Vietnam regulator works to diversify stock market products

Vietnam’s State Securities Commission (SSC) is reviewing regulations to shorten and facilitate the process of listing shares after initial public offerings (IPOs), the commission said.

Besides stabilizing the trading system and making it transparent, increasing products will also help the stock market to develop sustainably, attracting domestic and international investors, it noted.

However, the number of new products on the stock market has been stagnating in recent years. At the Ho Chi Minh Stock Exchange (HoSE), which accounts for more than 80% of the entire market's trading value, the number of new listed stocks has sharply decreased. Newcomers are mostly fund certificates and businesses moving from the Unlisted Public Companies Market (UPCoM).

Tran Hoang Son, strategic director of broker VPBankS, said the market has not seen the entry of new bigcaps which are private companies such as Vingroup (VIC), Mobile World Corporation (MWG), and Refrigeration Electrical Engineering Corporation (REE). Many large consumer, construction, and real estate groups have yet to list on the exchanges.

“Regulators need to create incentives for these large private corporations to list and increase their scale to help diversify goods on the stock market,” the SSC said.

At the same time, divestment and auction activities have also been gloomy as the market has suffered from the absence of big players like Vietnam Rubber Group (GVR), Becamex (BCM), and Binh Son Refining and Petrochemical Company Limited (BSR), which heated up the market in the 2018-2019 period.

Pham Huyen Trang, associate director at Saigon Securities Inc. (SSI), said potential cash flows into Vietnam's stock market remain high. However, due to limitations such as the lack of new listings and foreign ownership limits, capital flows into Vietnam remain humble.

Pham Thi Thuy Linh, deputy director of the SSC’s Market Development Department, held that the development goal of the stock market is to become a medium- and long-term capital mobilization channel. Share listing helps businesses to increase their reputation and attract domestic and foreign investors.

To help businesses raise capital and list on the stock exchanges, the SSC is reviewing regulations on share offerings, listings and trading registration, she said.

Good time for stock listing

The stock market is seeing many growth drivers such as low interest rates, recovering corporate profits, a potential market status upgrade, and the upcoming operation of a new trading system provided by Korea Exchange (KRX). These factors are encouraging businesses to list and divest state capital.

Ho Sy Hoa, research and investment advisory director at DNSE Securities, said that the company made a successful IPO online and committed to listing in 2024. The board of directors realized that this year is a good time for its IPO and listing thanks to government support, market status upgrade potential, and low interest rates.

"The investment needs of the people, the size of the capital market, and the stock market still have a lot of room for development. Listing now will help the company to expand its scale and market share," Hoa said.

In addition to DNSE, recently, the HoSE announced that it had received an application to list nearly 205 million shares in DSC Securities (transferred from the UPCoM).

Since the end of 2023, listing activities on the major bourse have perked up with a series of businesses receiving approval such as Nam A Bank, Viettel Post, Hua Na Hydropower Plant, and Quy Nhon Port. The UPCoM also welcomed new firms such as BCG Land, Taseco Land, Northern Electrical Equipment, and Kontum Water Supply Company.

Closing the Wednesday trading session, the VN-Index, represening the HoSE, stood at 1,262.73 points.