Vietnam stock markets set for listing surge

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Hordes of companies plan to float their shares on Vietnam's two stock exchanges this year in the hopes that an improved economy will lead to market rallies.

Authorities at the Hanoi Stock Exchange predict that the bourse will receive about 100 newcomers this year. In January alone, ten firms, including Ben Thanh Services JSC and Tia Sang Battery JSC, are scheduled to be listed on the exchange.

Market officials claimed 20 enterprises had deferred their trading debuts to this year, blaming the gloomy market outlook.

Nguyen Quang Man, chairman and general director of Song Hong Corp., said, "We had aimed to list our shares in the fourth quarter of 2010 or early 2011. As the market was not bright last year, we decided to wait till the beginning of this year. I believe the stock market will do better in the coming time."

On the Ho Chi Minh Stock Exchange, many big businesses like the Military Bank and Binh An Seafood JSC are slated to be listed this year.

While the economy expanded 6.78 percent in 2010, a 5.32 percent year-on-year increase, the benchmark stock index fell around 2 percent during the year.

Experts say local stocks are likely to rise this year on signs of an improved economy. The government has set an economic growth target of 7-7.5 percent for 2011.

Apart from the expectations of stock market growth, another reason that will spur companies to make their stock market debut this year is new regulations on securities, said Nguyen Anh Tuan, head of brokerage at Viet Dragon Securities Corp.

Under the modified Securities Law that will take effect on July 1, a company must list its shares on the official market (the Ho Chi Minh Stock Exchange, the Hanoi Stock Exchange or the UPCoM - an exchange for informally traded stocks) for one year at latest after making an initial public offering (IPO).

Currently, there are no time-related regulations for listing linked to those who have made IPOs. Therefore, shares of many companies have changed hands on the unregulated over-the-counter (OTC) market for years after the IPOs. As the OTC market operates without any management oversight, it contains a lot of risks for investors.

Management capacity

Le Hai Tra, a board member of the Ho Chi Minh Stock Exchange said the country's stock market has achieved great growth in terms of the size since it opened in 2000.

As of January 10, 274 companies are listed on the Ho Chi Minh bourse, while 370 firms have been listed on the Hanoi exchange.

The exchanges should not only encourage companies to float their shares but also improve eligibility conditions for listing, Tra said.

"In order to make the market more professional and transparent, it is essential to classify listed businesses by different criteria. Apart from standards of capital and shareholders, enterprise management ability should be taken into account," he said.

Thai Thi Thanh Hai, deputy general director of auditor Deloitte Vietnam, echoed Tra's assessment. "Improving listed companies' management ability will enhance transparency, thus strengthen investor confidence," she said.

The first and most important thing in increasing management capability is to specify the role of the board of directors in mapping out strategies and orientation for a company. Currently, in some companies, the roles and rights of the board of directors, shareholders, and general director are not divided clearly."

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