Market displays no true underpinning indicators

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VietStock FI English - 33 month(s) ago 3 readings

Vientiane: After a dull day Tuesday, yesterday in early trading there was little change to the previous day's close. Early EDL-Gen and BCEL were dead bolted at “price resistance” levels. By the close BCEL failed to trade but nevertheless lost 100 kip.

Like waiting for the billy to boil and with little incentive to sell, no trades occurred in the first 3 sessions and the index remained firmly locked at 909.31 points.

It took four call auction sessions before the first matching trades occurred for 10,084 shares for 43,361,200 kip (US$5,400). No further trades occurred in the next 11am session.

In a case of the seller beware, yesterday's directionless trading (decrease in turnover) displayed no true underpinning “fundamental indicators”, in particular BCEL being devalued 100 kip according to LSX rules, on no trades. Even though the volumes and turnover increased yesterday compared to Tuesday, overall it was a lackluster session.

According to the SECO's Notice No. 042/SECO, dated 10 Jan 2012, the Lao LSX stock market regulator released a notice on Measures of unlocking EDL-Gen Employee Shares.

EDL-Gen employees' shares, which were previously locked up for 1 year to Jan. 11, 2012, have now been partially released. This means the power company employees' shares (IPO ESOP entitlement) can now be freely be traded on the LSX as from Jan. 11, 2012. EDL-Gen employees therefore can now trade up to 50 percent of their ESOP IPO. Then from Jan. 11, 2013, EDL-Gen employees can trade the other 50 percent or up to 100 percent of their shares.

Likewise from Jan 23, 2012, BCEL staff are also now allowed to sell 50 percent of their holdings and then to sell the balance or all their shares (IPO ESOP entitlement) in 2013. NOTE: Neither notice means employees have to sell their shares.

Employees uncertain of their investment should consult their broker as to their strategy, which we have a preference to go long and hold.

For further announcement details refer to the notices section, on the websites of the Lao LSX, Lane Xang Securities Brokers or BCEL-KT Securities Brokers.

Novices noting the drop in volumes and turnover this week have asked whether the LSX a secure investment proposition. The response is a firm positive yes (long term) but it's not a place for day traders.

Yesterday there was absolutely no incentive to sell (trade for a discount) but plenty of incentive to buy, if you could. Markets are driven by supply and demand.

Investors of both IPOs for BCEL or EDL-Gen are in a currently profitable position, given the current share price and dividends due or paid (around +8 percent annualised).

There has been no visible announcement, but the final dividend for 2011 stocks, based on past performance, should be finalised and paid by April.

For further information on dividend payments contact your local broker.

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