Value of IPOs and corporate bond issuance hits five-year high
Issuance value of corporate bonds in Viet Nam reached a five-year high of VND39.45 trillion (US$1.7 billion) in 2018, data from Bao Viet Securities Co (BVSC) showed.
The total value of additional shares issued, initial public offerings (IPOs) and corporate bonds hit VND83 trillion ($3.56 billion), its highest level since 2014.
IPO value also hit a five-year peak of VND21.94 trillion ($942 million), eight times higher than the value recorded in 2017. However, the value of additional shares issued was just VND21.76 trillion ($934 million), the lowest level since 2014.
In its report on opportunities in Viet Nam’ stock market in 2019, BVSC highlighted investment opportunities on the Unlisted Public Company Market (UPCoM), where many equitised State-owned companies are trading shares.
The current market capitalisation of the entire UPCoM is VND910 trillion ($39 billion), of which the 20 largest stocks account for 70 per cent.
The biggest companies include Airports Corporation of Viet Nam (ACV), Viet Nam Engine and Agricultural Machinery Corporation (VEA), Vietnam Airlines (HVN), PV Oil (OIL), Vietnam International Bank (VIB), FPT Telecom (FOX) and Quang Ngai Sugar (QNS), each with a market capitalisation of between VND11 trillion ($472 million) and VND186 trillion ($8 billion).
Opportunities may also come from divestment of State capital. ACV, VEA, HVN, Viet Nam National Textile & Garment Group (VGT) and Viet Nam Pharmaceutical Corp (DVN) on the UPCoM; Petrolimex on the HSX; and construction materials manufacturer Viglacera (VGC) on the Ha Noi Stock Exchange all have plans to sell more State capital in 2019.
Importantly, changes on the foreign ownership ceiling for public companies in the Draft Amended Securities Law may bring benefits for foreign investors by removing the requirement to seek shareholder approval for extending foreign ownership in the company to 100 per cent.
This change is expected to make it easier for Viet Nam’s companies to qualify for MSCI’s emerging market index.
However, BVSC warned that Viet Nam’s stock market may struggle to attract more new foreign capital compared to 2016-17 due to increasing cost of capital after many central banks tightened monetary policies.
In the latter half of this year, if Viet Nam fulfills criteria to qualify for a reclassification, new speculative foreign capital flows may enter the Vietnamese stock market.