Four commercial banks and 16 large state companies have considered plans to go public as the Government prioritises stabilising the stock market.
Government officials had targeted 71 State corporations and big companies for equitisation from 2007 to 2010. This included the Bank for Foreign Trade of Viet Nam (Vietcombank), Bank for Investment and Development of Viet Nam (BIDV), Viet Nam Industrial and Commercial Bank (Incombank), Mekong Housing Bank (MHB), MobiFone and Sai Gon and Ha Noi Brewery and Drinks Corporations this year.
But a stagnant domestic stock market and a freeze on the over-the-counter market have forced state officials to seriously reconsider.
Companies going public at this time would get low returns.
The ramifications are significant. High in capital, these companies would generate an oversupply, possibly leading to an economic crisis. The stock market has only recently recovered.
Individual investors currently unable to sell their stocks will welcome the postponed decision.
But large investors, especially financial organisations, objected to the decision. Having anticipated the IPOs, they will have to reconsider their business plans.
On the other hand, from 2001 to 2006, there were only around 3,000 state companies equitised, 77 per cent of which had a low capital base of under VND10 billion (US$600,000). The percentage of stocks available for investors was just 3.6.
The postponed decision may adversely affect future IPOs plans, forecasting a slowdown in the equitisation process.
Source: VNS
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