Investors turn to hunt for bonds

As experts have many times warned that shares were overvalued and share prices had far exceeded Investors who placed orders in many successive trading sessions, but failed to buy shares, are now injecting money in bonds - a good alternative.their actual values, investors do not expect share prices to increase any more. That explains why investors now are tending to hunt for bonds instead of shares.

Hoang Xuan Giang, an investor who once hunted for MB shares, now is trying to buy MB bonds. Mr Giang said that if he bought 4 MB bonds at VND3.2-3.3mil/bond instead of one MB share at VND12-13mil/share (the face value is VND1mil/share), he would earn a profit four times higher than the invested sum of money after five years, when the bonds would be converted into shares. Even if MB share prices dropped by 50%, the profit would still be double the invested sum of money.

Investors are now buying bonds, considering this a safer investment channel as bond prices do not see big fluctuations like share prices. Even if the market freezes, bond holders would still get higher profit as bond interest rates are higher than share dividends.

Bonds issued by the Saigon Securities Incorporated (SSI) are also being hunted by investors. SSI shares are listed among the blue chips at the Hanoi Securities Trading Centre (HASTC). As SSI shares are valuable on the market, investors are rushing to buy SSI bonds, hoping that when the bonds are converted into shares, they will get fat profit. Now SSI bonds are trading at VND800-820,000/unit (the face value is VND100,000), and the bonds will be converted into shares in 2008, while SSI shares are selling at VND240,000/share.

Just several months ago, purchasing bonds was considered the job of the ‘coward’ investors, who dared not play on the official ‘playing field’. However, bonds now are listed in the portfolios of many investors.

Nguyen Anh Tuan, an investor at BSC trading floor, said that investors were now thinking of purchasing bonds because investments in shares would not bring the fat profit it did in the past year. He said that the market would fall down after a long time of heating, and it was the right time to restructure investment portfolios.

Source: VNE Equity Vietnam Mekong Capital