Vietnam stocks hit new high

Vietnam’s stock market index soared 3.51 percent to close at a new lifetime high on Friday as blue chips made all-around gains.
The VN-Index rose 28.57 points to 817.39, beating the record of 809 set on December 20, with 67 gainers and 20 losers.

Trading volume jumped by 2 million shares to 7.9 million shares. Total value rose to VND898 billion (US$55.5 million) from VND668 billion.

Hanoi-based infrastructure developer SJS became the first stock to cross the VND600,000 mark, hitting the 5 percent ceiling to close at VND604,000.

IT developer FPT also rose 5 percent to close at VND495,000.

Other heavyweights to gain 5 percent were REE which closed at VND326,290, GMD which closed at VND396,720, and VNM which closed at VND632,890.

Analysts attributed the sharp rise to positive news about the future of the market.

Nguyen Van Dung, director of the Hanoi Securities Trading Center, added that foreign portfolio inflows into the market had jumped because of optimistic forecasts on the country’s economy and stock exchange by international financers like Merrill Lynch and Credit Suisse.

But he warned that a steady market needed experienced investors who were not driven by the “herd instinct”.

Compiled by Dong Ha

Overview of informal stock market

The World Bank report on the realisation of rules and principles of corporate management in Vietnam was uploaded on the website of the State Securities Commission (SSC), providing an interesting picture about Vietnam’s informal stock market.

The WB specialists drew a rather comprehensive picture of the informal stock market, which is now beyond the management of Vietnam’s securities managers. They held that the non-regulated informal market has not been affected by the establishment of the Ho Chi Minh City Securities Transaction Centre (STC) in 2000.

More active than formal market

Primarily, transacted shares on the market are of equitised SOEs and stock companies of private businesses and investment organisations. They have not been regulated by any securities management bodies, namely the State Securities Commission and Ho Chi Minh City STC.

By December 22, 131 out of nearly 6,700 stock companies were listed on STCs in Ho Chi Minh City and Hanoi. But shares of not-yet-listed companies have been traded on the informal market, which is estimated to be three to six times higher than that on STCs. The daily transacted value is three times higher than that of the official market.

Non-licenced brokers

The unofficial market is an informal network of licenced and non-licenced intermediaries dealing with securities transactions which have not been listed at the Ho Chi Minh City STC. There are two groups of intermediaries on the informal market. One group includes independent and non-licenced go-betweens, about 60 to 80 in Ho Chi Minh City. The majority of the group is financial institutions consisting of licenced securities companies. The other group comprises licenced securities companies which work illegally with non-listed securities and are allowed to trade only listed securities on the official market.

The transactions are conducted with some kinds of documents. The payments in cash are done within a few days of transactions.

High risk

Informal transactions are not protected by law or any legal organisations but depend largely on the prestige of non-licenced intermediaries.

The informal market is unable to protect investors due to its ineffective, unfair, and obscure market mechanism, not like that of STCs. Regulations of stock markets are not applied to non-organised STCs. So the SSC is powerless in informal market management.

The prices of shares are doubtful due to the shortage of report systems and transparent transaction information. The financial and professional capabilities of brokers are not under control and the information on published shares is not identified. Hence, informal transactions are rather ineffective and small scale; however, they still make up the larger part of all transactions throughout the country.

According to the report, another factor preventing companies from listing on STCs are requests to provide transparent listing information. Maintaining vague capital to avoid tax is a desire of numerous companies. It is difficult to motivate them to join the official market unless corporate standards are clear. Moreover, higher listing criteria are necessary to attract investors.

Management, how?

A currently being deliberated measure is raising and applying corporate transparency criteria to all companies, rather than to only listed companies at the moment. This is to create a fair playground for both non-listed and listed companies. This will also help to improve attraction to listing on STCs which will not be seen as a large burden on enterprises. The 2006 Securities Law also regulates all public companies.
Another practical tool in the management of off-STCs transactions is the setting up systems of concentrated registration and private securities brokerage registration.

Ten new companies list shares on Ha Noi bourse

More than 109.3 million shares from 10 companies were newly listed on the Ha Noi stock exchange on Dec. 27, increasing the exchange's overall value up to 10.8 trillion VND (677 million USD).

Seventy-seven companies and one commercial bank are now listed on the exchange.

The newest additions are Petrolimex Petrochemical (PLC), HCM City Book and School Equipment (STC), Song Da Investment and Development (SIC), Phu Thinh-Nha Be Garment (NPS), Song Da 5 (SD5), Song Da 7 (SD7), H.A.I. Agricultural Pharmaceutical (HAI), Nui Beo Coal (NBC), Minh Phu Seafood (MPC) and Ha Noi Milk (HNM).

Four additional companies also got on board the HCM City Securities Trading Centre on Dec. 27, bringing the total number of listed firms to 94.

The four companies are Hoa Binh Construction and Real Estate (HBC), Khanh Hoa Power (KHP), Lu gia Mechanical and Engineering (LGC) and Viettronic Tan Binh (VTB).

The HCM City centre will receive on Dec. 28 six new arrivals, the Saigon Fishing Net (SFN), My Chau Packaging (MCP), the food company Safoco (SAF), Petrolimex Transport (PJT), Binh Dinh Mining (BMC) and the investment and trading DIC companies.

World Bank wants careful equitisation of power plants

Although the equitisation of power plants has helped develop the national grid and meet soaring demand, the process would likely encounter roadblocks, the World Bank warned recently.

Shares of equitised power companies listed on the bourse in HCM City and Ha Noi, including Vinh Son-Song Hinh, Thac Ba, Na Loi and Nam Mu, have generated interest from foreign and domestic investors.

However, according to the World Bank’s report on Viet Nam’s electricity industry in 2006, the eq

uitisation process of power plants should be carefully considered. This is especially true in remote areas where companies are less profitable because they are forced to offer power at below-market rates, the bank said.

At present, the State holds a majority stake in several large electricity firms in a bid to stabilise supply nation-wide. Yet industry plans to shrink the State’s stake to less than 51 per cent. World Bank experts warned authorities in rural and remote areas should examine that policy closely.

For instance, the equitised Khanh Hoa power company has had difficulty developing an electricity network in remote areas and luring investors. The State should subsidise enterprises in these areas, said industry experts.

The nation’s developing power industry faces other challenges, according to the report. In other countries, firms usually target strategic and powerful shareholders to finance upgrades and implement state-of-art management methods.

Vietnamese electricity companies saw a shortage of strategic shareholders, however, the report stated. Most shareholders are small investors, looking for immediate profits rather than long-term returns.

Source: Vietnam News

HCM City stock exchange ups ante

HCM CITY — Onlycompanies with at least VND80 billion (US$5 million) in authorised capital will
be allowed to list in HCM City.

State Securities Commission Chairman Vu Bang told reporters on the sidelines of a Listed Company Club and investors’ meeting last Saturday in HCM City that a draft decree to guide the Securities Law had been submitted to the Government.

Under the decree, expected to be approved early next year, companies already listed but with less than
VND80 billion equity would have two years to increase their capital failing which they would be moved to the Ha Noi exchange.

Bang said the HCM City bourse would target major institutions in industries like banking, insurance,
and telecom.

FPT lists this week

The Vietnamese markets moved erratically during the past week but with more ups than downs, propelled
by the impending listing of several blue chips.

The VN Index closed almost 65 points higher at 696.12 even though two out of the three trading sessions
last Friday were cancelled due to technical problems at the HCM City Securities Trading Centre.

The Corporation for Financing and Promoting Technology (FPT) will list in HCM City on Wednesday.

FPT is a market leader in systems integration, mobile phone distribution, software production, and telecom
and internet services. It recently opened a software engineering university.

Big names like Intel Capital and Texas Pacific Group have invested US$36.5 million in FPT, whose
equity capital now stands at over VND608 billion ($38 million). Its shares were traded unofficially at 20 times their face value.

It will be followed the next day by Thu Duc Housing Development Corporation (TDH). With capital of
VND170 billion ($10.6 million) it will be the first property company to list. It is owned by various institutional and individual investors including major companies like the HCM City Securities Company, Saigon Securities Inc, Amersham Industries Ltd, and Vietnam Dragon Fund Ltd.

The Hong Kong and Shanghai Banking Corp rates TDH as one of Viet Nam’s top 15 blue chip companies.

The 16-year-old joint-stock company has invested in more than 30 housing projects including An Phu and Binh An, and has eight others under construction, including Cantavil and Hiep Phu.

It is also a major financial investor with VND250 billion ($15.6 million) in Phuoc Long Textile Joint Stock Co., HCM City Housing Development Bank, and Prudential Balanced Investment Fund 1. Its chairman, Le Chi Hieu, said the company would begin to offer new services like property management and brokerage.

It made a profit of VND38 billion ($2.7 million) last year and VND40 billion in the first three quarters
this year.

Securities firm to debut

Saigon Securities (SSI), among Viet Nam’s first securities companies, will this Friday become the first
company from the industry to list on the Ha Noi Securities Trading Centre.

SSI has an equity of VND500 billion ($31.25 million) and total assets of over VND2.5 trillion ($156.25 million).

It services over two-thirds of all foreign stock market investors and consulted for 17 major companies listed in HCM City.

It expects net profits this year of VND148 billion ($9.25 million) and VND302 billion next year, and to
pay annual dividends of 30 per cent until 2009. — VNS

see details: VietNam News

Vietnamese Stocks - Equities in Vietnam

Vietnam Stock Exchange - The Stock Exchange for Vietnamese Stock Market

The Stock Trading Center of Vietnam (‘STC’), located in Ho Chi Minh City, was officially inaugurated on July 20, 2000, and trading commenced on July 28, 2000. Initially, two equity issues were listed, Refrigeration Electrical Engineering Joint Stock Corporation (‘REE’) and Saigon Cable and Telecommunication Material Joint Stock Company (‘SACOM’). It is the smallest stock exchange in Southeast Asia. The Vietnam stock exchange is both operated and regulated by the State Securities Commission.

More information about Vietnam Stock Exchange

Vietnamese Securities Companies

As of February 2004, thirteen companies have been licensed by both the State Securities Commission and Ho Chi Minh City Stock Trading Center. Of these, nine have capital of VND43bn (US$2.73m) or more and have been licensed to conduct a full range of securities business including brokerage, advisory, fund management, proprietary trading and underwriting. Saigon Securities Incorporation, Hai Phong Securities Joint Stock Company and EAB Securities Company have chartered capital ranging from VND20-22bn (US$1.27m-US$1.4m) while Mekong Securities Joint Stock Company are capitalized at VND6bn (US$0.38m). Neither company is licensed to conduct proprietary trading or underwriting.

More information about Vietnamese Stock Brokers

Foreign Participation

Foreign ownership of shares in companies listed on the Ho Chi Minh City Stock Trading Center is limited to 49% of the company’s issued share capital. For bonds, foreign investors can hold 100% ownership of a particular issuer’s bonds.

Foreign investors who wish to purchase shares through the Ho Chi Minh City Stock Trading Center are required to register through a custodian licensed to hold securities on behalf of foreigners – of which there are currently three; The Hongkong and Shanghai Banking Corporation, Deutsche Bank AG and Standard Chartered Bank. Beside these three, securities companies can play role of custodian unit to hold stocks for foreigners as well. Once registered, a Securities Transaction Code is issued to the foreign investor who may then open a Trading Account with one or more of the twelve licensed Securities Companies.

How to Buy Vietnam Stocks

For private investors, it is necessary to fly to Ho Chi Minh City (Saigon) to open a securities account and a bank account. Foreigners are able to transfer funds out of Vietnam after fulfill tax obligations. There is no time constrain.

You may wish to contact Vietnamese stock brokerage firms on this list for more information.

Thanks for Minh Quan for the updates of the rules of Vietnam stock exchange.

see details Vietnamese Stocks - Equities in Vietnam