HA NOI (VNS)— Many listed companies had failed to hit their business targets this year due to economic woes, while the stock market had seen many more leave the market due to prolonged losses, the State Securities Commission reported at a meeting on Thursday.
|Investors at VNDirect Securities Co. Many listed companies failed to hit their business targets this year due to economic woes, while many more left the market due to prolonged losses. — VNS Photo Truong Vi
More than 60 per cent of listed companies posted lower profits in the first nine months of this year, up 12 per cent from the same period last year, while the number of companies reporting losses was up 170 per cent during the period, reaching 143. The return on equity (ROE) ratio also decreased from 12.3 per cent from last year to just 8 per cent.
According to the commission, high lending interest rates, rising input costs (fuel and electricity prices), increased inventories and weak demand were the main reasons companies were experiencing difficulties.
Real estate developers, construction and material building companies, securities firms and retailers were the biggest victims.
With regards to securities companies, over 50 per cent of firms reported losses this year, while around 70 per cent incurred cumulative losses. Fourteen companies were put under the control of the State Securities Commission while three were suspended from operations and four had their operating licences revoked. The number of securities branches and transaction offices also declined.
Viet Nam's stock market was seen as one of the best performing markets in the world this year, but its performance was unstable.
The VN-Index on the HCM City Stock Exchange gained over 8 per cent from the beginning of this year but the HNX-Index on the Ha Noi Stock Exchange lost more than 12 per cent.
Total capital mobilisation on the stock market this year was estimated at VND152.6 trillion (US$7.27 billion), up 54 per cent over last year. However, money were raised mainly from government bond issues which totalled VND142.5 trillion ($6.78 billion), while capital raised from share issues was down 42 per cent from a year ago, reaching just VND10.1 trillion ($481 million).
This year, the market saw 25 companies and one fund debut shares but also witnessed 21 firms delist because of prolonged losses or serious violations of information disclosure regulations.
Market capitalisation on the two exchanges was around VND720 trillion ($34.3 billion), up VND183 trillion compared to last year, but 87 per cent came from the HCM City market. Market capitalisation on the Ha Noi exchange was lower than its total listed value because more than 72 per cent of shares dipped below their par value.
Despite being on a downward trend since the second half of this year, share liquidity on the market improved 28 per cent over last year, averaging nearly VND1.32 trillion ($62.7 million) per session. Improved liquidity was attributed to extended transaction times during the afternoon session on both exchanges.
In order to help boost the stock market next year, in addition to extending the personal income tax exemption, the commission has asked the Government to issue tax incentives for new types of investment funds. It was also committed to accelerating the market restructuring scheme and introducing new products to the market next year. — VNS