Share auctions plunge to 16-year low

Share auctions plunge to 16-year low, Illustrative image (Photo: VNA)

Hanoi - Only three share auctions have been organised in the Vietnamese stock market so far this year, the lowest number since 2007, according to recent statistics from the Hanoi and Ho Chi Minh Stock Exchanges (HNX and HoSE).

The auctions had a total value of 2.7 trillion VND (111 million USD).

The HoSE recorded a single successful auction, with Petrolimex divesting 120 million shares (equivalent to a 40% stake) in PGBank (PGB) with a value of 2.56 trillion VND. On the HNX, there were two successful auctions involving Tia Sang Battery (TSB), selling 3.44 million shares, and EVNNPC auctioning 2.34 million shares. The total value of share auctions on the Hanoi bourse reached nearly 164 billion VND.

The decline in share auction activities can be attributed to various factors, including the challenging macroeconomic conditions in 2023. The VN-Index has struggled to surpass the 1,100-point threshold for several months, reflecting the difficult situation in the stock market.

Experts point out that the lack of notable new companies entering the market is one of the reasons for the decline in share auctions. This has led to a continuous decrease in auction values over the years, from a peak of 130 trillion VND in 2017 to only 2.7 trillion VND last year.

The number of newly listed shares in 2023 remains modest. Both exchanges have listed only nine new stock codes and one fund certificate, with many of them being transferred from UPCoM and not considered entirely new listings.

Companies like Nova Consumer (NCG), Ton Dong A (GDA), and VNG (VNZ) have decided not to list and are only traded on UPCoM. Moreover, several stocks have been delisted from the HoSE and the HNX due to violations of information disclosure regulations and financial losses.

Dinh The Hien, an economic expert, said that the lack of new listings is primarily due to businesses not perceiving the favourable timing for going public. After a challenging year, the stock market has only experienced a slight recovery, making it unfavourable for businesses to raise capital at reasonable costs through IPOs.

"State-owned enterprises face additional challenges in the equitisation process as they require strategic partners to participate. However, the global economic difficulties caused by the COVID-19 pandemic have led to a narrowing of operations for many manufacturing corporations and financial investors, making it more challenging for state-owned companies to find strategic investors."

Hien emphasised the importance of a vibrant market with new products and listings. The presence of more listed businesses and quality stocks attracts investors and contributes to the development of the capital market.

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