Share auctions plummet to 16-year low

A woman stands in front of an e-board showing stock indices. In 2023, only three share auctions have taken place so far, with a total auction value of VNĐ2.7 trillion (US$111 million). This represents the lowest number of auctions since 2007.  — VNA/VNS Photo

HÀ NỘI — The number of share auctions in the Vietnamese stock market has reached its lowest level in the past 16 years, according to recent statistics from the Hà Nội and HCM Stock Exchanges (HNX and HoSE).

In 2023, only three share auctions have taken place so far, with a total auction value of VNĐ2.7 trillion (US$111 million). This represents the lowest number of auctions since 2007.

HoSE recorded a single successful auction, with Petrolimex divesting 120 million shares (equivalent to a 40 per cent stake) in PGBank (PGB) with a value of VNĐ2.56 trillion. On HNX, there were two successful auctions involving Tia Sáng Battery (TSB), selling 3.44 million shares, and EVNNPC auctioning 2.34 million shares. The total value of share auctions on HNX reached nearly VNĐ164 billion.

The decline in share auction activities can be attributed to various factors, including the challenging macroeconomic conditions in 2023. The VN-Index has struggled to surpass the 1,100-point threshold for several months, reflecting the difficult situation in the stock market.

Experts point out that the lack of notable new companies entering the market is one of the reasons for the decline in share auctions. This has led to a continuous decrease in auction values over the years, from a peak of VNĐ130 trillion in 2017 to only VNĐ2.7 trillion last year.

The number of newly listed shares in 2023 remains modest. Both HoSE and HNX exchanges have listed only nine new stock codes and one fund certificate, with many of them being transferred from UPCoM and not considered entirely new listings.

Companies like Nova Consumer (NCG), Tôn Đông Á (GDA), and VNG (VNZ) have decided not to list and are only traded on UPCoM. Moreover, several stocks have been delisted from HoSE and HNX due to violations of information disclosure regulations and financial losses.

Đinh Thế Hiển, an economic expert, told Việt Nam News that the lack of new listings is primarily due to businesses not perceiving the favourable timing for going public. After a challenging year, the stock market has only experienced a slight recovery, making it unfavourable for businesses to raise capital at reasonable costs through IPOs.

“State-owned enterprises face additional challenges in the equitisation process as they require strategic partners to participate. However, the global economic difficulties caused by the COVID-19 pandemic have led to a narrowing of operations for many manufacturing corporations and financial investors, making it more challenging for state-owned companies to find strategic investors.”

Hiển emphasised the importance of a vibrant market with new products and listings. The presence of more listed businesses and quality stocks attracts investors and contributes to the development of the capital market. —VNS