Property stock values plunge deeply

The dreary property market this year has led to the plunge in real estate stocks as the share values of several listed property firms had dropped as much as 80 percent.
When the property market was still bustling, real estate stocks were among the most attractive to investors. However, multiple property companies have been helplessly watching their market values strongly decline since the year’s beginning.

Investors’ confidence in the market also dwindled in accordance with the gloomy market trend, especially after the central bank tightened credit for property even though the sector has yet to prosper since its fall in 2008.

The businesses of property firms were reflected in their stock prices. Among the 60 listed realty firms, the share values of several companies were now equal to 20 percent compared to the end of 2010.

Van Phat Hung Corporation (VPH), for example, sees its VPH price of 25,000 dong per share in 2010-end drop to a mere 5,000 dong now. Similarly, Pacific Property and Infrastructure Development Joint Stock Co. (PPI) witnessed its stock falling from 24,000 dong to 4,600 dong per share as of Wednesday.

Even the giant like Hoang Anh Gia Lai (HAG) also recorded a slump in stock prices, from 80,000 dong per share in the end of last year to 18,000 dong at present.

Market observers said the credit tightening policy pulled down the trade volume on apartment market since investors found this segment no more appealing.

In fact, due to the lack of capital, many enterprises had to suspend the construction of new projects. Also, under the pressure to settle their debts at banks, several enterprises have sold off their products to cut losses.

According to Savills Vietnam, the investors’ psychology is an important factor to the property market at the moment, and decided whether the cash flow would return to the market in the near future.

Fiachra Mac Cana, managing director and head of the research department of the Hochiminh City Securities Co. (HSC), said in a recent market analysis that property prices would decline drastically in the first quarter of next year when banks forced small property companies with high ratio of overdue debts to sell their products to pay debts. As the prices fell, investors would be wiling to buy property products along with real estate stocks.
Saigon Times

Tags: vietnam stock, Vietnam stock market, VNindex

Posted by VBN on Dec 31 2011. Filed under Real Estate, Stock. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry