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News -IPOs: stop or march forward?

Updated: 28-03-2017 | Hits: 694

Opinions still differ about whether to delay the IPOs of big corporations which have been previously planned to be carried out in the second half of the year...

Opinions still differ about whether to delay the IPOs of big corporations which have been previously planned to be carried out in the second half of the year.

If a lot of IPOs are made at the same time, it would cause losses to the state, as the seller. However, the re-arrangement of the IPOs would slow down the process of state-owned enterprise (SOE) equitisation.

Dominic Scriven, Managing Director of Dragon Capital investment fund management company: the owner should consider thoroughly

If analysis shows that the purchasing power for the next 12 months is VND100, while the commodities to be supplied are worth VND200, we will have to either reduce the number of securities issuers or reduce the volume of shares to be sold.

The state, as the seller of the commodities, will have to choose either to target the commodities’ prices or the equitisation process. If it wants to get more profit from the sale, it will have to delay the IPOs of several corporations. Meanwhile, if it aims to push up the equitisation process, it will have to sacrifice the price goal. In general, the state should harmonise the benefit of the owner (the state), the management authority (state securities commission), and the subjects in the market.

Vu Thanh Tu Anh, Director of Research at the Fulbright Economics Teaching Programme in Vietnam: no need to hurry

The aims of IPO or equitisation are not only to help bring money to the state, but also help improve the corporate governance skill of enterprises. In order to answer the question whether to allow a massive number of IPOs in the second half of the year, we should consider if the IPOs can help reach the two goals.

I think that it is very difficult to reach both the two goals. In the current situation, the state would find it hard to optimise the attraction of a big surplus of capital from these IPOs. Another question is whether the foreign investors we expect have come. I think there is no need to hurry to make so many IPOs at the same time. It would be better if the state re-arranges the IPO timing of these very important enterprises.

Bui Viet, Director General of EAB Securities Company: domestic investors will suffer loss

The State Bank’s decision on limiting loans for securities investment has had a big impact on the market: domestic investors cannot arrange capital for investment deals. If the IPOs are still carried out as previously planned, both the state and domestic investors will surely suffer loss. Only foreign investors will applaud the IPOs.

I think that the state’s policies prove to be not synchronous. The state, on one hand, plans the many IPOs, on the other hand, tightens the loaning for securities investment. Having little money, investors will pay low for the shares, and the state will suffer. The fact that few investors join the IPOs should also be seen as a bad thing for the state IPOs.

Huy Nam, securities expert: Many IPOs would influence the market of listing shares

I do not think that conducting a great number of IPOs in such a short duration is a good idea. The success possibility of the IPOs is very low as there are too many IPOs, which may cause commodity ‘indigestion’.

The great quantity of IPOs will also have bad impacts on the listing share market, since a lot of investors will shift to inject money in the auctions instead of the listing market. The unstable official market will certainly affect investors’ feelings.