason is that negotiable transactions take longer time and are only suitable with large orders. Also, thanks to superiority of quotation, the increase of the minimum transaction volume will encourage small investors to use quotation for their transactions.
Dung added that many investors said that they wanted the price margin of the Hanoi stock market to increase higher than the existing figure of +/- 10 per cent per session, or to remove completely the price margin. However, with its small scale, the Hanoi market usually experiences a rapid increase or quick fall in prices. Therefore, margin is still a necessary solution for all investors, especially new ones. Dung said that in the short term, the Hanoi stock market would not expand its margin. However, in the long term, alongside the growth of investors and the appearance of market makers, the margin may be expanded to 20, 50 and 100 per cent or may even be removed.
Even though the Hanoi market still faces many technical constraints, the quality of listed enterprises on the market has attracted many investors. Ten stocks traded on the market include BBS, CID, DXP, GHA, HSC, ILC, KHP, VNR, VSH and VTL. Among which, enterprises issuing stock DXP (the Doan Xa Seaport Joint stock Company), GHA (the Hai Au Paper Joint stock Company), ILC (the International Labour Company) and VSH (the Vinh Son-Song Hinh Hydro-electric Power Company) gained good business result in the first quarter of 2006. The enterprises have their equity much higher than their charter capital. Their ROE (return on equity) rate in the first quarter reached at least five per cent.
According to investors, those enterprises with an annual ROE of at least 20 per cent are worthy being invested in. Also, the Hanoi stock market’s average P/E (price on earning) index is just 16 while the figure in the Ho Chi Minh City market is 28. Those markets with the average P/E index of between 18 and 20 are considered as attractive.
To provide more convenience in transactions for investors and securities companies, the Hanoi market will propose distance transactions. Accordingly, monitors will be taken to securities companies, so investors’ orders will be displayed instantly and they will not have to wait for between five and seven minutes as at present. Also, securities companies will not have to have their staff members staying at the floor to enter orders to the system. However, the idea may become true in 2007 or 2008 with the Hanoi stock market needing more investment capital. From now to that moment, investors have to accept some constraints of the market.
Quynh Chi
Vietnamese
