Vietnam has introduced a rule compelling state-owned companies to list shares more quickly following initial public offerings (IPO) in an attempt to accelerate a privatisation programme lagging behind schedule.
From Nov 1, companies that conduct IPOs will have to register shares on the official UpCom over-the-counter market within 90 days of receiving business registration certificates, according to a decision issued by Vietnamese Prime Minister Nguyen Tan Dung published on the government's website. Shares must then begin trading on one of the country's two main stock markets in Hanoi or Ho Chi Minh City within a year of certification.
Since announcing a plan in February to sell stakes in 432 enterprises by the end of 2015, only 35 have held IPOs and none of those shares are yet trading. The state has raised 2.54 trillion dong ($119.8 million) this year, about half of the 4.74 trillion-dong target, as companies rushed offerings often without any prior marketing to investors.
"This is an important step to help shorten the timing from IPO to listing, creating liquidity for the stocks," said Hanoi-based Pham Luu Hung, associate director of Institutional Research and Investment Advisory at Saigon Securities Inc, the nation's largest brokerage.
The ruling also applies to state enterprises that have already sold shares to the public. About 1,000 unlisted public companies, including Vietnam Technological and Commercial Joint- Stock Bank and Southeast Asia Commercial Joint-Stock Bank, must register for trading, Saigon Securities wrote in a note to investors on Thursday.
The government is hastening asset sales after excessive borrowing by state-owned companies saddled the banking system with bad debt and helped drag economic growth to a 13-year low in 2012. Money managers have avoided IPOs even as they poured a net $236.5 million into the country's stock market this year, concerned the shares are illiquid and stakes held by non-state shareholders are too small to influence corporate governance.
The benchmark VN Index has jumped 23% in 2014, the fourth-best performer among Asian benchmark indexes tracked by Bloomberg, after India, Indonesia and Thailand.