Banking & Finance
Vietnam should not delay IPOs
VNECONOMY updated: 26/09/2007
Associate Prof Dr Dang Van Thanh, former Deputy Chairman of the National Assembly’s Economics and Budget Committee, said that Vietnam should not delay the scheduled IPO plans.
What the market needs is stability
Mr Thanh said that the State should not delay the IPOs of big corporations, while it needs to set up suitable roadmap for the IPOs.
IPO is a part of the process of equitising big corporations, which aims upgrade the corporate governance skills and restructure the national economy. Therefore, the State should not delay the process which has been legalized.
In fact, foreign investors are interested in Vietnam’s stocks partially because they are interested in the state owned enterprise equitisation process in Vietnam, he said.
Mr Thanh admitted that experts have reasons to suggest delaying IPO. They fear that the IPOs undertaken in the context of the market falls would bring losses to the state as the seller, and cause the oversupply of commodities on the market.
However, Mr Thanh keeps an optimistic view about the impact of the IPO. He even thinks that the IPOs would act as the catalyst to make the stock market prosper again.
The IPOs of big corporations would bring ‘good commodities’ to the market, while the buyers would have the chance to purchase the good commodities at reasonable prices. If the IPOs had come several months ago, when the stock prices were overly high, the investors would have been overcharged.
Mr Thanh does not think that it is a bad thing if the recent IPOs ended with the low auctioned prices. In fact, the prices were considered low only if they are compared to the highest peaks of prices seen when the market was overly hot. The overly high prices do not truly reflect the real value of listing companies.
The reasonable prices of shares would help create a sustainable and stable stock market. The stability of the stock market, not the hot development, is the thing the Government strives to.
No need to worry about capital shortage
The experts, who have suggested delaying IPOs, also fear that IPOs would not attract investors, who have spent a lot of money on stocks already, now do not have money for other stocks. In other words, they think that investors do not have enough money to buy many kinds of commodities, especially when banks are now trying to limit the loans to securities investment.
However, Mr Thanh denied the worry about the capital shortage, saying the idle capital among the public remains very profuse. Once the stock market bounces back, the capital would automatically flow into it.
Mr Thanh believes that nearly $3bil is waiting to be injected in stocks. Many big investment funds are ready to disburse for the plans to buy shares of big equitising corporations in IPOs.
Supposed that the idle capital among the public has become exhausted and investors do not have much money to buy more commodities, then the delay of the IPOs of 20 general corporations, nearly 400 enterprises and banks for some more time would not bring the expected things.
“In all cases, the delay of the IPOs would bring no profit, and you should understand that there is no need to do that,” he concluded.
Source: VietnamNet
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