VietNamNet Bridge - It is still unclear how the state will sell its stakes in 10 major state-owned enterprises – whether one auction or in many sales campaigns. Analysts believe reasonable selling prices of the stakes would be 15-20 percent higher than current market value.

Nhu Dinh Hoa, CEO of Bao Viet Securities Company, noted that the state seemed to be ‘selling good businesses’ and ‘retaining medium-tier enterprises’. 

The decision, from the view of an investment fund, proves to be an unwise move. However, this will bring benefits to businesses. 

Once the state divests businesses, it will allow other institutional investors to join the businesses’ boards of management which can help improve operations.

Dang Quyet Tien, a senior official of the Ministry of Finance, the State Capital Investment Corporation (SCIC), has full power to determine when it will sell the stakes to optimize the profits. 

Meanwhile, to date, SCIC has not made any statement about the exact time for share sale.

Also according to Tien, when selling listed companies’ shares, SCIC will make transactions directly with buyers or through the stock market. In general, the former mode will allow it sell stakes for better prices.

As for unlisted companies, SCIC will put shares into auction. At present, SCIC is selling shares in bulk.

SCIC will have to consider the time for share sale thoroughly, so that the sale will not affect enterprises’ workers and negatively affect the market.

Under the SCIC restructuring plan, the divestment of the 10 major state-owned enterprises will be followed by divestment of hundreds of other enterprises. 

According to Dominic Scriven, general director of Dragon Capital, the domestic stock market is losing its attractiveness. A lot of foreign investors want to inject money into Vietnamese stocks, but they have met barriers. 

Investors have visited Vietnam thinking it would be profitable to invest in Vietnamese stocks, but not many are available. 

The stock market could only attract $122 million worth of capital more in 2014, while the overseas remittance were high at $12 billion and foreign direct investment (FDI) reached $12 billion.

In this situation, the state’s divestment from big businesses such as Vinamilk and FPT is hoped to make a breakthrough in the market as it brings more opportunities to foreign investors to access blue chips. 

The Vietnamese stock market is now just equal to 1/8 of the Singaporean market. 

However, Scriven said, investors are disappointed as the capital withdrawal roadmap has not been figured out.

DDDN