Unequal Balance

The Vietnamese stock market is entering a new whirl with continuous and formidable fluctuation of prices. Certainly, the stock price is always affected by many factors, for example, the business performance of the enterprise, decisions of management board, the overal situation of the whole market, etc. But generally, the most basic law influencing on stock price is the supply and demand balance.

Demand to wait for opportunity

The wave on the exchanges has created undercurrent to the below OTC market by chance. (Photo: T.C)

When the listing market begins to speed up, many experts have the same comment that it results from the common impact from WTO and APEC.

However, investors simply understand that the price goes up due to the sudden increase of buying power pouring into the market.

On the other hand, in their opinion, the “fever” starts from foreign organizations and some certain major investors that have pushed up the demand power on mainstay stocks of the market as REE, GMD, SAM, VNM, STB, ITA, etc. “This is the time it needs to increase”, a veteran investor comments on the price rise.

To understand him, let's have a look at the over-the-counter (OTC) market and feel how the real heat from the listing market “spreads” to OTC’s stocks price.

When VN-Index just quickly increased, buyers immediately “hunted” for stocks in the OTC market to diversify their investment portfolio and wait for opportunities from new potential stocks which were not yet recognized.

The wave on the exchanges accidentally created the “undercurrent” to the OTC market.

Who profits from the price increase?

Only within 2 weeks, the OTC stocks preparing to list boosted their average value more than 30%, such as Horuco, Tifoplast, Tapack, PV Drilling, etc. The prices of other enterprises’ stocks even increased rapidly as soon as they got new information.

But the matter is that who will get profit when OTC price goes up.

First, look at the Vietnam Securities Investment Fund (VF1), the most transparent and open in the present market. More than 50% of this fund’s portfolio is still in OTC market. VF1 claimed a profit of over VND100 billion last week, raising its total net property to nearly VND1.2 trillion compared with the oroginal establishing value of VND300 billion. Most of VF1’s profit was obtanied from the OTC market before these stocks are recognized by public and appear in the concentrating market.

The individual investors can push up demand power in short-term. (Photo: T.C)

As the same time, foreign funds and investment institutions also pay much attention to the auction sales only and buy in strategic stocks. However, to help OTC stock price grow, it is necessary to have demand from individual investors who can push up the price when they rummage to buy stocks. The increase of price on the exchange is therefore the best motive for general demand power of the whole market.

An expert investor on the ACB Securities Company’s floor said that Viet Nam’s stock market is very interesting as it can bring profit to all investors at the moment.

So, both institutional and private investors can get profit, the obvious profits attracting innumerous new investors. Market managers also “feel the profits” as stocks are gradually ascending and overwhelming other investing tools.

Will demand keeps stable if supply ascends?

In spite of the increasing price, everybody admits that the fact and fiction will only be obvious until the first quarter next year. Enterprises are striving to enter exchanges, which will put more supply pressure on the market.

However, thanks to the early raise of demand power, the capital that has been increasing in the market may not make the stock price degrade as quickly as worried.

The fluctuation of supply and demand everyday can show that the market in the short term is unstable; however, in the long term, the increase of buying power will be a multipurpose key for the growth of the market.

It can be thought that the early using of demand increasing to wait for the coming hot supply is challenging but potential, helping the VN-Index be able to overcome this time.

Looking back after the next 2 years, we can see where the real demand come from. However, experts are now afraid of the general heat that can make individual investors buy wrongly-estimated stocks.

Related Articles:
Viet Nam stock market in the new “fever”: Stock Prices Continuously Soaring
Two weeks after joining WTO: Stock Fever with Capitalized Value Up To Over US$430 Million
Viet Nam Stock Exchange and Small Investors
VinaCapital Raises Another US$300 million to VOF
VF1 to Adjust Issuing Price

By Tuong Chau

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