"It's a grey market," explains Lynh Khanh Pham, owner of the coffee shop IndexX House. Each day around 70 regulars visit his shop, order their coffee and food, fill in forms and post them onto the shop's notice board. The form announces potential buyers and sellers in shares of recently privatized state-owned enterprises (SOEs). More than 300 SOEs have been 'equitized' since Vietnam's equitization programme was implemented eight years ago.
According to Pham, the shop is networked with Dow Jones Telerate and has a screen on the second floor flashing the market movements in Paris, Hong Kong and New York.
Investment advice
Pham says he only makes money through selling food and beverages, and charges no broking fees. But his shop is drawing in the money men. Every Friday for the past six weeks, high-flying investment professionals come into the first floor of Pham's three-storeyed coffee shop to give presentations on basic investment techniques to a full house of 120.
Pham's guest presenters have included the chief representative of the State Securities Commission in Hanoi, as well as local and foreign investment managers and businessmen aspiring to float their companies. The audience is composed of mainly small business owners.
"I wouldn't say that they're lectures. It's more like a talk show," says Pham. "People stand up and ask questions. And if the hosts can't answer, they usually have a group of government people with them to help."
The stock exchange is being temporarily housed in a small building next to the grand colonial building that is being renovated for the formal exchange, says Pham.
Positive climate
David Matthew, general director of Chinfon Manulife in Ho Chi Minh City, says he has not been to the shop but he hears that "it's a bit like Lloyd's of London". Matthew declines to comment on how Manulife will invest its premiums in view of the new capital market developing in Vietnam. Manulife has been operating in Hanoi since 1996, and formed a joint venture a year ago.
The first two companies to be listed on the new stock exchange will be REE (Refrigeration and Electrical Engineering Company) and Sacom, a telecom cable producer. Like most former SOEs, Sacom and REE set their share price at 100,000 dong ($7.10) when equitized. But in the grey market, REE is trading at D140,000 and Sacom at D145,000.
When the stock exchange rings its bells next month for the first time, the number of shares traded are likely to mutiply ten-fold. That's because Vietnamese listing rules require all shares listed on the exchange for the first time to be set at a price of D10,000, which is about ten times lower than most most companies' share prices at the moment. The companies therefore have to prepare for a stock split when they are listed.
According to investors on Pham's trading floor, the third company likely to be listed is Asia Commercial Bank. And they expect another 30 companies will be listed one year from now. Pham hopes Ho Chi Minh City will become another Shanghai in three years' time.
The stock exchange will operate from 8am to 3pm every Monday, Wednesday and Friday, while IndexX House opens from 7am to 10.30pm, seven days a week. Pham charges 80 cents for a cup of brewed coffee.
