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2008: equitisation slow, IPOs unattractive
2008 proved to be an exquisitely gloomy year for the stock market. Investors were indifferent to initial public offerings, while the equitisation process proceeded at a snail’s pace.
IPOs unattractive
Though the starting share prices offered at IPOs turned out to be relatively low, investors still turned their backs. A lot of IPOs were reportedly cancelled as there were no buyers.
The Ninh Thuan Water Supply and Drainage Company offered 2.4mil shares for sale at the starting price of only VND10,000/share. However, investors only ordered to purchase 10% of the shares, or 218,000 shares. Even Sabeco, a big name among brewery producers, saw investors order to purchase only 78.4mil shares, while it offered 128.3mil.
Most recently, the HCM City Stock Exchange announced the cancellation of the IPO of the Bac Lieu Transport Works Joint-stock company as no investor registered to join the IPO. The IPO of Ba Ria-Vung Tau provincial construction and urban development company could not attract any foreign investor, while only 656,400/16,408,300 shares were sold.
In 2008, according to HOSE, only a few IPOs were successful, while the number of unsuccessful IPOs (IPOs were either cancelled or not all shares were sold) was not less than 20.
The situation has been the same for the Hanoi bourse with only 11 IPOs so far this year with 69.97mil shares offered for sale. Meanwhile, only 22.57mil shares were traded – 32.2% of total offered shares.
Le Dat Chi, a securities expert, said that in the context of the gloomy stock market “this would be a strange thing if IPOs can attract investors”. Chi said that the market has become saturated, and that even listing companies will find it hard to find buyers for additional shares.
Deputy General Director of VIS securities company Pham Linh said that if the stock market continues falling down, IPOs will remain unattractive to investors. Linh said that even if investors really wanted to join IPOs, they would not be able to due to the losses they have incurred in 2008.
Equitisation plodded along
According to statistics released by the Ministry of Finance on December 3, in the first 11 months of the year, only 73 of 262 enterprises were equitised, which means that only 28% of the plan was fulfilled.
A recent report by the government said that in 2008-2010, the government plans to restructure 1,535 enterprises, including 948 enterprises to be equitised. As the equitisation went slow in 2008, Vietnam will have to equitise 800 enterprises in 2009, a very difficult mission.
In 2007, Vietnam was able to restructure 116 enterprises only, while it was aiming for 600.
The General Director of Dragon Capital, a fund management company, Dominic Scriven, said that the current market was unfavourable for equitisation; however, he still thinks that it is necessary to speed up equitisation since he believes it will be good for the national economy.
Chairman of Eurocham Alain Cany also said that Vietnam should not be slow in equitising state-owned enterprises just because of the dour stock market. He said that Vietnam should have the longer-term vision that equitisation can bring about the renovation of corporate governance skills.
VnMedia
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