SAN FRANCISCO (08/04/2000) - Investors began trading shares last month on Vietnam's long-delayed stock market. Trinh Ba was not among them.
He and his Hanoi-based friends would rather buy and sell U.S. stocks on the Internet. Their clique of online traders is part of an emerging investor class that is spreading support for incremental economic reforms that the Communist government began in 1993.
After talking about it for years, the Vietnamese government officially opened the country's first securities exchange with considerable fanfare July 20. But like many liberalization efforts in Vietnam, there was a lot of talk and not much action. Trading in two stocks - Refrigeration Electrical Engineering and Cables and Telecommunications Materials - began July 28. But the government allowed shares to rise only 2 percent a day and total market turnover initially was just US$5,000. Trinh says local companies are too immature to invest in.
So investors looking for real action are turning to the Net. Trinh, 26, and others opened accounts last year with Ameritrade, E-Trade and Trading Direct.
They use Yahoo Inc. and MSN to get stock information and tips, such as whether the U.S. Federal Reserve is likely to raise interest rates. "We get a lot of good information on the Web, although there are a lot of rumors," says Trinh.
The State Securities Commission (Vietnam's equivalent of the Securities and Exchange Commission) says it has no idea how many Vietnamese are trading U.S. stocks. E-Trade and Trading Direct say they don't keep records on their account holders' nationalities. For its part, Ameritrade says it has 250 customers in Vietnam.
While trading foreign stocks is not banned in Vietnam, the country's strict capital controls make it illegal to ship U.S. dollars abroad. However, bringing dollars into the country is permitted, and Hanoi apparently doesn't require Trinh and his friends to pay taxes on the money they earn from trading.
Nonetheless, Trinh keeps a low profile and didn't want his photo taken.
The nebulous rules reflect the ambivalent attitude Vietnam has about capitalism. While officials pontificate about the need for reform and the transition to a market economy, the Communist Party is afraid of the social upheaval that could come from such a social change.
But some government officials welcome a few online traders as a way to unofficially spread a free-market mentality. "It is a good thing because the Vietnamese will know better about trading stocks," says SSC official Le Thao, an expert on Vietnam's securities market.
Trinh says he knows four other online traders in Hanoi. All are 24 to 32 years old, and each has invested from $2,000 to $50,000. Two work for companies, one works for the government and another is in real estate. Three of the four have been abroad or, like Trinh, have relatives overseas who can help them set up brokerage accounts.
After a year of daytrading, Trinh says his initial investment of $5,000 has grown to $40,000 - a huge amount in a country in which the average per capita income is $370 a year and the majority of people eke out a living in the countryside.
"After the first few months I saw myself making profits so quickly," says Trinh, who had a new house built and moved out of his parents' home. "The god of fortune has smiled on me."