Vietnam IPOs of State-Owned Companies Underperform
April 15, 2014 Leave a comment
Vietnam IPOs of State-Owned Companies Underperform
About One Quarter of Shares on Offer Were Sold in First Quarter
NGUYEN PHAM MUOI
April 1, 2014 2:40 a.m. ET
HANOI—Vietnam’s initial public offerings of state-owned enterprises in the first quarter of this year have shown poor results, with only small amounts of shares on offer being sold mostly to local investors, according to data from market regulators in Hanoi and Ho Chi Minh City.
The SOEs offered to sell nearly 304.5 million shares between January and March, of which nearly 83.5 million shares, or 27.4%, were sold, with foreigners buying only 10.1 million shares, data showed.
Total proceeds collected from those IPOs were 1.05 trillion Vietnamese dong ($49.4 million), below the government’s target of 1.10 trillion Vietnamese dong set earlier this year.
Of the companies selling shares, nine were from the Ministry of Transportation and four from the Ministry of Construction. The companies have been mainly involved in public works in the property sector, which is facing difficulties including depleting funds and slow payments by local governments.
“But the main reason for the poor sales in those IPOs was public concerns that the economic recovery has not been very bright and the property sector remains struggling with high housing inventory and falling prices,” said economist Vuong Quan Hoang from Hanoi-based DHVP Research & Consultancy.
“Though the stock market has risen significantly—the key index was up nearly 20% in the first quarter—many investors are hesitant to buy shares from those companies, whose financial future is very dim because the government is expected to cut sharply down its funds for public projects from this year,” he said.
In February, Vietnamese Prime Minister Nguyen Tan Dung said the government plans to sell shares in 432 state-owned enterprises by 2015 in an effort to revamp the state-owned sector.
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