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Investors must shape up to avoid losses: experts

Update: February, 09/2017 - 09:00
Investors should improve their knowledge of the stock market as a lack of experience and knowledge could make their investments suffer, securities experts said at an online conference held by news site cafef.vn yesterday. — Photo vietbao

HÀ NỘI — Investors should improve their knowledge of the stock market as a lack of experience and knowledge could make their investments suffer, securities experts said at an online conference held by news site cafef.vn yesterday.

There are opportunities and risks for investors in the securities-finance markets that can result in losses, according to Trần Hoàng Sơn, head of market strategy division at MB Securities Company (MBS).

There are some mistakes that investors should try to avoid when they invest in the finance-securities markets such as depending too much on market speculations and rumours when unable to assess the accuracy of the information, he said.

In addition, investors should be wary of firms that lack transparency among the management board members and may falsify financial reports, he added.

Investors can also suffer losses when they put too much trust in brokerage agents, which lead to the agents losing their money, or make investment in firms that have high finance leverage ratios, Sơn said.

Information disclosure remains an obstacle that has prevented investors from getting accurate evaluations of targeted companies.

Government agencies should develop a legal framework to sanction companies that intentionally violate information disclosure rules, said Lê Đức Khánh, head of market strategy division at Maritime Securities Inc (MSI).

Those agencies should also provide stricter listing regulations regarding business performance and how long a company needs to prepare for listing on the stock market, he said.

For example, Central Mining and Mineral Import-Export JSC’s (MTM) listing on the Unlisted Company Market (UPCoM) cost investors a huge amount of money as no securities or financial firms evaluated the performance of the mining company.

“The securities firms must play the role of a protector to prevent risks for investors,” Khánh said. “Investors should think carefully about the transparency and the earnings of a business before investing.”

Investors need to use suitable investment strategies, which focus on potential growth of the companies that have high potential in the long term but are underestimated at the moment. They should also avoid short-term surfing.

When the stock market advances, there are more earning opportunities for investors and they will be motivated to buy stocks, using high levels of margin lending.

High investor confidence during an advancing period of the stock market is always trouble for investors as they can miss out the chance to buy good stocks and add bad stocks to their portfolios, Khánh said.

Many companies will be traded on the securities market this year, of which, well-performing companies will see increases in share values while others will decline.

Investors may need time to address the accurate range of share values for those companies. It may take investors three months to watch those stocks move before purchasing them.

Cao Minh Hoàng, head of market analysis at the asset management firm IPA Investment Corporation, expected that investors will participate more in training programmes organised by finance-securities firms.

In those training programmes, investors will be trained by securities experts regarding corporate governance and finance management to protect their investment, he said.

Investors can also try finance investment services provided by reputable financial institutions, to keep risks at low levels and generate profits from investment, Hoàng added. — VNS

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