HoSE listing remains a gamble
HoSE listing remains a gamble
The Ho Chi Minh Stock Exchange (HoSE) has recently accepted or looks set to accept the listing of three more large-cap companies, but questions remain following a volatile year for the market.
PetroVietnam Power Corporation (PV Power) will debut on the HoSE on January 14, 2019 with more than 2.34 billion shares. On December 28, 2018, the company cancelled the trading of more than 467.8 million shares on the Unlisted Public Company Market (UPCoM).
On January 2, the southern market regulator announced it had approved the listing of the country’s largest ceramics and tile producers Viglacera with more than 448.3 million shares and an unknown debut date.
National flag carrier Vietnam Airlines recently filed to list all of its 1.4 billion shares on the southern bourse.
The company also plans to terminate its listing on the UPCoM in the near future if the filing is approved.
If Vietnam Airlines’ listing is approved, the southern market will receive three new large-cap companies and investors will have more industry-leading options.
Moving from the UPCoM and the Ha Noi Stock Exchange (HNX) to the HoSE means the companies meet the standards of the southern bourse, which are stricter than the two other markets. That recognition may help boost the prices of the companies’ shares and lure more foreign capital.
But questions remain about the HoSE listings. The firms that started trading on the HoSE in 2018 often saw share prices jump strongly on the debut, but as post-debut performance depends on market conditions, they were often below expectations.
Large firms that debuted on the HoSE in 2018 included HDBank, Techcombank, Saigon Real Estate JSC, residential developer Vinhomes and Vincom Retail.
As of January 4, Saigon Real Estate JSC shares have lost 35.6 per cent in value since their debut. HDBank shares have shed a quarter of their value, and Techcombank shares have declined by 27 per cent. Shares of the two subsidiaries of property developer Vingroup – Vinhomes and Vincom Retail – have decreased by 16.3 per cent and 17 per cent, respectively.
The first three months of 2018 were an ideal time for companies to start trading on the southern bourse as the benchmark VN Index reached its record high of 1,204.33 points on April 9.
But the rest of the year was challenging for listed companies as world markets were threatened by fears of a global economic slowdown amidst trade tensions between China and the US. International capital returned to developed markets from emerging ones to deal with US lending rate increases.
The benchmark VN Index ended 2018 at 892.54 points, down 9.31 per cent from the end of last year and down 26 per cent from its record high in April. Listed firms on the southern market have also seen their share prices decline since then.
Market volatility and the downtrend of large-cap stocks led PV Power to delay its HoSE listing several times as the firm feared listing shares in such an unstable context would not be profitable for shareholders.
In 2019, the Vietnamese stock market is expected to encounter big challenges caused by global challenges that drag down investor confidence, including geo-political instability in Europe and the trade tension between China and the US, which seems unlikely to be resolved in the short term.
