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Stock market in the spotlight
The Vietnamese stock market marked its 11th anniversary this year with both good and bad news. The benchmark HNX-Index for the Ha Noi Stock Exchange hit a series of record lows during the past two months while the VN-Index on the HCM City Stock Exchange also reached its lowest point of the year.
Market value plunged, with a lot of stocks losing around 80-90 per cent of their value. Notably, Viky Plastic Co (VKP) sunk to only VND600 (US$0.03) per share. The securities market was hit by several negative developments, but it also received some support from the Government.
1. Listed firms and securities companies violate regulations
The State Securities Commission collaborated with the Criminal Police Office to investigate the Vien Dong Pharmaceutical Co (DVD) late last year. This case continued to attract the attention of investors until the company was forced to terminate operations in September this year.
DVD's chairman at that time, Le Van Dung, was found to have manipulated stock prices of DVD and Ha Tay Pharmaceutical (DHT) along with several other people, creating false revenue for his own company.
Nine other individuals were also fined for their manipulation of shares of Cai Lay Veterinary Pharmaceutical (MKV), Ha Tien Transport (HTV), construction company Vinaconex 15 (V15), property developer Vincom (VIC) and An Phat Plastic and Green Environment (AAA).
In addition, about 100 listed firms received penalties for violating disclosure regulations this year, three of which were asked to delist from the stock market.
Meanwhile, securities firms faced a hard year, posting huge losses and unable to avoid insolvency. Kim Long Securities Co (KLS) in March planned to leave the securities business, while others had to stop brokerage service. SME Securities Co was twice reported as insolvent.
2. Many large businesses acquired
The most remarkable mergers and acquisitions included Masan Consumer – a subsidiary of the HCM City Stock Exchange's blue chip Masan Group (MSN) – acquiring a 50.1 per cent stake in Vinacafe Bien Hoa (VCF). The two largest capitalised shares in HCM City – Vincom (VIC) and Vinpearl (VPL) – merged, while the first merger in the banking sector saw Sai Gon Commercial Bank (SCB), Viet Nam Tin Nghia and De Nhat Bank come together.
Meanwhile, blue chip Sacombank (STB) and food processor Hung Vuong (HVG) were involved in rumours of take-overs due to vast purchases by investors.
3. Circular allows margin trading
One of the highlights in policies was Circular 74 allowing margin trading and opening of multiple accounts for both sell and buy orders in a single session, which came into effect in August. In fact, these types of transactions had previously appeared in the market but in an illegal manner.
The circular was welcomed by both securities companies and the investment community as it was seen as a big leap made by authorities. However, the regulation was not loose enough, said FPT Securities Co's head of brokerage Nguyen Van Dung.
There are now around 40 securities companies entitled to execute margin trading and about 160 listed stocks which are not qualified, mainly due to weak business results.
4. State-owned enterprises equitised
The Bank for Investment and Development of Viet Nam (BIDV) on Thursday concluded its initial public offering, raising $75 million, and is preparing to list shares next year. Prior to BIDV, Military Bank (MBB) officially listed in the HCM City bourse and became the 11th largest stock in terms of capitalisation.
Some other SOEs had implemented their IPOs such as the National Petroleum Corp, VNSteel and Mien Trung Corp.
The Government has also pledged to equitise 27 SOEs by 2015.
5. Watchdog issues restructuring plan
The Ministry of Finance is working with relevant authorities to map out measures for developing the domestic market, focusing on restructuring securities companies, securities products on the market, merging the two national stock exchanges and improving the investment system.
The ministry said it would submit its restructuring plan within this month and begin to implement it next year.
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