The slow listing of post-equitisation firms, including State-owned enterprises (SOEs), may make Vietnamese firms less attractive regarding a lack of corporate transparency and government agencies managing those firms must be blamed for the problem.— Photo vov.vn

HÀ NỘI — The slow listing of post-equitisation firms, including State-owned enterprises (SOEs), may make Vietnamese firms less attractive regarding a lack of corporate transparency and government agencies managing those firms must be blamed for the problem.

According to the State Securities Commission (SSC), there were 413 companies that had not traded their shares on the stock market as of the end of 2018. Of the total, 195 companies are not equitised SOEs, namely Sài Gòn-Hà Nội Insurance Corporation, Vietnam National Aviation Insurance Corporation, Petrolimex Group Commercial Joint Stock Bank and Việt Nam Thương Tín Commercial Joint Stock Bank.

The remaining number (218 companies) are post-equitisation SOEs such as Transport Engineering Design Inc and Vietnam National Vegetable, Fruit and Agricultural Product Corporation.

According to Trần Minh Hải, director of the banking-securities-investment law firm Basico, firm management boards are the first to blame for the problem as they have not followed the rules to put those firms’ shares on the stock market.

In addition, punishments for the violations and delayed listing had not been strict enough to put pressure on the firms to trade shares, negatively effecting shareholders’ rights and benefits.

Government agencies and local authorities also had to take responsibility for the problem as they, as the representative of the Government monitoring the State capital in those firms, had not performed well to push the firms to trade their shares on the stock market in the post-equitisation stage.

According to other analysts, companies delaying their listing will bring down investors’ confidence in the market’s transparency and openness, and result in lower quality of corporate governance in those companies due to lack of private investors’ participation in the management board.

Listing and privatisation are seen as instruments to make corporate operation and business activity more transparent and public to investors, thus assuring the benefits of investors when purchasing firms’ shares.

Transparency is also among key decisive factors that would determine whether Việt Nam is admitted in global investment institutions’ revision for an upgrade from “frontier” to “emerging market”, according to Bảo Việt Securities Co’s head of market analysis and investment consultancy Phạm Tiến Dũng.

That is expected to lure foreign capital into the Vietnamese equity market and boost the performance of local firms, Dũng told Việt Nam News in an email.

“If included in the re-classification review list (of the Morgan Stanley Capital International and Financial Times Stock Exchange), Việt Nam may lure US$1 billion worth of capital from global exchange-traded funds and prove the Vietnamese equity market is secure and big enough to receive larger international investors.”

“What needs improving at the moment includes the market and corporate transparency, fair information accessibility to all investors, and increase of foreign ownership limit in local companies,” Dũng said.

In 2019, the State will continue selling its stakes in local SOEs and the trend is “irreversible”, according to Dũng.

“Recent successful State divestment deals such as brewer Sabeco and dairy producer Vinamilk showed government agencies paid more attention to the demand and requirement of investors,” he said.

What weighed on investors’ sentiment was not only about the sectors and prices, but also about their participation in the post-IPO corporate management, he said, adding that was the key factor to make divestment and listing deals more attractive. — VNS