Stock boom: Happy or worried: Lack of professionalism

6 min read

Most experts do not claim that Vietnam’s stocks increased “hot” but admitted that the market’s rapid and strong momentum has created great pressure on the system and regulators to take corresponding social and policy behaviors.

Small investors suffer

The first is that the technical malfunction on the Ho Chi Minh Stock Exchange lasted from last year until now, has not been overcome but is aggravated not only to disadvantage individual investors but also affect the capital mobilization channel of enterprises (enterprises).

Dr. Ho Quoc Tuan, a lecturer at the University of Bristol (UK), said that the fact that Vietnam’s stock market continuously reached a record during the outbreak of the Covid-19 epidemic was practically no different from many countries around the world, from the US, Korea. China to China. In 2020, the proportion of American investment assets invested in stocks increased by more than 30% while in China it is estimated that there are about 1.5 million new securities accounts opening every month and the number of new investors for the whole year of this year. China is about 18 million people.

“Those numbers show that this is a trend caused by the epidemic, many people have lost their jobs and are socially isolated, so they have found investment channels to make money, “playing the stock market” is one of them. This is a trend and needs corresponding behaviors in terms of society and policy,” said Dr.

In fact, in large markets with a record increase in the number of investors, there are sometimes cases where the trading system fails due to the sudden increase in the volume of transactions. However, just a few days later everything was fixed. In Vietnam, the stock exchange’s technical problems have lasted from 2020 to 2021, while the technology innovation project that has been started since 2012 has not been completed yet.

The ball is constantly being kicked about the future but so far no one has been held accountable. Therefore, the investor’s frustration is understandable. “Investors and securities companies still have to pay fees to HoSE but in return, the service is not as desired. Who should the investor know and who will be responsible? They need satisfactory answers” – Dr. Ho Quoc Tuan analyzed.

Next is the fact that thousands of new investors open securities accounts every day, creating an ever-increasing wave of buying and selling according to the crowd. They mainly buy and resell securities to enjoy the price difference, regardless of the basic factors of the business, inadvertently pushing the stock price far beyond the real value. This is also a manifestation of the speculative, short-term and unprofessional market, easily manipulated by teams and groups to push and push prices.

The director of a securities company admits somewhere in the market there are still “tricks” that cause dis trust among investors. As in the case of shares of a real estate enterprise recently increased the price continuously from VND 24,000 to more than VND 29,000 in a short time, investors massively bought in. Soon after, the Board of Directors approved the plan to report to the Shareholders’ Meeting on the issuance of an additional 207 million shares to increase the charter capital at a discounted price of 20% compared to the average price in the last 20 trading days, estimated at only VND 20,000 and issued 7 million shares to officials, staff for 0 VND.

This issuance plan is assessed by experts to affect shareholders’ interests, including the risk of dilution as well as the offering price. Immediately, the stock price of this enterprise fell continuously for 3 days with a decrease of more than 20%. Foreign individual and institutional investors are racing to sell off. Next, investors received news that a business leader had sold hundreds of thousands of these shares right at the top and before the important decision was announced. “Business leaders make decisions that can comply with the law and gain immediate benefits, but the bigger loss is the confidence of investors in the business,” said the director of this securities company.

Most investors participating in the stock market recently are speculative, paying little attention to the internal affairs of enterprises. Photo: ROYAL TRIAL

The risk is growing

From a management perspective, Mr. Pham Hong Son, Vice Chairman of the State Securities Commission, acknowledged that the stock market maintains a strong and long momentum as in recent years has been settinging for both regulators and market members. Therefore, besides the positive points, the stock market is also facing many difficulties and challenges, requiring us to identify to come up with appropriate solutions.

Accordingly, Vietnam’s stock market in the coming time will still face great risks. The first is that the prolonged global Covid-19 pandemic will remain the greatest risk. Therefore, the stock market’s movements in the medium and long term depend on the ability to control the epidemic in the world and Vietnam as well as the recovery level of the domestic and international economies. In addition, the high stock price level also creates huge adjustment risks.

Another big risk comes from the margin lending balance of securities companies which has continuously increased in recent years. As of May 31, the market’s margin balance reached VND 112.1 trillion, an increase of VND 31,200 billion compared to the end of 2020 and an increase of VND 10,700 billion compared to the end of the first quarter of 2021. Some securities companies have shown signs of margin lending reaching the ceiling (not twice the equity).

From a management perspective, Mr. Pham Hong Son, Vice Chairman of the State Securities Commission, acknowledged that the stock market maintains a strong and long momentum as in recent years has been settinging for both regulators and market members. Therefore, besides the positive points, the stock market is also facing many difficulties and challenges, requiring us to identify to come up with appropriate solutions.

From the perspective of the stock market, which can increase hotly, causing investors, the market and the economy to face risks, Assoc. Prof. Dr. Pham The Anh, Chief Economist of the Center for Economic and Strategic Research, said that investors need to be aware of both opportunities and risks when determining stock investments. They need to have financial knowledge, good asset management, measure risks and deal with possible losses. When the market heats up, stock prices that are too high compared to their true value can lead to a price crash stage.

“It is very difficult to judge the market at the moment, it is impossible to predict when it will recede. Because the market depends on the epidemic situation, it will lead to business activities in all fields. If everything is still difficult, Because of difficulties and idle money of people, businesses do not know where to pour it and interest rates are still low, the heat of the stock market cannot stop,” – Assoc. Prof. Dr. Pham The Anh analyzed.

Regarding the testing of the system designed by the Korea Stock Exchange (KRX) from June 14, Mr. Le Hai Tra, General Director of the Ho Chi Minh Stock Exchange (HoSE), said that this is the The project has 3 beneficiaries, including 2 exchanges and Vietnam Securities Depository Center. It is expected that the system will officially operate this year with the command processing capacity many times higher than the current one. This system will replace the new system deployed by FPT Corporation with a capacity of handling 3-5 million orders per session (expected to launch in July). “However, the FPT system does not end its mission immediately, but is still a backup solution for a certain period of time,” said Mr. Tra.

Faced with the situation of order blocking on the Ho Chi Minh City Stock Exchange in the past time, but it has not been completely handled, following the direction of the Ministry of Finance, the Chief Inspector of the Ministry of Finance has just signed an administrative inspection decision at the Department of Transport. Ho Chi Minh City Securities Exchange.

Son Nhung – Thai Phuong

Source: nld.com.vn – Translated by fintel.vn