A Tale of Two Markets

A couple of recent columns from Vietnam News illustrate the contradictions of this market, which always seems to be going in two directions at once.

On the local side we have what can only be described as a speculative frenzy, driven by day-trading housewives, dealing in rumors and gossip.

Wake me up when it’s over

The Sai Gon Securities Trading Centre has been on fire in the last few months, but the party may be ending as some experts say the market is in danger of overheating. But don’t tell that to the women who have been investing in droves.

Visit the floor of the stock exchange and you’ll notice that these women – often seen talking on their mobile phones – outnumber the men. They often spend the entire morning staring at the board full of twinkling figures.

Huong, Thuy, Cuc and Van, all in their forties, are just a few of the many women who have been "playing stocks" since last December. They’re already amassed thousands of shares valued at hundreds of billions of dong, they say.

Where they get their information about the hottest stocks is a source of dispute and rumour, but they’re reportedly known for their wide circle of contacts.

These women, however, are a lucky minority compared to most investors. Most women are investing very small sums of money and many know little about the market even though they’ve taken a few courses. They can speak vaguely about P/E (price/earnings ratio) and few know the difference between a stock and a bond.

"They just want my advice on what stocks to buy," said Nguyen Vinh, who teaches a course on the stock market. He said he told them that if he knew, he wouldn’t be teaching.

TV producers say they are also getting lots of requests for tips from women who have heard that many have made big money purchasing stocks.

In December, Xuan Vinh, for example, spent VND65 million buying 2,000 LAF and TRI stocks, and each morning she saw herself richer by VND2-4 million.

But she didn’t do her research: LAF stock and TRI shares suddenly plummeted in value last month. Vinh says she lost a great deal of sleep.

"The stock market is not gambling. If you keep a sound mind it can be a good occasion to earn some money," warns Dinh Cam Tu, who works at Sai Gon Trade Centre.

In a remark that will be sure to have women grousing at men’s chauvinism, Huy Nam, a stock exchange expert, said: "Many women conduct transactions emotionally, just like when they go shopping. They will be certainly be the big losers when the balloon bursts."

FULL STORY here: Wake me up when it's over

When the balloon bursts, it is safe to say that it will be more than a few little old day-trader ladies who get hurt.

On the other hand, we have our friends the foreign institutional investors pouring money into the market by the truckload.

Take this column for instance:

Stock market kinks need to be ironed out

The imbalance in supply and demand in both the official and over-the-counter markets is a key problem the Government must focus on, according to David Fernandez, JPMorgan’s head of Emerging Asia Economic Research.

Fernandez said that JPMorgan’s clients believed the demand for Vietnamese securities would rise rapidly, even as more companies in the country are equitised and listed on the stock market.

He said investment management funds are now finding it easy to seek capital in the US or Europe, and that JPMorgan clients in Hong Kong, Singapore and South Korea are all raising funds to inject into Viet Nam.

The Government’s job is to create an environment in which investors would want to enter and not leave, he added, predicting that in the near future share prices would remain high and said he did not see signs of an unstable market. However, he said that policymakers should take action now while shares were overvalued.

He also believes that a financial crisis like the one in Asia in 1997, when investors withdrew massive amounts of money from stock markets, would not occur in Viet Nam.

He added that though risks exist in all markets, the risks in Viet Nam were still not fully apparent, and that the investment environment was a favourable one for investors. Foreign investors, he said, were confident about the Government’s policies on forex management and other policies related to the stock market.

FULL STORY here: Stock market kinks need to be ironed out

So we have the Ten Year Bulls from Merrill Lynch, Citi and JP Morgan, boldly charging into the final frontier market in Asia...

And the Day-Trader Housewives throwing their money at every new rumor that comes along...

Right now both are dumping money into the market as fast as they can, driving the VN Index ever higher to new record levels.

But some day in the not too distant future, they will pause for breath and take a look at what they are doing. The Institutional Bulls in their suits will look around them at the Housewives in their slippers and pajamas and the housewives will stare back at the Suits. There will be a lightning flash of recognition and everyone will make a MAD DASH for the door.

Last one out's a rotten egg!

At least this is how I imagine this Close Encounter between these alien beings unfolding.

The absurdity of the situation will suddenly reach the breaking point and a light will go off and they will suddenly come to their senses and say:

Where am I? What have I done? This is NUTS. I have to get OUT OF HERE.

Or not... Time will tell.

Just remember, whatever happens, this is a tale of two markets, engaged in a delicate cross-cultural tango, each moving to a different rhythm, tuned to the beat of their individual iPods.

When the music stops, WATCH OUT!

Where it stops nobody knows...