Companies hold back from listing in exchange shake-up

April 25, 2023 | 10:32
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A number of companies have postponed or entirely cancelled plans to list in Vietnam due to current market volatility and economic uncertainties, while some banks signal their intention to tap into broader funds by switching to the Ho Chi Minh City bourse.

Earlier this month, Phu Hung Securities Company withdrew its application for an initial public offering (IPO) on the Ho Chi Minh City Stock Exchange (HSX). Its application for the listing of 150 million shares was submitted in November, but it cited unfavourable stock market conditions and the interests of shareholders for the about-turn.

Companies hold back from listing in exchange shake-up
Since the start of the year, several groups have withdrawn plans to list due to market developments ,Photo: Shutterstock

In January, KienlongBank passed a resolution to withdraw its application to list on HSX due to the market’s poor developments. It had submitted an application to list five months prior.

KienlongBank initially made it known it wanted to go public at the end of 2021 and had even proposed a name change to KSBank, but it was not approved by the State Bank of Vietnam. The bank then initiated a brand repositioning plan after personnel from the Sunshine Group joined the bank’s senior management.

Sacom Real Estate JSC also cancelled its plan to list on HSX earlier this year, citing a mismatch with the company’s direction.

In December, Vietnam First Securities Company announced a resolution to withdraw its application to list shares on HSX. The reason cited was also unfavourable financial and securities market developments in Vietnam.

Numerous Vietnamese businesses have signalled their ambition to be listed on the HSX, but many have yet to complete the requirements for approval, such as Thanh Cong Securities, Vietnam Construction Securities, and Quy Nhon Port JSC.

Data by Deloitte showed that companies in Southeast Asia raised $7.6 billion from 163 IPOs last year, down 43 per cent from a record $13.3 billion from 152 in 2021. While the number of IPOs had increased, there was a decrease in total funds raised in 2022, which is indicative of a high number of small-sized offerings that year.

This is due to smaller companies proceeding with their IPOs despite the existing economic uncertainties, while bigger players with better leverage are postponing their offerings ahead of better market conditions.

Bui Van Trinh, deputy leader of Disruptive Events Advisory at Deloitte Vietnam, said, “The focus on IPOs has shifted from real estate to industrial products and consumer businesses. Consumer businesses should continue to play a key role, with some highly anticipated upcoming listings from this sector.”

Despite the withdrawals, HSX could be poised to regain its former vibrancy as several companies announce plans to migrate their listings from other exchanges.

Notable among these companies are Binh Son Refining and Petrochemical, Bao Chau Pharmaceutical Corporation, and Nam A Commercial Bank.

Nam A Bank recently has meanwhile decided to transfer all its currently traded shares on the Unlisted Public Company Market (UPCoM) to either HSX or the Hanoi Stock Exchange (HNX).

In a similar move, Viet Capital Joint-Stock Commercial Bank announced its intention to transfer the trading of its shares from UPCoM to HSX. The bank has been trading on UPCoM for over two years.

Currently, there are 17 banks listed on the HSX, two listed on the HNX, and eight banks trading on the UpCOM, while three other banks are trading over-the-counter.

However, the goal of the overarching the Vietnam Stock Exchange (VNX) from the outset was that by the end of 2023, all listed stocks on the Hanoi bourse would be transferred to the HSX.

VNX chairman Nguyen Thanh Long previously stated that since its inception, the Ho Chi Minh bourse has consistently maintained its goal of creating a trading market for high-level listed businesses, while the HNX, in addition to providing a trading market for small businesses, continued to develop and expand its objectives of developing bond market.

“Furthermore, the HNX has developed new products and services, exemplified by derivative products that accompanied the birth of the derivatives stock exchange in 2017,” Long said.

Meanwhile, Trinh of Deloitte believed that with the current uncertainties, investors as well as companies are proceeding cautiously. “Vietnam’s regulatory bodies have launched several initiatives to promote the transparency of financial information through regulations that encourage a transparent and efficient listing process, and by promoting the adoption of International Financial Reporting Standards,” he said.

“We hope that this will boost local and international investor confidence and enhance the attractiveness and vibrancy of Vietnam’s capital market.”

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