Caution sounded regarding company lisiting

At the conference about advancing Vietnam securities market on December 17, Asian Development Bank (ADB) experts recommended Vietnam authorities to find other methods to increase local stock market, better than gathering all public companies in official markets by law as it is now.

The ADB recommendation comes after the amended Law on Securities, approved on November 11 and is to come into effect in July 1, 2011, regulated unlisted public companies totrade their shares on official market within one years after making initial offering.

Vietnam’s official securities markets, comprising the bourses Hanoi Stock Exchange (HNX) and Ho Chi Minh Securities Exchange (HoSE) and the market for unlisted public companies UPCoM, are all run by the government.

The new regulation, Vietnam’s lawmakers said, was in an effort to more tightly control public companies .

However, it was inadvisable to use law as a tool gathering all public companies in government-run markets, said Tyge Vorstrup Rasmussen, ADB consultant and chairman for North European Securities Exchanges Federation.

“It is better to develop the UPCoM, making it an attractive option for the companies,” said Rasmussen.

The UPCoM, lauched in June 24, 2009, was opened to float securities issued by unlisted public companies. The market is using continuous order matching method and conventional negotiation.

Rasmussen said the UPCoM could be attractive more by applying some of the unofficial market’s advantages, namely selling and buying securities at the same day, selling securities prior to the T+4 limit (four day after the securities purchase), short selling, margin or extending transaction time.

The State Securities Commission’s (SSC) management ability was also questioned.

According to ADB experts, several nations when running a securities market like the UPCoM, have to choose to manage either a modest number of securities with high quality or a numerous ones, such as England’s AIM and America’s NASDAQ.

Rasmussen said the fact that just a small portion of Vietnamese public companies opted to trade their shares on local official markets was  normal.

Excluding nearly 700 companies listing on HoSE and HNX, there are 4,000 public companies existing in Vietnam, yet just 968 had registered at SSC and 106 floated on the UPCoM.

“With 4,000 to 5,000 public companies Vietnam is having, some 1,000 listing is rational,” said Rasmussen.