Investors anxious about stock alliances

Many listed companies have announced to buy large amounts of shares in each others, triggering concerns from investors that they partnered up to drive share prices.

Share price of a stock alliance can rally on just one or two members’ announcement about positive financial result (Photo: Minh Tri)

Seafood exporter Aquatex Bentre has bought nearly one million shares in steel maker Dai Thien Loc since the first quarter of the year.

Le Ba Phuong, vice chairman of the former, is also a member of the latter’s the board of directors.

The HCMC-listed seafood exporter also owns 1.9 million shares in plastic packaging manufacturer Dohaco, which also lists on the Ho Chi Minh Stock Exchange.

Vietnam’s largest brokerage Saigon Securities Incorporation meanwhile is one of the biggest shareholders of both Aquatex Bentre and the property care service provider Pan Pacific Corp.

Pan Pacific Corp, in addition, holds shares in both the seafood firm and Dai Thien Loc.

Many investors also feel confused about the seafood company’s investment porfolio and wonder what kind of cooperation that Aquatex Bentre is looking for in the partnership with steel maker Dai Thien Loc.

“In principle, if share price of one out of three stocks that hold shares in each others moves up, the remainders’ will likely to follow a similar pattern,” said a broker in HCMC.

“Share price of a stock alliance can rally on just one or two members’ announcement about positive financial result as rumors and sentiment control the tides on the Vietnamese stock market.

“However, one member’s loss will also result in bad impacts to the rest.”

Many investors are also concerned about the partnership between Pan Pacific Corp and the brokerage SSI.

The HCMC-listed brokerage last month registered to buy 550,000 shares in the property care services provider to raise its state to 17.7 percent, according to a statement on the Ho Chi Minh Stock Exchange.

Pan Pacific Corp earlier announced it would invest around VND90 billion ($4.5 million) in financial sectors.

The HCMC-listed firm’s short-term financial investments are worth more than VND84 billion in the first quarter of 2011, amounting to nearly 30 percent of its total asset and 70 percent of its registered capital.

In 2010, Pan Pacific Corp earned more than VND15 billion from financial investments, equal to 75 percent of the net value.

Financial experts warn that the firm will likely to suffer heavy losses from its financial investments since the market remains bearish.

Pan Pacific announced in a financial report that its net profit in the first quarter plummeted 111 percent.

By Phuong Trinh – Translated by Ngoc Khoan

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