VietNamNet Bridge – Oil & gas companies have seen their stock prices plummeting as oil prices have dropped.


GAS, the shares of a gas company listed on the HCM City Stock Exchange (HOSE), has fallen by 31 percent from its peak of VND86,000 at the November trading session. PVD, the shares of a drilling company, lost 28 percent of its value, while PVS oil & gas service company lost 30 percent.

PVS and PVC of the drilling solution and chemicals companies had led the HN Index of the Hanoi bourse to surpass the 93 point threshold, while GAS and PVD had led the HCM City bourse to the VN Index peak of 640 points in the past.

However, the same shares led to a sharp fall in stock prices.

It is still unclear if the stock prices have bottomed out.

BIDV Securities Company has advised investors to invest in companies in the fields of transportation, plastics, tyre and packaging, and to “keep away” from oil and gas shares.

SSI, Saigon Securities Incorporated, believes that both oil & gas and bank shares are no longer attractive in both short term and medium term.

Analysts noted that the oil & gas stock prices will heavily depend on investors’ feelings. This once occurred with ACB bank shares some years ago. When Nguyen Duc Kien of the bank was arrested, the ACB price dropped from VND25,000 to VND15,000, and has not recovered, despite the bank’s great efforts to settle its problems.

And the same thing may happen with oil & gas shares.

The impressive business performance of the most important subsidiaries of PetroVietnam, the national oil and gas corporation, helped raise oil and gas share prices by 2-3 times over the last 52 weeks.

This is one reason that investors believe the oil & gas shares will recover soon, though prices have decreased by 30 percent or 40 percent from their peak this year.

Another reason is that some oil & gas companies have obtained “jobs” for the next year. PVD, for example, has signed contracts to charter all their oil rigs until the end of 2015. This means that the revenue of PVD will be stable despite oil price fluctuations.

However, the analysts say, risks still exist. It may happen that PVD’s customers would ask to re-negotiate contracts once the crude oil price falls to below $60 per barrel. The oil price decreased to $66 per barrel on November 29.

Kim Chi