Stock market investors need more information
Stock market investors need more information
The buying and selling of shares in Laos is expected to stay low key for the next few years after the Lao Securities Exchange opens next year, as most people have no experience in this form of investment.
A number of Lao businesspeople have said they have no idea about how to invest in the equities market, though the government is now allowing the two state-owned enterprises BCEL and EDL Electricity Generation to offer shares for public sale. This is the first time any Laos-based business has offered shares for sale.
Those considering investing in the new stock exchange said they had learnt what they knew about stock markets from foreign TV programmes and newspapers. They knew there had been fluctuating stock prices during the global financial crisis, but had no experience of buying or selling shares.
The manager of a construction company in Vientiane said he would like to invest in the stock market after learning this form of investment could yield better returns than simply depositing money in a bank.
But he didn't know how to go about trading and needed to learn more about this new investment opportunity, he said.
Another businessman said he thought the sector concerned should hold a seminar and workshops on stock trading so people could learn about this form of investment, and more people would be encouraged to take part.
Dr Darrell Walker, an Australian stock market specialist, said trade on Laos' new exchange would be slow in the first few years, adding that other countries including Vietnam had experienced a similar situation.
“Two years after opening, the stock trade in Vietnam was booming,” he told Vientiane Times .
Economist and business advisor Dr Mana Southichak said people needed to closely study the performance of a company before buying its shares. The more information they had about a company, the more chance they had of making a profit, he said.
“If you make a careful study of the performance of a company, you will be able to reduce your investment risk,” the Lao American advisor said.
Dr Mana, who runs Intergro Consulting in Vientiane, said investors should study the business of a company and the demand for its products on the local market. Knowledge of product demand would help investors to forecast the growth of a company and gauge its potential for profit.
He said the stability of the Lao economy was important, explaining that if the economy remains strong businesses will be more likely to make a profit, thus making an investment in its shares more profitable.
Dr Mana said he appreciated the government's decision to open the Lao Securities Exchange, and believed this move would create another channel for local enterprises to mobilise investment funding and expand.
“In the past, local companies have only been able to obtain investment fu nding from banks,” he said, adding that the new stock market would benefit the Lao economy in the long term. However, a number of people have expressed concern over fluctuations in stock prices and the rapid inflow and outflow of foreign currency in Laos, which could affect the value of the kip.
The government plans to limit the number of shares that foreign investors can buy in order to stabilise the inflow and outflow of foreign currency.
Vientiane Times
