Stock market lull sees spike in foreign buys
During the lull in the stock market, many domestic investors are indifferent about trading shares however some foreign investors are quietly picking up shares in blue chips, aiming to gradually dominate these companies.
Shares of the Hau Giang Pharmaceutical Co (DHG) suddenly became a hot item last week, as according to the Ho Chi Minh Stock Exchange (STC), the demand for DHG shares from foreign investors rose sharply and made the biggest of the markets daily buying orders. During the past five trading days, foreign investors bought 133,100 DHG shares and sold only 11,290 shares. In recent trading sessions, they have often offered the ceiling price in a bid to snap up as many as they could. On June 15, the market reported buying orders for 79,030 of DHG’s shares of which foreign investors ordered 47,230. Thus within only one week, DHG’s shares climbed from 318,000 dong to 351,000 dong a share.
Some experts say that DHG was one of the best performing businesses and is on the rise. Last year, DHG posted a pre-tax profit equal to its chartered capital. This year, DHG is planning to raise its chartered capital from 80 billion dong to 200 billion dong. Accordingly, in the first phase, the company will scale up its chartered capital by another 20 billion dong to 100 billion dong by issuing shares to the public. In the second phase, the company will raise its chartered capital from 100 billion dong to 200 billion dong by paying dividends in shares and issuing bonus shares to its existing shareholders. Although the company listed on the stock market at the end of last year, foreign investors hold up to nearly 32% of DHG’s stake.
While the market was depressed, foreign investors took advantage of buying blue-chip shares, strengthening their presence in these companies. Among 107 listed companies on the southern bourse, 28 foreign entities have held up to over 30%. In particular, 12% of these foreign investors have used up their 49% (30% for banks) level of ownership.
Nearly one year ago, when the Binh Minh Plastics Co started listing on the stock market, foreign investors owned only 6.5% of its stake. However, to date, foreign investors hold all their allowed 49%. As for the Thu Duc House Development Co (TDH), although the company listed shares at the end of last year, foreign investors have so far snapped up 49% of its stake. Sectors that are not required to be governed by the state will be allowed to open up wholly to foreign investors, that means foreigners will have the right to hold 100% of capital of Vietnamese joint stock companies.
With long term objectives and more experience, foreign investors understand that snapping up blue-chip companies is now much easier than it will be in the near future, so whenever the market is static, foreign investors use this advantage to pick up blue-chip shares. It is projected that with such an increase in the rate of buying, foreigners will shortly dominate all the blue-chip companies, after the Vietnam government allows 100% foreign ownership.
Category: Stocks
