Promoting New Stock Listings

9:11:28 AM | 7/28/2023

The stock market is an effective funding channel that supplements medium and long-term capital sources for the economy. It brings many benefits to companies such as fundraising, operating expansion, prestige enhancement and branding. However, many large companies do not prefer to float their shares on the stock market. This leaves the stock market with fewer good listings and investors with fewer choices of investment.

The stock market is an efficient financing channel that provides medium and long-term capital sources for the economy

Companies hesitate stock listings

According to the State Securities Commission of Vietnam (SSC), 54 new stocks were listed on all three exchanges in 2022. However, delistings outnumbered new listings by more than 40 on all three exchanges.

Since the start of 2023, only PVP stock of Pacific Petroleum Transportation Joint Stock Company was listed on the Hochiminh Stock Exchange (HOSE). In July and August, the ADP stock of A Dong Paint Joint Stock Company and the SIP stock of Saigon VRG Investment Corporation. All three companies moved from UPCoM.

The Hanoi Stock Exchange (HNX) also had only three new listings in the first six months, namely DTG of Tipharco Pharmaceutical Joint Stock Company, PPT of Petro Times Joint Stock Company and KSV of Vinacomin Minerals Holding Corporation.

The UPCoM bourse also had three new listings, namely GPC of Green+ Group Joint Stock Company, VMT of Vinatrans Da Nang Joint Stock Company, and VNZ of VNG Corporation. This exchange also welcomed 22 companies delisted from HNX due to loss-making business in many years.

Mr. Phan Quoc Huynh, Vice Chairman of the Vietnam Association of Securities Business (VASB), Chairman of the Board of Directors of SBS Securities Company, said that only a few companies floated their shares on the stock exchanges in the first six months of 2023 because of both subjective and objective reasons.

According to many experts, the listing path is currently "clogged" because listing requirements and conditions are controlled more closely. Companies must be in good shape, with strong financial statements and profit-making business in at least 1-2 years.

In addition to objective domestic and global macroeconomic difficulties, the weak listing is attributed to companies and market makers. “Many companies are struggling to get through financial shortages. They do not want to go public when they are not fully ready. So, it is easy to understand their move,” he said.

Bracing business support

According to VASB Chairman Nguyen Thanh Ky, Vietnam is considered to have much room for long-term growth by investors. “Therefore, to increase the market size and supplies, attract more domestic and foreign investors, and move towards market upgrading, it is very necessary to encourage and promote companies to list their stocks in the coming time,” he emphasized.

In more than 20 years, the Vietnamese stock market has made remarkable progress. The market capitalization of HOSE, HNX and UPCoM reached VND5,783 trillion (US$252 billion) on June 30, 2023, up 10.7% from the end of 2022 and equivalent to 60.8% of the estimated GDP in 2022.
According to the SSC, as of the end of June 2023, 1,600 companies listed their stocks on HOSE, HNX and UPCoM: HOSE (403 companies), HNX (332 companies) and UPCoM (865 companies). Up to 42 companies had a capitalization of more than US$1 billion (over VND23 trillion).

To persuade companies to go public, VASB Vice Chairman Phan Quoc Huynh said that the Ministry of Finance, the State Securities Commission and the Stock Exchanges are facilitating them to float their stocks on the exchanges and develop business and investor communities toward common interests. Policies and regulations are now very open, and accommodative to companies that seek to list their shares.

By Huong Ly, Vietnam Business Forum