Vietnam opens Hanoi market to help regulate stock trading
Vietnam opened a securities trading center in Hanoi to auction shares in state-owned companies and ultimately become the Communist country's second stock market as the government continues to open its $40 billion economy.
The authorities hope that by June the center will operate as an over-the-counter market in the Vietnamese capital, State Securities Commission Chairman Tran Xuan Ha said today. The center is designed to help regulate trading in the more than 2,400 companies whose shares can change hands though remain unlisted.
``Anything that the authorities can do to restrain the ability of people to sell shares to the public via an unregulated and nontransparent form has got to be positive,'' said Kevin Snowball, chief Vietnam representative for PXP Vietnam Asset Management Ltd., which oversees $10 million in the country.
The first market, the Ho Chi Minh City Securities Trading Center, opened in Vietnam's largest city in 2000 and now has 27 listed companies with a total market value of about $275 million. All but one were previously owned by the state. Vietnam's state- owned enterprises still account for about a third of gross domestic product, according to government estimates.
The country has been selling shares in some companies after first converting their ownership structure into stockholdings, a process known as ``equitization.''
Shares in such companies ``are being traded and transferred on the free market,'' Ha said in a speech in Hanoi. The center will make it easier for both local and foreign investors to buy and sell shares in state companies and establish fairer pricing, Ha said.
First Sale
The Hanoi center today said it organized the sale of 24.9 billion dong ($1.6 million) worth of shares in the Post and Telecommunications Equipment Factory.
Equitizations, in which shares tend first to be sold to a company's managers or other employees, have gathered pace recently, rising 10 percent to 212 in 2002 and 66 percent to 352 in 2003, according to the World Bank. Through last October, more than 400 had had taken place last year, the Bank said in a December report.
Ha is aiming to make Hanoi a secondary market for securities that haven't listed yet, with simpler requirements and procedures than the Ho Chi Minh City bourse, he said.
Companies on the Ho Chi Minh City Securities Trading Center must demonstrate a history of profitability before listing, and must release results four times a year thereafter.
While the Ho Chi Minh City Securities Trading Center works through a centralized trading system, trading in shares on the Hanoi Securities Trading Center will work through the principle of direct negotiations between buyer and seller, said Vu Bang, vice- chairman of the State Securities Commission.
By Jason Folkmanis - Bloomberg - March 08, 2005.
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