Knowledge - Special subject

The difficulty in analyzing a Vietnam business

We can say in a few years, the explosion of Vietnam's stock market has attracted many investors as well as international financial institutions. We cannot deny the development and the benefits that brings the stock market. Stock markets have contributed significantly to the country's GDP growth. So far, Vietnam's stock market has been a development in all aspects compared to the beginning of time: From the number of listed companies (153 stocks on HOSE and HASTC stocks in 130), the number of securities companies nascent, investment funds, to a total value of market capitalization, Index, the value and volume of average daily trading of investors and especially foreign investors. However, this is not enough, Vietnam's stock market is still more work to be done, particularly to overcome the weaknesses towards a stock market "open," according to international standards. So far, Vietnam's stock market has only officially operating for 8 years, 1 age is too young compared to the decades of stock market Western countries. The very young there is one source that we encounter difficulties when analysis and assessment of a company in general and a listed company in particular.

External hard

The first problems that almost all objects using information on Vietnam's stock market experiencing, it is difficult for the input of data analysis. When analyzing a company to come to a decision, securities firms, investors and analysts are based on records and data provided by the business under the regime of the present disclosure onions. However, because of the different purposes, business can provide false data. Therefore, financial reports and the prospectus may not contain the figures were "distorted".

Normally, the data is published in the report did not accurately reflect the health status of the company. In fact most of the companies in Vietnam and even in the world, the chief financial officer (CFO) are always under great pressure of chief executive officer (CEO) of the report should always be subjective .

On the other hand, each company has its own way of presenting the report, according to the manager's subjective, it is difficult for the audience to use and analytical approach. Currently, the financial markets in general and Vietnam's stock market in particular, are in the early stages of new development, infancy. The level of information gathered as well as statistical data from those directly engaged in providing data not so high that not enough data comparisons between companies in the same industry or comparison between sectors together to fight correct price of the company's position in that industry or sector position versus other sectors.

Another difficulty from the outside but the object using information or encounter, it is difficult to source information. At present, Vietnam does not have an organization that specializes in collecting, processing information of the company including information about risks, operational history ... to provide analytical information authentication when evaluating a company. Although agencies exist mass media such as newspapers, internet, etc... But the agency is not a professional organization financially, therefore, the information and data that they provide is not necessarily authentic, adding that too much information for the purpose virtual difference can be launched by accident or intentionally. Therefore, when access to the sources of information for analysis will lead to a wrong assessment of the company.

We are not completely negate the contribution in the field of providing information, financial data of some media as the website of the company stock, financial forums, stock etc .. But the reality, even themselves securities firm, a financial institution is considered to be a professional in the field of stock at the moment, given the same information about the company, the same financial indicators, at the same time, the two different securities companies to publish different results and consequently investors use information if the Company's securities will make an informed decision, but use the other company's stock a different decision.

Difficult inside

When analyzing a company, the analyst must understand business that what works in the field of development in the market is. One point worth noting is that the information collected about the companies usually have lagged behind the reality, so when analysts need to see changes in the near future on how business, positive or negative, its trends compared to other businesses.

Also included are objects using information to analyze often limited in terms of expertise, technical analysis method. This is an important element to help people analyze the correct assessment of a company. Currently, in Vietnam there are many experts, but the level of expertise is not yet enough, do not have much practical experience that is easily underestimated the nature of a company or business.

The analyst does not have the ability to predict accurately the market, lack of technical analysis, not to apply the analytical tools to analyze the market and the company. Especially Vietnam investors are mostly small retail investors, the investment often follow the herd mentality, the market on the buy, the market sell-off run down, adversely affecting shares and photos awarded to the company.

Some solutions

Currently, the company provides information to the center, then the new center announced to the public. But with more and number of companies announced that center back slowly (maybe few days), it will lead to insider trading. Therefore, the solution to the problem of transparency of information on Vietnam's stock market, avoiding proprietary financial information disclosure of the company held securities brokerage business is to give themselves the disclosure of information for many mass media, announced promptly to prevent insider trading. In fact, there were some companies have realized the advantages of listing on the stock market, such as tax abatements (formerly) easily raise capital, improve corporate reputation etc... Therefore there is a growing number of the application for listing on the stock Exchange as well as Ho Chi Minh securities Trading Centre in Hanoi. But the need to do now is to improve the quality of companies listed on Vietnam's stock market and not just focus on the number of listed companies.

The quality of the market not only in the quality of listed companies, but also in other subjects involved as the company stock, held stockbrokers etc .. Therefore, improving the quality the services of brokers, brokerage organizations, stock exchanges, securities trading center as well as a member of the market should also be emphasized in order to strengthen inspection and surveillance activities market for the securities market healthy activities. Brokerages and trading centers work efficiently, save costs contributed to increased liquidity of the stock market.

Also need to strengthen professional training and dissemination of knowledge about the stock market. These are tasks that can be undertaken by securities associations, like the pattern of associations of securities in developed countries as NASAA and SIFMA (in North America).


Attracting investors to join the stock market by raising standards of disclosure, supervision, inspection and handling of violations and extend the model of collective investment funds, establishment official credit ratings.




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