David Ying, chief representative of SYSTEX Corporation, offers
his personal views on the stock market and its future


The past year was volatile worldwide, and Viet Nam's stock market
was no exception. On the opening day of trading on the HCM City Stock Exchange
in 2008, the VN-Index reached 921 points, not an historic high but something
close.


By December 25, the Index had plunged to a mere 302 points, a
third of its value at the beginning of the year.


But, despite the global financial crisis, Viet Nam has 95
licensed securities companies, ranked third among ASEAN countries in terms of
the number of the brokerage houses (95), behind only the Philippines (184) and
Indonesia (121).


In stock market capitalisation, however, Viet Nam was ranked last
among all major ASEAN states with stock markets, with total market
capitalisation of US$11.36 billion and an average daily turnover on the market
of just $46.51 million. That's only a tenth of Thailand's and just 4.5 per cent
of Singapore's.


From the above statistics, it's obvious that competition among
brokerage houses in Viet Nam during 2008 was tense, if not cutthroat. Liquidity
of shares was also a major concern for average investors, not to mention foreign
institutional investors. A severe market situation is still ahead in the coming
year, so it's almost needless to say that "survival of the fittest" will be norm
throughout 2009.


Worse to come


Re0cently, I visited several securities companies in HCM City.
The majority of trading floors of these brokerages had many empty seats waiting
for retail clients. One senior staffer at a famous securities company predicted
that the worst was yet to come. He said his company was already prepared for the
most severe situation in 2009, including but not limited to budget cuts, selling
assets to raise cash, and laying off employees.


Where did all the investors go? We still saw crowds on the gold
trading floors and active subscriptions to the Vietinbank and Eximbank IPOs.
Frankly speaking, investors are still very cautious about equity investment due
primarily to the recent global financial turmoil and past unhappy experiences.
No clear signs suggest that the worst is over. Many institutional and individual
investors are asking, "How did the financial tsunami adversely affect the 300
listed companies in Viet Nam?" It won't dust out until the annual reports are
released in early 2009.


To survive, brokerage houses need to be conceptually reequipped
and revamped, without big expenditures; retail investors also have to be
re-educated, reshaped and encouraged as most of them incurred losses in the past
one way or the other. In order to call them back to the market, it is imperative
to begin providing real-time financial information to retail investors. Courses
and seminars to introduce online trading need to be conducted and other new
services should be in place.


More aggressively, to attract retail investors to commit their
capital once again, new investment instruments have to be created. To fully
utilise current employees and facilities, brokerage houses should develop and
introduce new investment instruments, such as investing in fixed incomes or
Exchange-Traded Bond Funds (ETFs in government bonds), for their clients to park
money in a safer haven while waiting for opportunities.


Future perspectives


It was very painful to watch the recent financial turmoil change
Wall Street and it no doubt reshaped the securities market landscape in Viet
Nam. In the foreseeable future, marginal brokerage houses will be restructured
and the lucky ones merged into stronger ones equipped with experienced and
innovative staff and higher market awareness and recognition. Brokerage is a
service business, and it is human nature that good people are always looking for
reputable houses. Only good staff can provide better services.


At the end of day, whoever is well-capitalised, well-staffed,
innovative in developing new financial instruments, and providing prudent
services to their clients, e.g., electronic trading, real-time financial
information, regular investment seminars, and advanced trading knowledge and
devices, will ultimately be the winners.