Stock exchange a step towards market economy
BANGKOK - Vietnam took another step towards a market economy on
Thursday when its Communist party rulers presided over the
opening of Ho Chi Minh City's stock trading centre.
Nguyen Tan Dung, deputy prime minister, told businessmen,
diplomats and political figures that the securities market was an
"important channel for putting funds from society into efficient
production and business".
Trading, which will be limited to three hours a day, three days a
week, will not begin for at least 10 days. So far just four companies, all former state-owned
enterprises, have been given permission to list on the exchange.
But despite the market's tiny size, potential investors and analysts were upbeat.
"I feel excited," said attorney Tran Quyet Thang, general manager of Saigon Securities, one
of six fledgling companies licensed as brokers. "It's the first time there is a complete market
policy. Investing people have a choice. They don't have to only deal with the bank system."
On Thursday a stream of potential investors made their way to the gleaming offices of
Saigon Securities where they huddled over computers with detailed prospectuses of the
listed companies, and filled out forms to open trading accounts.
Across the street, Bao Viet Securities, next door to the colonial-era exchange building, was
also dealing with a flood of visitors wanting to open accounts.
Pham Uyen Nguyen, Boa Viet Securities deputy managing director, said: "Enterprises say
'we lack money to develop' and the people say 'we don't know where to put our savings'.
"This builds a bridge for the capital flow between the public and the enterprise." Yet equity
trading will not be entirely new to the business-minded residents of Ho Chi Minh City. It has
had an active kerb market for shares in so-called "equitised" companies, the more than 400
former state enterprises that have been transferred to the hands of the workers,
management and public.
Since September 1999, much of that trade has gone through Indexx House, a slick
restaurant with computers and a trading board that acted as a central clearing house for
share trading.
Tran Anh is a housewife whose husband works for telecom cable manufacturer SACOM,
one of the four companies that will be listed. In 1998, with bank interest rates extremely low,
she and her family used their savings to buy additional SACOM shares, then available for
100,000 dong ($7) each.
Potential buyers recently offered to buy Ms Tran's 2015 shares for 170,000 dong per share,
but she refused to sell, preferring to wait for the market launch.
Jonathon Waugh, Jardine Fleming's representative in Vietnam, said: "If there is any news
that a company has permission to list, the stocks have just rocketed."
The initial listings will raise no new capital but will rather formalise trade in the existing
shares, and the market is expected to help generate new funds for Vietnam's private
companies.
The market launch is also expected to give additional impetus to the process of "equitising"
other state companies.
Yet some analysts worry that the market's regulatory framework may be too stringent and
could stifle market growth. The State Securities Commission has laid down listing criteria that
are almost "first-world" in their demands for transparency and accountability.
This could discourage many companies from seeking a listing, said Fred Burke, an attorney
with Baker & McKenzie in Ho Chi Minh City.
However, he added, "people will realise that if they want to raise money on the capital
market, they'll have to be transparent".
By Amy Kazmin - The Financial Times - July 20, 2000.
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