Vietnam's latest IPO — an initial public offering of stocks — drew about 1,000 people eager to cash in on a transportation and logistics company called Sotrans.

The market is emblematic of Vietnam's overall economy: energetic, fast-growing and still in the early stages of its development. It poses greater risks to investors than a more advanced economy, but also the promise of great returns.

U.S. President George W. Bush is scheduled to visit the exchange when he comes to Vietnam this week for the Asia-Pacific Economic Cooperation summit.

He will find a market on the move.

Vietnam's stock exchange is still tiny by global standards: the companies traded are worth roughly 2 percent of those listed in Thailand. But the number listed — currently 52 — is growing rapidly, and overall stock value increased tenfold in less than a year.

"You'd have to go quite a long way to find a stock market that's grown 10 times in 10 months, even though it started from a very small base," said Dominic Scriven of Dragon Capital, which manages an US$860 million investment fund in Vietnam.

"And it probably will have grown 15 times by the end of the year,” he said.

When it opened six years ago, the market was the laughingstock of Southeast Asia.

Few companies were listed, and foreign investors kept their distance. But it has taken off in the last couple of years, attracting the attention of investment firms such as Credit Suisse and Citigroup.

"Vietnam is beginning to deliver on a decade of promise," a recent Merrill Lynch report said.

Vietnam's GDP is expected to grow by more than 8 percent this year, second in Asia behind China and one of the highest rates in the world.

Investors are eager for a piece of the action.

Standing in line for the Sotrans IPO was Vo Van Dung, 36, a Ho Chi Minh City businessman. He began investing in the Thai stock exchange 13 years ago, before Vietnam had a formal market.

"When the market first opened here, I made good money because most people did not understand investing, but I already had experience," Dung said. "The market here is very promising. I don't think I will go back to Thailand.”

On a recent day at the HSC securities firm in Ho Chi Minh City, about 50 people crowded around a stock ticker, eyes glued to the board. Brokers in their 20s took orders from behind a nearby counter.

Some of these eager investors will inevitably lose money. Others already have struck it rich.

A young man named Hung sat in the lobby in jeans and T-shirt, waiting to talk to his broker. Hung declined to give his full name because he didn't want his friends to think he was boasting about his wealth, a faux pas in Vietnam.

He said his initial investments of US$30,000 have grown to US$5 million. His best performer is the Export-Import Bank of Vietnam. A US$100,000 investment a year ago is now worth about US$800,000.

"A lot of my friends have made more money than I have," Hung said.

While such stories are legion, Scriven of Dragon Capital preaches caution. Reliable information about companies is far more difficult to obtain than on Wall Street, where Securities and Exchange Commission requirements lay out detailed disclosure requirements.

Vietnam has approved a new securities law that Scriven called "a huge leap forward." Effective Jan. 1, it will clarify investment rules and bring more transparency to the market, though still not as much as in developed countries.

Investors have more choices every day. The number of listed companies has risen by 50 percent in 2006 and is expected to double again by year's end, when tax incentives for listing will expire, said Tran Dac Sinh, director of the Ho Chi Minh City Stock Trading Center.

The market is drawing many novice Vietnamese investors, who often seem to operate with a herd mentality, Sinh said. "A lot of them buy when prices are going up, not when they're going down."

Many took a hit when the market surged earlier this year, rising to 630 points before falling to 400.

"A lot of investors lost money, but it was a good lesson for them," Sinh said.

For the recent IPO of Vinaconex, a big state-owned construction firm, nearly 2,000 people turned up, spilling out the trading center's front door and lining up around the block.

Like many state-owned firms, Vinaconex is in the process of "equitizing," selling off shares to private investors to raise capital. While the state will keep a stake, private investors will soon own more than 50 percent, Sinh said.

Refrigeration Electrical Engineering Corp. was the first market listing, back in 2000. Once a state-owned firm, REE has since sold 93 percent of its shares to private investors.

Last year, the company raised US$10 million on the market, issuing shares that have since tripled in value.

"Vietnam is an emerging market, so you can find many opportunities here," said Nguyen Thi Mai Thanh, REE's managing director. "It's very exciting."

Source: AP