3:26:37 PM | 7/8/2005
The Vietnam State Securities Commission (SSC) has recently completed a project of "investigating and assessing eligibility of Vietnamese enterprises to participate in the Vietnam stock market" through surveys in 447 enterprises nationwide. It aimed to assess real capabilities to list on the stock market. These surveys showed that most Vietnamese enterprises are unready to play a role in the stock market.
The surveys were carried out in 170 equitised State-owned enterprises, 62 equitising enterprises and 214 newly established ones, which have a chartered capital of over VND5 billion (USUS$312,500) or those with a chartered capital of less than VND5 billion (USUS$312,500) but having the ability to accumulate capital in the near future.
The purpose of this project was to attract the concerns of enterprises and responsible State agencies about the opening of the Hanoi Securities Trading Centre (HASTC) and to help the SSC and the Ministry of Finance to have more information for adjusting and the size and the construction pace of a stock exchange that goes in line with real economic situations.
As for their business operations, the surveys showed that 53.7 per cent of enterprises enjoyed profits in the two latest years. However, in reality, they are still quite weak due to their backward technologies and equipment, humble financial potential and other reasons. Only 11.8 per cent reported themselves to be unprofitable and 4.4 per cent of them had failed to pay debts and interest on time. But, according to surveyors, these figures may be different because some enterprises refused to reveal their business situations.
As regards mobilised capital sources, nearly all enterprises used bank loans. The results showed that 42.2 per cent mobilised capital from share issue and 40.9 per cent from their workers. It meant they have paid more attention to stable and long-term capital sources. Only three of the surveyed enterprises accumulated capital from bond issue. In general, all enterprises wanted a new capital mobilisation channel to improve their financial situations and expand their business. However, most enterprises have not clearly defined their business lines and plans and they, therefore, mainly concentrated on mobilising short-term capital. Share issue is not their top choice in calling up capital.
As for the eligibility to participate in HASTC, only 217 out of 447 surveyed enterprises expressed their willingness to enter HASTC but their time frame for listing ranges from 2005 to 2015. This revealed their hesitations to the securities market.
Almost all of them are aware of stock market participation advantages. 75 per cent agreed that their company names and images would become more popular and their reputations would be increased, 73.6 per cent thought that it would help them become more competitive while 70.4 per cent supposed their managing boards would become more active. 65.3 per cent knew that they would gain an increase in their stock liquidity. However, several enterprises were against these advantages while others were unclear of the SSC questionnaire.
One of the biggest hindrances for enterprises participation in the stock exchange is their limited knowledge of stocks and the stock market (66.2 per cent admitted), fear over lengthy listing procedures (48.3 per cent), fear over information disclosure (38 per cent), dislike of regular financial reports (35.5 per cent). According to surveyors’ observations, enterprises as well as responsible State agencies are alarmingly ignorant of the stock market’s workings. Therefore, training and promotion of knowledge of the stock market is now crucial.
How can the Vietnamese stock market develop? The answer depends on efforts made by various sectors and organs. As for enterprises, they have to upgrade their knowledge of the stock market and administration to meet the demands of a listed firm. As for the SSC, it has to complete the legal framework and seek measures to support enterprises in finance, information and training to help them to understand this new kind of market.
Vietnamese
