Vietnam bourse pulls in $39,000 on first day

~ Le Vięt Nam, aujourd'hui. ~
The Vietnam News

Vietnam bourse pulls in $39,000 on first day

HANOI - Hundreds of onlookers gathered at the first trading session at Vietnam's new stock exchange yesterday, an event which observers described as a significant step towards further economic reforms. However, trading on the floor within the restored French colonial building in central Ho Chi Minh City was thin as authorities placed a cap on the two companies which had listed prior to yesterday's opening session.

Trade was valued at 68.7 million dong - about HK$39,000. Hong Kong's main board took in HK$15.81 billion yesterday. Altogether 1,000 Refrigeration Electrical Engineering and 3,600 Cable and Telecommunications Material joint stock shares changed hands for 17,000 dong and 16,000 dong respectively. Buyers vastly outnumbered sellers. The Vietnam News Agency reported that there were 2,500 prospective buyers but only 12 sellers.

Rick Mayo-Smith, managing director of Hong Kong-based Indochina Capital Corp which created a US$10 million fund to buy Vietnamese stocks, said he agreed with the authorities' cautious approach. "It's very important to take things easy [in order] to minimise the potential of mistakes which would have a severe impact on confidence," he said. "I think what we'll see is steady growth in trading over the next three to five years which in turn will provide a major impetus for Vietnamese companies to embrace transparency and adopt better management practices."

Two companies - Haiphong Joint Stock Paper and Transforwarding Warehousing Joint Stock - have been licensed to list but failed to complete requirements before the opening of trade. Another 40 are eligible for listing but have adopted a "wait-and-see" approach after expressing fears that public trading would see company valuations fall. Eight companies are seen listing by the end of the year and trade until then is expected to be dominated by government bond issues worth a projected US$142 million.

One regional strategist said fund managers would only invest in the new stock market when its size and liquidity reached a critical mass. "Realistically the market will have to grow in excess of US$10 billion before any regional investor will look at the market seriously," said Raymond Foo of BNP Paribas Peregrine. The market may grow to such a level if the government pursues a reformist agenda and privatises the telecommunications and utility stocks which would cause market capitalisation to surge, Mr Foo said. "Should the government be very reform-minded and privatise the large state firms . . . then the process could happen in the next two years," he said.

By Huw Watkin - The South China Morning Post - July 29, 2000.

Vietnam stock market starts trade

BANGKOK - Investors in Vietnam rushed to buy stocks in two former state-owned companies on Friday as the long-awaited trade at its newly opened stock exchange in Ho Chi Minh City kicked off. Despite the huge demand, only a few trades were completed during the two-hour session as few sellers emerged after securities regulators set last-minute price ceilings for the first day of trade.

"Sellers were very thin on the ground," said Jonathon Waugh, deputy general director at ACB Securities, one of six securities companies licensed to trade at the exchange. Vietnam's State Securities Commission had initially said that prices for the two listed stocks - a refrigeration company and a telecom cables company - would be allowed to float on the first day of trading. But shortly before the 9am session began, the market regulator announced that it had decided to set ceiling prices for the first day.

Brokers, who had expressed concern that the share prices would skyrocket in the exuberance of the first day's trade, welcomed the intervention, saying it would prevent small investors from getting hurt. "It was a smart idea," said Pham Uyen Nguyen, deputy managing director of Bao Viet Securities. "Without a ceiling price, the price might have gone too high at the beginning and gotten stuck there." The prices for Ree, the refrigeration and air condition company, and Sacom, the telecom cables manufacturer, were set at 16,000 and 17,000 dong - 60 and 70 per cent above their 10,000 dong face value.

In future trading, stock prices will not be allowed to rise or fall more than 5 per cent in a single day, according to the market rules. Securities dealers predict that prices of the two listed equities will rise 5 per cent a day on each of next week's three scheduled trading days. Several hours before the trading center opened on Friday morning, investors were lined up outside securities companies, waiting to place buy orders on the market. Many investors were willing to purchase at prices well above the ceiling price set by the government.

"It was extraordinary," said Mr Waugh, who is also Jardine Fleming's chief representative in Ho Chi Minh City. "There were hordes of people coming from 7.30am and filling in the buy orders." Both Ree and Sacom are former state-owned companies, whose shares have been distributed by the central government to workers and managers of the firms and members of the general public as part of Vietnam's privatisation effort. A "kerb" market for the shares has been active for several years. An additional two companies have also been given permission to list, and trading in those firms is expected to start soon.

By Amy Kazmin - The Financial Times - July 28, 2000.