Online trading craze grips Vietnam

Hang around Vietnamese cafés long enough and you are likely to see an arresting sight: one person handing another a grocery bag stuffed with bank notes. Drug deal? Bribe?

In fact, this is the way many Vietnamese buy stocks these days - not through a broker or the stock exchange but through the Internet, with payment made in cold cash. Finding each other through stock-trading chat rooms and websites, buyers and sellers strike a deal online and then close it by exchanging cash for stock certificates.

It's a vivid sign of the times in booming Vietnam. With the economy growing at its fastest clip in a decade, everyone wants to get in on the action. From taxi drivers to tycoons, Vietnamese are speculating wildly on anything that might go up - apartments, gold, land and, above all, stocks.

Online trading is an easy way to play the game. Traders don't need to open an account with a broker. They don't even need a bank account. Unregulated, informal and private, the online market works something like Craigslist or eBay. But they're not trading baseball caps or Dad's stamp collection.

Participants are trading stocks in privatized state companies that make everything from fertilizer to tractors.

Because they ride the waves of the market, these traders are known as market "surfers." On the trading site sanotc.com.vn, surfers with handles like hunter, ghostman, Billgatesvn8x and buyhigh_selllow, barter all day, some offering shares at a premium to see if anyone will bite, others trying to wheedle sellers into giving a discount.

A surfer called huanquan_2006 peddles stock in the Vinagolf golf tourism company. He claims people are begging him to sell at 43,000 dong ($2.61) a share but the stock is sure to go for at least 80,000 when it is listed on the stock exchange. "I own 15,000 shares of this baby. Come on, who wants it? Let's party."

Meanwhile, trungvalen1982 proffers a real estate stock that is just bound to go up because the company is about to build "the most magnificent building in Hanoi," a 30-storey tower. "No way will it be under 200. Anyone want the bloody thing? I can sell it to you at 145."

In another exchange, surfers debate the merits of STB, the stock code of the Saigon-Thuong Tin Bank. "What the hell happened with STB today?" writes someone who goes by Muoidotinox. "I bought this thing at 155 and today the price to 146. My guts are in a knot."

"Don't think of its price each day, you are making a long-term investment," advises Xmas2k5, "Just like putting money in the piggy bank. Before long you'll be able to break that pig and buy yourself a villa."

Not long ago, such banter would have been unthinkable. Almost all Vietnamese companies belonged to the state so there was no such thing as stock or a stock market, much less an informal Internet trading market. But, as it opens its economy, Vietnam's Communist government has privatized more than 3,000 companies and many are going to the market to seek investment.

Their newly issued shares go to executives, staff and members of the general public, who often turn around and flip them for a quick profit. It's risky, but for Vietnamese, who love gambling, addictive. "We're natural risk takers and adventurers," says Ho Chi Minh City stock broker Hun Nam. "People get rich, lose it all then come right back to the market."

With many newly privatized companies releasing little reliable financial information, surfers often buy and sell on the basis of rumour and hearsay. "They'll say things like, 'My friend has an uncle who has a sister who's married to a guy who bought this stock,' " says Mark Djandjy, a Canadian who is head of research for Ho Chi Minh City's Horizon Security Analysis.

Surfer Pham Thanh Tung, 29, says he has increased his money 11 times since he started trading a couple of years ago. "It's easy to buy, easy to sell," he says, "I give you money and you give me stocks - nobody knows."

Another surfer, Trinh Tuan Vu, 26, says he once walked into a café with six billion Vietnamese dong, the local currency, in three ordinary plastic shopping bags. That's nearly $400,000 (U.S.).

How popular is online trading? Sanotc.com.vn, the trading site, has more than 175,000 members and the number is increasing by up to 700 a day.

One reason is that the opportunities on the formal market are still limited. The Ho Chi Minh City stock exchange lists just 120 companies and the Hanoi exchange another 100. But the sanotc site lists 1,462, most of them companies that have issued stock but are not ready to list on the formal exchanges.

The enthusiasm of surfers has helped fuel a big runup in share prices. The Ho Chi Minh City exchange is up tenfold since opening seven years ago. Last year, it doubled. But there are wild swings along the way. The market fell by 30 per cent in April and almost as much in August.

Concerned about irrational exuberance, the Vietnamese government has brought in a law limiting securities loans and plans to put a tax on stock trades.

Mr. Pham says that won't slow him down. He recently saw a 300-per-cent gain on a rubber company stock he bought. "Everyone likes to make a profit," he says with a smile.

Surf's up, and no one wants to miss the wave.