Vietnam’s IPO frenzy expected to cool down this year

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Vietnam’s Ipo Frenzy Expected To Coll Down This Year
Ho Chi Minh Stock Exchange
© Arno Maierbrugger

After a record year of share sales in 2018, Vietnam is experiencing a slowdown as fewer businesses offer stakes to stock investors amid uncertainties in the market.

Just 21 companies have sold shares so far this year – raising just around $281 million as of May 31. For the same period in 2018, 39 companies garnered $3.51 billion from share sales, the highest-ever in the Southeast Asian country, according to data compiled by Bloomberg.

Moreover, in the first five months of last year, there were eight share offerings valued at more than $100 million each. In 2019, all the deals were valued at less than $80 million.

“The scales of share sales are quite small with companies that have low market caps, making them less attractive to foreign investors,” Tran Hoang Son, Hanoi-based market strategist at MB Securities JSC, told Bloomberg News.

In 2017 and 2018, Vietnam experienced its largest-ever share sales, including the offering of shopping-mall operator Vincom Retail JSC in 2017, which raised $688 million, Techcombank’s share sale in April last year, which garnered $922 million, and luxury property developer Vinhomes JSC, which brought in almost $1.4 billion in the same month.

Vietnam’s equity benchmark index lost two percent in May 2019, the biggest monthly loss since December, as intensifying trade tensions hurt market sentiment. The MSCI Asia Pacific Index lost 6.2 per cent in May, the most since October.

There has also been a reduction in the value of trading. The daily average value of stocks changing hands on the Ho Chi Minh City Stock Exchange in the first five months totaled $170 million, compared with about $320 million in the same period last year, according to Bloomberg data.

Adding to the muted market has been the failure of the government to spur faster stake sales of state-owned companies. The privatisation process of state companies has been “much slower than the government expected,” with 97 such firms yet to go public, according to deputy finance minister Vu Thi Mai.

In an effort to speed up the process, the government recently allowed state-owned enterprises to apply the book-building method, allowing companies to have a better sense of investor appetite for their offerings and to set prices accordingly.

Private and state-owned companies that have indicated plans to sell shares this year include:

Vietnam International Commercial Bank JSC

Saigon Commercial Bank

Mobile Information Services JSC (Mobifone)

Vietnam Posts & Telecommunications Group (VNPT)

Vinafood

Vietnam National Chemical Group (Vinachem)

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Ho Chi Minh Stock Exchange © Arno Maierbrugger After a record year of share sales in 2018, Vietnam is experiencing a slowdown as fewer businesses offer stakes to stock investors amid uncertainties in the market. Just 21 companies have sold shares so far this year – raising just around $281 million as of May 31. For the same period in 2018, 39 companies garnered $3.51 billion from share sales, the highest-ever in the Southeast Asian country, according to data compiled by Bloomberg. Moreover, in the first five months of last year, there were eight share offerings valued at more than...

Reading Time: 2 minutes

Vietnam’s Ipo Frenzy Expected To Coll Down This Year
Ho Chi Minh Stock Exchange
© Arno Maierbrugger

After a record year of share sales in 2018, Vietnam is experiencing a slowdown as fewer businesses offer stakes to stock investors amid uncertainties in the market.

Just 21 companies have sold shares so far this year – raising just around $281 million as of May 31. For the same period in 2018, 39 companies garnered $3.51 billion from share sales, the highest-ever in the Southeast Asian country, according to data compiled by Bloomberg.

Moreover, in the first five months of last year, there were eight share offerings valued at more than $100 million each. In 2019, all the deals were valued at less than $80 million.

“The scales of share sales are quite small with companies that have low market caps, making them less attractive to foreign investors,” Tran Hoang Son, Hanoi-based market strategist at MB Securities JSC, told Bloomberg News.

In 2017 and 2018, Vietnam experienced its largest-ever share sales, including the offering of shopping-mall operator Vincom Retail JSC in 2017, which raised $688 million, Techcombank’s share sale in April last year, which garnered $922 million, and luxury property developer Vinhomes JSC, which brought in almost $1.4 billion in the same month.

Vietnam’s equity benchmark index lost two percent in May 2019, the biggest monthly loss since December, as intensifying trade tensions hurt market sentiment. The MSCI Asia Pacific Index lost 6.2 per cent in May, the most since October.

There has also been a reduction in the value of trading. The daily average value of stocks changing hands on the Ho Chi Minh City Stock Exchange in the first five months totaled $170 million, compared with about $320 million in the same period last year, according to Bloomberg data.

Adding to the muted market has been the failure of the government to spur faster stake sales of state-owned companies. The privatisation process of state companies has been “much slower than the government expected,” with 97 such firms yet to go public, according to deputy finance minister Vu Thi Mai.

In an effort to speed up the process, the government recently allowed state-owned enterprises to apply the book-building method, allowing companies to have a better sense of investor appetite for their offerings and to set prices accordingly.

Private and state-owned companies that have indicated plans to sell shares this year include:

Vietnam International Commercial Bank JSC

Saigon Commercial Bank

Mobile Information Services JSC (Mobifone)

Vietnam Posts & Telecommunications Group (VNPT)

Vinafood

Vietnam National Chemical Group (Vinachem)

Share your vote!


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