IPO policies should be reconsidered: expert

Saturday, May 17, 2008
Cao Sy Kiem, former Governor of the State Bank of Vietnam, now a member of the National Advisory Council for Financial and Monetary Policies, said that in the context of the market’s falls, it is necessary to reconsider IPO policies, weighing the possible success, IPO techniques, stake sale prices and attractiveness.
Kiem said that the top priority now is to fight inflation, and when fighting inflation, this will influence the stock market. However, this does not mean that Vietnam will have to sacrifice the stock market to fight inflation.
He also said that the stock market will not be able to recover until the national economy stabilises and price increases are restrained.
Do you think that it is necessary to delay the IPOs of big enterprises?
I think that we should not speed up IPOs or delay all IPOs. I think that capable enterprises still should implement IPO plans as scheduled. However, if we make a massive number of IPOs, this will cause ‘share dilution’, or a supply and demand imbalance.
The thing we need to do is to regulate IPOs in a flexible and harmonious way. We should thoroughly consider which enterprise to make IPO and when.
In some cases, the IPOs of some big enterprises will help stimulate demand.
After the bad results of the recent IPOs, some experts say that it is necessary to amend the procedures on equitisation, including the regulations on selling stakes to foreign strategic investors. What is your viewpoint about this?
I think that it is the right time to change the method of selling stakes to foreign strategic investors. The current method, under which foreign strategic partners have to buy stakes at the IPO average price, has not been accepted by many institutional investors. Foreign strategic investors, unlike other investors, keep shares for a long time. Meanwhile, they have good technologies and markets, and they will be able to help enterprises change corporate governance skills. I think that the final decision of selling stakes to foreign strategic partners is to improve businesses’ operations after the equitisation.
Do you think that big corporations’ IPOs will be attractive to foreign investors at this moment, when Vietnam prioritises the fight against inflation?
Foreign investors always are methodical investors and they only make investment decisions after they analyse the market. They have longer term vision, and even now, when the market is falling down, they still purchase shares. They are unlike domestic investors, most of whom are speculators and short-term investors. (DTCK)