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Firms under observation seek to escape spotlight
Listed firms that have been placed under observation by market regulators due to poor business performance are anxious to escape the unwanted new status as soon as possible.
About two weeks ago, the HCM City Stock Exchange began issuing alerts and placing under supervision a number of companies that list shares on the exchange and reported losses either in the fourth quarter or for all of 2008. The observation status is aimed to alert and protect investors.
The 13 enterprises put into observation included such major stock market players as Pha Lai Thermal Power (PPC), Refrigeration, Electrical and Engineerings Corp (REE) and Cable and Telecommunication Materials (SAM). And the list is predicted to get longer, as 11 companies listed on the HCM City Stock exchange have delayed making their required financial disclosures.
The State Securities Commission has already warned these firms that failure to make required financial disclosures would also result in firms being placed under observation, as well as other penalties.
Firms already placed under observation have watched the value of some already depressed shares decline further, as spooked investors have rushed to unload them in spite of suggestions from the stock exchange that they look to the underlying causes of a firm's losses before dumping its shares.
"Being marked as a supervised firm just gives us one more thing to worry about," said a representative of Hapaco Hai Phong Paper, one of the observed firms. He said rumours about company management and business prospects began to circulate right after the firm was placed under observation.
"It takes years to establish a reputation but just one night to lose it," said Traphaco director Vu Thi Thuan. "The market regulators should realise what firms have to cope with when they are placed under observation."
"We expect market regulators to consider putting firms like ours under observation. But we need to be released from that status soon or investors may become even more pessimistic about our business prospects," said REE chairwoman Nguyen Thi Mai Thanh, who recently took personal responsibility for leading her company into the red in 2008.
Thanh said regulators should clarify for investors the reasons for losses whenever, announcing that a firm has been placed under observation, with an aim to minimise suspicions about a company's long-term business prospects.
VietNamNet, Viet Nam News
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