Vietnam’s stock market has been in drastic decline, dampening investor sentiment. But David Gerald, President and CEO of Securities Investors Association (Singapore), says it’s time for long-term investors to jump in. The Saigon Times Daily spoke with him on the sidelines of a recent seminar on corporate governance in HCMC.

The Saigon Times Daily: Vietnam’s stock market capitalization has been falling in recent times. Has Singapore’s stock market experienced the same thing?

- David Gerald: Singapore’s stock market is also volatile; the index is always moving up then down. It all boils down to supply and demand. People start selling because of uncertainties, causing excess supply. The market quickly reacts to this by pulling the price down.

Has the Singapore stock exchange gone down as drastically as in Vietnam?

- Not in recent times but in the past, once or twice. Recently, it has been fluctuating but not more than 3%. It gets corrected timely. The market consists of traders, punters and investors, both short-term and long-term. It is the short-term players who create volatility in the market by constantly going in and out of the market.

What’s your advice for investors in such a market?

- Choose to invest in the right companies by looking at the fundamentals of the companies. If you have chosen a fundamentally sound company that has growth potential and is stable, do not worry. What temporarily goes down will definitely pick up and grow. Give yourself 3-5 years. Take Warren Buffet as an example. He buys a good stock and does not worry whether the market goes up or down. He stays there for years and he makes money.

Ask yourself: Is the company run well? Is its business good? Is there a growth potential? If yes then do not waver. Stay on.

Can you give us an example of such a Singapore company?

- Singapore Airlines is one such. Its stock has swung back and forth between S$11 and S$14 due to the movements of funds. However, some long-term investors may have bought the stock when it was only S$3. They are indifferent about the current range between S$11 and S$14 as they believe the stock will go up S$20 in a few years to come.

The ultimate question is how long you have to wait on the market. It depends on your financial planning and your purpose of investing. For example, if you invest for your children’s education, you can wait until they are in school-starting age to sell.

Do you have any other advice?

- My other advice is ‘diversifying’. Invest in different companies as well as different instruments. Put your money in stocks but do not go beyond five, put money in bonds, Exchange-traded funds (ETFs) and fixed deposits. This way, you will have incomes from various sources and at the same time, minimize your risks. It is very important for investors to manage their risks, which most of them do not often pay attention to.

So how many percent in stocks?

- The general view is that if you have S$100, don’t invest more than S$30 in stocks. So around 30% in stock, 20-25% in bonds and a certain amount in properties, etc.

However, it also depends on your risk preference – whether you are an investor, punter or trader. Traders, punters and short-term investors often put more money in stocks because they can take the risks. It also depends on your financial strength – whether you can afford to lose all of your investments. If you are not financially strong enough, do not put all of your money in high-risk investments.

Do you have any personal investment in Vietnam’s stock market?

- Not yet as this is a new experience to me. I want to learn more about Vietnam first. But it is time to come to Vietnam. I wish I had S$1 million, so that I could invest in good undervalued stocks here, and leave them untouched for 5 years.

Can you talk a little bit about the role of the Securities Investors Association in Singapore (SIAS)?

- SIAS educates investors to be well-informed and be able to make decisions on their own. We teach them how to analyze the company, the market and how to interpret annual reports. To decide whether to invest in a company, investors should first study its annual reports to find out the leaders of the company, its core business and its growth potential.

SIAS also protects investors. If there are disputes between the shareholders and the company, arisen from the company’s wrongdoing, SIAS will interfere and try to resolve issues amicably. We will first negotiate with them privately in the conference room. However, if they are not willing to talk, we will go to the press.

Why go to the press?

- To publicize the problem so that the company will come to the table. We have encountered several cases. Most of the time, the company agrees to come to our conference room, and quietly we settle the disputes. It’s a win-win situation. Sometimes though, the company may not cooperate and shut the doors on us. We then have no choice but to go to either the press or the court. We’d rather go to the press to make that company talk to us.

How often do you win?

- We win 100%.

But if the company does not cooperate you will go to the press? Won’t that give them a bad reputation then?

- That’s right. That’s why we try not to do that. Our first approach is working things out privately. Call up the Chairman and the CEO to say we have a problem and we need to talk. 99% of the time, they will talk. 

Source: Saigon Times.