FDI firms face difficulties in listing

Update: December, 23/2019 - 09:04


A facility of Taya (Vietnam) Electric Wire And Cable JSC (TYA). After 13 years of listing on the Việt Nam’s stock market, shares of Taya have lost more than half of their value. Photo

HÀ NỘI — Foreign direct investment (FDI) firms trading on the local stock market are facing the neglect from investors and difficulties in management mechanisms.

There are currently only 10 FDI enterprises listed on local exchanges compared to the tens of thousands of FDI firms operating in Việt Nam.

Prices down

After 13 years of listing on Việt Nam’s stock market, shares of Taya (Vietnam) Electric Wire And Cable JSC (TYA) have lost more than half of their value.

The company was listed on the Hồ Chí Minh City Stock Exchange (HOSE) in 2006 for VNĐ34,000 per share. Now its shares are priced at VNĐ13,450 per share, with average liquidity of more than 20,000 units per session.

Also in 2006, shares of Taicera Enterprise Company (TCR), a Taiwan-based enterprise, were listed on the HoSE for VNĐ35,000 per share. Now TCR is trading at the price of only VNĐ2,020 per share, a decline of more than 94.3 per cent in value after 13 years of listing.

The story is the same with other FDI stocks listed at the same time, such as The Royal International Corporation (RIC), Tung Kuang Industrial JSC (TKU), Mirae Joint Stock Company (KMR) and Everpia JSC (EVE).

FDI firms listed at later points faced the same situation.

Listed in 2017, shares of Siam Brothers Vietnam JSC (SBV) have so far dropped nearly 78.8 per cent, from VNĐ48,000 per share to VNĐ10,200 per share.

Chang Yih Ceramic JSC (CYC) was offered at VNĐ20,000 per on the first trading day in 2017, but now is trading at VNĐ500 per share.

Indifferent investors

According to Nguyễn Hồng Khanh, director of market analysis department at Vietnam International Securities Co (VIS), the business activities of many FDI enterprises lack stability and significant growth in annual profits, which discourages investors.

Many FDI enterprises wish to list on the stock market as they need capital to re-invest and expand in Việt Nam.

Some of them are facing difficulties with legal regulations, which, to them, are still unclear and overlapping.

Most listed FDI enterprises are small and medium sized enterprises. Their business activities have not witnessed significant advancement while a number of large institutional shareholders have gradually divested capital, affecting the confidence of small shareholders.

Some businesses have even had to cancel listings due to being suspected of being related to transfer pricing and tax evasion.

According to lawyer Tuấn Nguyễn from ANT Lawyers Company, FDI enterprises participating in the stock market can help diversify securities products, providing more choices for investors.

"However, looking at the overall picture, it seems Việt Nam is focusing on attracting foreign direct investment rather than investment through financial markets," he said. — VNS