LSX flush with investor confidence

LSX flush with investor confidence

Investor confidence was clearly demonstrated in Tuesday's Lao Securities Exchange (LSX) trading session when a record 650,667 shares changed hands for 4,481,736,700 kip (US$554,396), surpassing the previous highest day's trading by almost US$300,000.

There is a current groundswell of interest in the LSX and overwhelming enquiries as to what strategy private investors should adopt. It's early days yet, but regardless of all the hype in the past seven days of trading, the meteoric rise in the LSX index rally has to date been most impressive. Yesterday's volumes were ‘bullish' and reached their highest peak to date. Tuesday's session outperformed expectations, and more than doubled any two previous days' combined trading sessions.

BCEL's stock has a much lower market capitalisation than EDL Gen but that hasn't deterred this ‘lightweight' from outperforming EDL with superb share price appreciation. Based on current performance this stock is emerging as the investors' favourite and currently (technically) the share price is skyrocketing.

Further consideration is supported by yesterday's report that the bank has forecasted a rise in profitability for 2011-2012. As such, BCEL rates, at the current price, as a strong buy. Yesterday was another record day when the share opened aggressively at 10100 and volumes reached new territory of 210,667, exceeding Tuesday's 200,000 opening with a trading value of 2,127,736,700 kip (US$256,203), well up on last week's daily trading average of US$80,403.

EDL Gen is assured of growth with strong regional demand for hydropower. This stock fundamentally represents great value over the longer term for private and institutional investors. The share price is a bit more sedate than BCEL, but the performance is also impressive and definitely represents an accumulation strategy. Yesterday's trading volumes charged to 440,000 with the value peaking at 2,354,000,000 kip (US$291,192) -well up on last week's daily average of US$80,993.

Drawing comparisons it is worth noting EDL Gen has, in six daily trading sessions, traded 1,197,510 shares valued at 6,008,649,000 kip (US$744,135) while BCEL's turnover was 619,602 shares, valued at an impressive but comparable value of 5,657,834,450 kip (US$700,374).

World Markets were generally positive on Tuesday but trading volume still remained at lower levels. Commodities (coking coal, iron ore and copper) which were sold off yesterday staged our forecast recovery to Friday's closing prices, and it is reasonable to assume on the scarcity of dwindling copper stockpiles that there will be further strengthening in this sector for Q1 2011. Australia, the world's biggest exporter of solid fuel, saw supplies curbed for power station coal after heavy rain and devastating flooding, causing prices to rise for a seventh week to a more than two-year high as steelmaking coal increased by 5.7 percent.

Gold has a new resistance level at US$1,400/oz, particularly since the strengthening of the US dollar and oil prices.

The British pound appreciated yesterday to 1.59 with the Australian dollar hovering just under parity. The euro remained under pressure at 1.32.

Property stocks are currently under the microscope with a glut of housing and apartments occurring in China, Thailand and Vietnam.

China is to trial the introduction of a property tax and has restricted conditions for real estate lending.

Financial stocks at the moment have low PERs and have to rate reconsideration as economic conditions improve, particularly when diversifying your portfolio. In this sector, one stock you should research is ANZ Bank as its Asian expansion programme rates highly. Inflation and flood devastation in developing nations is forcing up food prices. In India vegetable prices have risen 69 percent year on year with restrictions now imposed on vegetable exports.

During the past two months the price of eggs in India has risen by 20 percent with no immediate improvement evident. Floods have affected Thailand, Brazil, South Africa, Australia and Sri Lanka and are putting food availability and prices under pressure. This signals a consideration in investing in the big supermarket retailers, who will be the immediate beneficiaries.

vientiane times