Over 1.6 billion shares could enter market in July

July 07, 2022 - 08:35
Stock dividend is a common form on the stock exchanges and after each payment, a large amount of shares are pumped into the market.
Steel wire rod products stored in a warehouse of Hoà Phát Group. Photo hoaphat.com.vn

HÀ NỘI — Stock dividend is a common form on the stock exchanges and after each payment, a large amount of shares are pumped into the market. In July, it is estimated that the market may receive more than 1.6 billion shares.

Notably, 1.34 billion shares of Hòa Phát Group (HoSE: HPG) will be issued to shareholders on July 20. The issuance is to pay 2021’s dividends at the rate of 30 per cent. 

Once it is completed, the total circulation of HPG Shares will increase to 5.8 billion units, the largest on the stock exchange.

Previously, on June 20, the steel producer closed the final registration for a list of shareholders receiving cash dividends at the rate of 5 per cent and stock dividends at the rate of 30 per cent. 

For cash dividends, more than VNĐ2.2 trillion (US$95.6 million) will be transferred to investors' accounts on July 6.

Another steel producer - Tôn Nam Kim (HoSE: NKG) is also preparing to release another 43.9 million shares on July 13. The shares are issued to pay dividends in 2021 at the rate of 20 per cent. 

Tôn Nam Kim will also spend about VNĐ219 billion to pay cash dividends. It is expected that the money will be sent to investors' accounts on July 5.

Shareholders of Đức Giang Chemicals Group (HoSE: DGC) are also about to receive more than 200 million shares on July 8. The company aims to pay these shares to shareholders as 2021’s dividends with a rate of up to 117 per cent. 

After the issuance, its charter capital will double to over VNĐ3.7 trillion.

Moreover, Đức Giang Chemicals plans to issue more than 8.5 ESOP shares, accounting for 5 per cent of outstanding shares. 

Money from the issuance is for supplementing working capital. These ESOP shares will be offered to the group's employees and its subsidiaries at the price of VNĐ10,000 per share and will be restricted from transfer for three years.

FPT Retail (HoSE: FRT) is about to distribute to shareholders 39.5 million shares from 2021’s dividend at the ratio of 2:1. The shares will be officially traded from July 14. 

On June 22, FPT Retail spent VNĐ39.5 billion to pay dividends in cash to shareholders at the rate of 5 per cent.

Stock dividends will have a two-way impact on price movements in the market. 

On the one hand, the potential increase in supply can significantly weigh on the stock, especially with high volumes like HPG or DGC. However, it should be noted that shares in the investors’ accounts are unlikely to be poured into the market right away, especially if shares prices drop sharply.

Meanwhile, the stock dividends will increase the purchasing power for investors because there are more collateral assets, meaning that shareholders have more leverage to support the price in case the stock continues to fall. 

But investors should also consider carefully before borrowing on margin, especially during current unpredictable fluctuations of the market. VNS