FDI firms face difficulties in listing

There are currently only 10 FDI enterprises listed on local exchanges compared to the tens of thousands of FDI firms operating in Viet Nam.

FDI firms face difficulties in listing

A facility of Taya (Vietnam) Electric Wire And Cable JSC (TYA). After 13 years of listing on the Viet Nam’s stock market, shares of Taya have lost more than half of their value. — Photo vneconomy.vn

Foreign direct investment (FDI) firms trading on the local stock market are facing the neglect from investors and difficulties in management mechanisms.

There are currently only 10 FDI enterprises listed on local exchanges compared to the tens of thousands of FDI firms operating in Viet Nam.

Prices down

After 13 years of listing on Viet Nam’s stock market, shares of Taya (Vietnam) Electric Wire And Cable JSC (TYA) have lost more than half of their value.

The company was listed on the Ho Chi Minh City Stock Exchange (HOSE) in 2006 for VND34,000 per share. Now its shares are priced at VND13,450 per share, with average liquidity of more than 20,000 units per session.

Also in 2006, shares of Taicera Enterprise Company (TCR), a Taiwan-based enterprise, were listed on the HoSE for VND35,000 per share. Now TCR is trading at the price of only VND2,020 per share, a decline of more than 94.3 per cent in value after 13 years of listing.

The story is the same with other FDI stocks listed at the same time, such as The Royal International Corporation (RIC), Tung Kuang Industrial JSC (TKU), Mirae Joint Stock Company (KMR) and Everpia JSC (EVE).

FDI firms listed at later points faced the same situation.

Listed in 2017, shares of Siam Brothers Vietnam JSC (SBV) have so far dropped nearly 78.8 per cent, from VND48,000 per share to VND10,200 per share.

Chang Yih Ceramic JSC (CYC) was offered at VND20,000 per on the first trading day in 2017, but now is trading at VND500 per share.

 

Indifferent investors

According to Nguyen Hong Khanh, director of market analysis department at Vietnam International Securities Co (VIS), the business activities of many FDI enterprises lack stability and significant growth in annual profits, which discourages investors.

Many FDI enterprises wish to list on the stock market as they need capital to re-invest and expand in Viet Nam.

Some of them are facing difficulties with legal regulations, which, to them, are still unclear and overlapping.

Most listed FDI enterprises are small and medium sized enterprises. Their business activities have not witnessed significant advancement while a number of large institutional shareholders have gradually divested capital, affecting the confidence of small shareholders.

Some businesses have even had to cancel listings due to being suspected of being related to transfer pricing and tax evasion.

According to lawyer Tuan Nguyen from ANT Lawyers Company, FDI enterprises participating in the stock market can help diversify securities products, providing more choices for investors.

"However, looking at the overall picture, it seems Viet Nam is focusing on attracting foreign direct investment rather than investment through financial markets," he said. — VNS

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