Market falls, companies cancel listing plans

Friday, April 25, 2008
The prolonged falls of the stock market have made many companies shrink. They are considering cancelling or delaying their listing plans.
One of the topics of discussion at the shareholders’ meeting of a bank in Hanoi recently was the listing of the bank at the Hanoi Securities Trading Centre (HASTC).

Many shareholders asked if the share issuance would make the situation worse, since share prices have been decreasing dramatically since the beginning of the year.

Though the bank has fulfilled the procedures for listing at HASTC, its management and supervision board still worry about the feasibility of the plan as the market now shows unfavourable conditions.

The bank’s shareholders had two different viewpoints. Some of them, fearing that share prices will drop further, which will make their assets smaller, did not advocate the listing plan. Meanwhile, some others said that the listing will help improve the liquidity of shares, and those who want to give up investments, can easily sell shares on the bourse. The bank is planning to raise its chartered capital to VND4tril, double the current level.

The leader of the bank, contacted by reporters, declined to answer the question about his viewpoint on the listing plan, saying that this is really a very sensitive issue at this moment.

The same situation is being faced by two other banks in Hanoi. Sources say that one of the two has even decided to withdraw its application for listing on the bourse even though it has fulfilled all necessary procedures and all it has to do now is wait for an official licence.

Nguyen Son, Head of the Market Development Division under the State Securities Commission, said that businesses have the right to decide whether to list or not. However, he stressed that listing on the bourse means bringing shares of businesses into transactions on the market, while the companies’ business will not see any changes (chartered capital, volume of shares…).

Son has reminded companies that share liquidity will be improved if the shares can be transacted on the official market. Moreover, transparent information will create favourable conditions for more investors to access and buy shares of the company.

SSC has only advised companies to delay their plans to issue more shares to raise capital, while it does not think that companies have to delay their listing plans due to the market’s falls.

Meanwhile, according to General Director of Bao Viet Securities Nguyen Quang Vinh, the companies consulting Bao Viet are still ready for listing.

“It is quite a wrong viewpoint that companies should only list on the bourse when the market is hot,” Vinh said, adding that the companies which can meet the requirements for listing should still follow their listing plan.

Nguyen Van Dung, General Director of Tan Viet Securities Company, also said that the listing will not much affect companies’ business. Share prices are decreasing not because companies list or don’t list on the bourse.

Dung has reminded the companies which have decided to cancel their listing plans that share liquidity is a very important thing.

“It would be very dangerous if your shares cannot be sold or purchased. Investors will also not have opportunities to sell shares to get money to invest in other fields,” he said.

He added that the companies that got licences already but still hesitate to list will have their licences revoked. If so, they will have to follow the procedures again later when they change their minds, and it will take time. (DTCK)