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Share delisting movement helps eliminate “rubbish” stocks from market
A lot of companies have delisted shares, either spontaneously or by force, leaving a lot of investors stuck with the unwilling stocks. However, the movement, to some extent, is helpful to the stock market, because it helps eliminate rubbish stocks.
Delisting shares in masses
The Hanoi Stock Exchange has informed that MED, a pharmacy company, has decided to delist its shares, even though MED shares have not been put into official transactions. Five million MED shares worth 50 billion dong have been delisted since August 7, 2012.
The decision on the delisting was made by the stock exchange, because Mediplantex has not fulfilled the procedures for the listing within three months since the day it got the approval for listing.
Prior to that, the Hanoi Exchange on June 14 allowed MED shares to enter the bourse on June 22 with the reference price of 15,500 dong per share.
In fact, MED has deliberately delayed the listing to wait for more favorable conditions. The company, like many other businesses, does not think that it’s the right time to list shares, when the stock prices have been falling dramatically.
In July 2012, the stock market witnessed the leave of a lot of listed shares. On July 26, the Hanoi Stock Exchange announced the decision on delisting 9,6 million VMG shares of the oil and gas trade and service company. Explaining the decision, the stock exchange said VMG did not have any transactions at the stock exchange in the last 12 months.
Especially, the company had very bad business performance. In the second quarter of 2012, VMG holding company incurred the loss of 1.37 billion dong, raising the accumulative loss to 54 billion dong by the end of the second quarter
The last trading session where VMG shares were traded at the price of 4300 dong per share was July 26, 2011. No more transactions have been recorded over the last year.
The Construction Company No. 11 (V11) decided to delist shares spontaneously to serve its restructure plan. However, due to the problems with the 2011 finance reports, V11 has been forced to delist before it asks for the permission for spontaneous delisting.
8.4 million V11 shares worth 84 billion dong would be weeded out from the stock market from August 17, after the company incurred the loss of 31 billion dong in 2011 and anticipates the further loss of 22 billion dong in 2012.
Only “high quality commodities” would be available
It’s clear that the delisting would bring big losses to investors, especially small individual investors.
When shares leave the official bourses, they would be transferred to UpCom, the trading floor for unlisted companies, or OTC (over the counter) market. Of course, the shares put into transactions at the two markets would have lower liquidity than the official bourses in Hanoi or HCM City. This also means that the attractiveness and the prices of the shares would also decrease.
In many cases, the delisted companies unexpectedly disappeared from the sight, VKP, which was forced to delist in June, is a typical example.
To date, VKP still has not convened a shareholders’ meeting, while the information about the company has disappeared from the official website, and it’s impossible to contact the company by the fixed line phone number.
Though delisting is described as a bitter medicine, analysts still believe that this, to some extent, would bring good things to the stock market.
It’s obvious that the delisting would allow eliminating low quality stocks and improving the quality of the commodities on the stock market.
vietnamnet
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