From July 2007, a series of giant companies in the fields of banking, information technology, real estate, oil and gas, chemical and others will list stocks on the stock market. This new wave is many times bigger than the listing rush in late 2006.
Attractive IPOs of giant companies
On May 31, Vietnam Insurance Corp. (Bao Viet) will make an initial public of offering (IPO) of 59.44 million shares, or 8.74 per cent of chartered capital. The reserve price is set at VND30,500 ($1.90) a share. This starting price attracts a lot of investors. With a nationwide insurance distribution network, the IPO of Bao Viet is a high potential investment opportunity.
In addition, other potential and attractive IPOs are those of the Bank for Foreign Trade of Vietnam (Vietcombank), Vietnam Industrial and Commercial Bank (Incombank) and VMS-MobiFone Company.
The IPO of the Bank for Investment and Development of Vietnam (BIDV) is an outstanding event this year. The candidates for IPO consulting at the opening bid on May 17 were world-leading financial organisations like JP Morgan, Merrill Lynch, Morgan Stanley and UBS. This was very attractive to investors. By September, BIDV will finish its equitisation plan, which will then be submitted to the Prime Minister for approval. The IPO is expected to take place in the fourth quarter of 2007. As of March 31, total BIDV asset value reached VND184,780 billion (US$11.55 billion), including VND142,844 billion (US$8.93 billion) mobilised capital. In 2006, BIDV’s profit mounted to VND4,862 billion (US$ 303 million). Experts said the IPO price will easily surpass current market prices of other bank shares like ACB, STB and EIB. If BIDV does not increase chartered capital before the IPO, its capitalisation value is no less than US$10 billion.
Before this opportunity, several foreign funds have been set up to join the active market. T.I.M Vietnam Tiger Fund (Liechtenstein) opened on May 14, Fullerton Vietnam Fund (Singapore) on April 23, Hwang-Dbs Indochina Fund (Malaysia) on April 12 and Tongyang Vietnam (South Korea) on April 2. The main purpose of these funds is to pour money into IPOs. On May 17, Mekong Capital opened its new fund, with capital value of US$100 million, to invest in State-run companies going public. In addition, many local investors are mobilising investment capital for the competition at IPOs of VNPT, VINASHIN and other giants.
From market to ‘supermarket’
With the quantity and quality of new stocks, the Vietnamese stock market is becoming a ‘supermarket’ from a market.
However, there are two contrary ideas about market trends in the coming time. In general, many investors worry that listed share prices will fall. Their viewpoint is consolidated by a large sum of money already withdrawn for IPO auctions. People withdraw money from banks and inject it into IPOs in hopes of possessing secure stocks, as dividends are believed much higher than bank interest rates. Many fear that the Vietnamese market will see a strong downtrend in the coming time due to excessive brokerage and weak management of Vietnamese companies.
On the contrary, many are optimistic for brighter prospect on the Vietnamese securities market this year, as the Vietnamese economy is developing strongly. Many foreign investors will increase their investment in the country. For example, Mr Peter Cohen, founder of Ramius Fund, a US-based global fund managing more than US$10 billion, arrived in Ho Chi Minh City May 21 to explore the opportunity and potential of the Vietnamese stock market. The first place Mr Peter Cohen visited was Ho Chi Minh City Securities Trading Centre (HSTC). Assessing the visit, Mr Stan Vukmer, Manager of Indochina Capital Fund said, “The visit by such a top investor is a good sign for the market. Understandably, long-term investors believe in the strong and solid growth of Vietnam.”
Lan Anh
Vietnamese
