Increasing 'high-quality' commodities to strengthen stock market

An investor observing the market's movements at a trading floor of a securities company. VNA/VNS Photo

Increasing the quality and quantity of listed companies and expanding institutional investor networks are crucial to bolstering the internal strength of the Vietnamese stock market and attracting mid- and long-term investors.

However, the expansion of commodities on the market has experienced a slowdown in recent years.

At the Hồ Chí Minh Stock Exchange (HoSE), which accounts for over 80 per cent of the total market trading value, there has been a significant decrease in the number of new listings.

Meanwhile, most of the newcomers on HoSE are fund certificates and businesses transferring from the UPCoM.

Statistics from the State Securities Commission (SSC) showed that HoSE currently has only 43 companies with a market capitalisation of over US$1 billion as of February. Among them, Vietcombank and BIDV are the only two commercial banks with a market capitalisation exceeding $10 billion.

These well-known entities have been trading on the exchange for several years.

However, in the past four years there has been a lack of big IPOs and significant listings similar to those of Petrolimex, VietJet Air, Vincom Retail, VPBank and Vinhomes. Moreover, large-scale State-owned enterprises such as Agribank, Vinacomin and MobiFone have been unable to undergo equitisation and pestment.

The absence of these major IPOs has resulted in a shortage of high-quality new stocks in the domestic market, resulting in limited investment options, particularly in terms of large-cap stocks, for investors.

As a result, the number of newly opened securities accounts has been continuously increasing, but trading activities remain concentrated on a few familiar ticker symbols.

Phạm Huyền Trang, head of Stock Analysis at SSI's Investment Analysis and Consulting Centre, highlighted foreign investors’ substantial interest in the Vietnamese stock market. However, they face limitations such as the absence of high-quality goods and new listed companies. Furthermore, listed stocks encounter challenges due to regulations on foreign ownership limits.

Phạm Thị Thuỳ Linh, deputy head of the SSC’s Market Development Department, shared the efforts to increase the speed of IPOs. The SSC has identified challenges that prolong the IPO, listing and trading registration procedures.

It is working in coordination with trading departments to streamline the registration and listing process, aiming to create favourable conditions for businesses to enter the stock market and attract additional capital for their operations.

During the document approval stage, the SSC has noticed discrepancies in understanding between businesses and advisory firms regarding legal regulations.

In March, the commission plans to hold conferences in both the northern and southern regions, inviting businesses interested in capital mobilisation for 2023-2024, as well as advisory firms, to share regulations and address any issues or concerns, said Linh.

Optimal timing for stock listing

The stock market is now experiencing various growth factors, including a low-interest rate environment, recovering corporate profitability, market upgrading potential and the implementation of the KRX system.

These factors provide businesses with the motivation to list their stocks on the stock exchange and facilitate State pestment activities.

Hồ Sỹ Hòa, head of Research and Investment Advisory at DNSE Securities, said that the company had successfully conducted a 100 per cent online IPO and plans to list within 2024.

The company's leadership recognised the favourable conditions for IPOs and listings this year, with Government support, market upgrade potentials, and favourable financing conditions.

"There is still significant room for investment demand from the public, market capitalisation and stock market growth. Listing at the present time allows the company to expand its operations and market share,” Hòa said.

Apart from DNSE, HoSE recently announced that it has received the listing registration documents for approximately 205 million shares of DSC Securities which will be transferred from UPCoM.

Since the end of 2023, the listing activities on HoSE have witnessed a resurgence as numerous companies have been granted approval, including Nam Á Commercial Joint Stock Bank, Viettel Post JSC, Hủa Na Hydropower and Quy Nhơn Port.

UPCoM has also welcomed new entrants such as BCG Land, Taseco Land, Northern Power Equipment and Kontum Water Supply.