Firms torpedo state’s ambitious bourse target

July 18, 2005 | 17:41
(0) user say
The government’s ambitious target of listing more than 100 firms on the bourse this year may slip out of reach, despite the Hanoi Securities Trading Centre listing its first enterprises last week.

Vu Bang, vice chairman of the State Securities Commission (SSC), said that the target for this year could be missed, due to the lack of interest from enterprises.
A report recently released by the Ministry of Finance (MoF) revealed that there were more than 2,400 equitised firms nation-wide, but most of them were hesitant to list on the bourse.
Vice minister of Finance Le Thi Bang Tam said many local enterprises were nervous about the information transparency conditions for listing on the bourse. To address the problem, the Hanoi Securities Trading Centre (HASTC) is offering an easier listing process for firms, compared to the official regulations at the Ho Chi Minh City Securities Trading Centre.
“Though there are fewer requirements for listing, enterprises must still have their business and financial information audited and available for public investors,” said Tran Xuan Ha, SSC’s vice president.
According to analysts, with such a small number of firms listed on the bourse, the nascent securities market may fail to meet the ambitious target set by the government of turning both Ho Chi Minh City and Hanoi into financial centres by 2010.
The first six firms listed on the bourse at the HASTC – Vinh Son-Song Hinh Hydroelectric, Thang Long, Khanh Hoa Electric, Hai Au Paper, Infrastructure Development and Construction Company, and Hacinco – have a total capital of nearly VND1.4 trillion ($93 million).
With these six firms added to the 29 firms currently listed at the Ho Chi Minh City Securities Trading Centre, the country has a total of 35 listed firms with assorted capital of VND7,000 billion ($460 million), equivalent to less than one per cent of GDP – far below the government’s target. Under the Strategy for the Development of the Vietnam Securities Market, approved by the Prime Minister, the total capital of listed firms on the bourse should reach two to three per cent of GDP by the end of this year, and 10 to 15 per cent of GDP by 2010.
To achieve these goals, around 160 equitised firms would need to be listed on the bourse.
SSC’s Vu Bang said an administrative measure to force equitised firms to list was difficult in a market economy.
Therefore, to create more commodities on the bourse, the SSC plans to cooperate with the MoF to review equitised enterprises that have a real demand to be listed on the bourse.
An expert from the World Bank said that local enterprises’ hesitation to list on the bourse would make it difficult for them to mobilise capital, which would hinder their competitiveness during the ongoing integration process.
Vice Minister of Finance Tam said the biggest challenge for Vietnamese enterprises could come with the country’s entry into the World Trade Organisation, and SSC’s immediate goals were to increase the liquidity of listed shares and the number of enterprises on the bourse.
The Vietnam securities market has been operational for five years.

By Vu Long

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional