OTC investors dig themselves into a hole
Throughout the bourse’s low, many investors hastily exchanged their investments in listed shares for gold, real estate and OTC securities. However, investors may regret their decision because OTC shares are now unmarketable.
In early October, when the official bourse was not producing high profits, investors began injecting money in OTC securities. A group of young investors, calling themselves SIG, decided to sell half of their listed stocks and buy up OTC shares.
Binh, a member of SIG said the price fluctuations on the official market made them lose patience, and they decided on the OTC alternative.
A member of a securities forum said he purchased Vinaconex shares after selling 60% of his listed shares. He thought Vinaconex was better because it saw steady price increases, as other shares fell.
The OTC market can bring higher short-term profits because the OTC’s share price increase ceiling is higher than the bourse’s. Therefore, OTC shares are the right choice for brave and eager investors.
Investors are most interested in bank, petroleum, and real estate shares because these are considered backbone sectors of the national economy.
However, investors made the wrong move. They are in a stalemate because no one wants to buy and they, therefore, cannot sell OTC shares. The continued official market slump has resulted in a steady OTC market decline, as well.
Truong, an investor, said he needs VND3bil to join Vietcombank’s IPO; but he is stuck with his OTC items and not enough funds.
Truong said he now needs a lot of money to restructure his portfolio, but he cannot arrange enough for his investment plans. He said that at this moment, there are more sellers than buyers. A lot of securities investors want to sell shares to pay down bank loans. Commercial banks are urging investors to pay off debts because they must reduce the outstanding loans to securities investors to below 3% of total outstanding loans, as stipulated by the central bank.
In April- August 2007, when the VN Index dropped to 889 points, OTC share prices fell to their lowest point. OTC investors incurred heavy losses when share prices dropped by 40% on average. |
