Illustrative image (Source: VNA) Hanoi (VNS/VNA) - As the stockmarket is experiencing strong volatility and shows little signs of strongrecovery, the State may struggle to sell its stake in State-owned enterprises(SOEs) on schedule.
Under the SOE equitisation plan approved in July2017 by Prime Minister Nguyen Xuan Phuc for 2017-2020, the Government has tooffload its stakes in 316 SOEs during 2017-2018, but it has only done so in 31firms.
Under the plan, the Government must startequitising 127 SOEs, including 85 SOEs for 2018. As of September 2018, only 11SOEs’ equitisation plans were approved, raising the number of SOEs withapproved equitisation plans to 26 since the beginning of 2017.
The slow pace has raised concerns about delaysor cancellations for the remaining deals as there are only two months left tillthe end of the year and the stock market has fallen in recent months, makinginvestors hesitant about new deals, according to the Ministry of Finance.
The stock market has been underperformingrecently. The benchmark VN Index gained 22.4 percent in the first four monthsof the year – among the world’s top growing markets – to touch its all-timehigh of 1,204.33 points on April 9.
After that, the benchmark index has beenvolatile, hitting the year’s lowest level of 900 points twice on July 5 and onOctober 26.
The VN Index ended last Friday at 900.82 points,a loss of total 7.3 percent in seven trading sessions and reducing investors’confidence in local assets.
Even a strong third quarter earnings seasoncouldn’t save market performance. Bank stocks, broadly recognised as one of themain pillars of the stock market, have declined despite earnings growth ratesof about 50-250 percent.
The poor market sentiment has resulted inState-owned banks’ failures to offload their stakes in other financialinstitutions to comply with anti-cross ownership rules.
The Joint Stock Commercial Bank for ForeignTrade of Vietnam (Vietcombank) this month failed to sell its shares in theMilitary Joint Stock Commercial Bank (MBBank) and the Vietnam Export ImportJoint Stock Commercial Bank (Eximbank).
A similar scenario is seen in other SOEs’share-selling deals. The Vietnam National Petroleum Group (Petrolimex), amember of the Vietnam National Oil and Gas Group (PetroVietnam or PVN), recentlyasked the Government’s permission to change its share selling plan to 2019-2020from 2018 as the market share price is lower than expectations and due tomarket volatility.
Other deals either received little attentionfrom investors, including the initial public offerings (IPOs) of the PowerGeneration Corporation 3 (Genco 3) and the Vietnam Rubber Group, or werecancelled like the IPO of the Vietnam Television Cable Corporation (VTVCab).
According to securities companies, the stockmarket may keep declining and investors should not buy local stocks at themoment.
Sai Gon-Hanoi Securities JSC (SHS) said in anote last week the long-term market outlook has worsened and the downtrend maycontinue until the market meets a new balance point.
MB Securities JSC (MBS) said the market is quitevulnerable to external factors and news, badly affecting investors’ sentimentand making them ignore positive internal elements.
Investors should stay calm and focus oncontrolled risks now by offloading more stocks from their portfolios, MBS said.The statement indicates the market may remain quiet in the coming weeks.
As the Vietnamese market is highly connected toregional emerging ones, which have been suffering from low investor confidence,this could damage the local market’s future outlook, according to HCM CitySecurities Corporation.-VNS/VNA
Under the SOE equitisation plan approved in July2017 by Prime Minister Nguyen Xuan Phuc for 2017-2020, the Government has tooffload its stakes in 316 SOEs during 2017-2018, but it has only done so in 31firms.
Under the plan, the Government must startequitising 127 SOEs, including 85 SOEs for 2018. As of September 2018, only 11SOEs’ equitisation plans were approved, raising the number of SOEs withapproved equitisation plans to 26 since the beginning of 2017.
The slow pace has raised concerns about delaysor cancellations for the remaining deals as there are only two months left tillthe end of the year and the stock market has fallen in recent months, makinginvestors hesitant about new deals, according to the Ministry of Finance.
The stock market has been underperformingrecently. The benchmark VN Index gained 22.4 percent in the first four monthsof the year – among the world’s top growing markets – to touch its all-timehigh of 1,204.33 points on April 9.
After that, the benchmark index has beenvolatile, hitting the year’s lowest level of 900 points twice on July 5 and onOctober 26.
The VN Index ended last Friday at 900.82 points,a loss of total 7.3 percent in seven trading sessions and reducing investors’confidence in local assets.
Even a strong third quarter earnings seasoncouldn’t save market performance. Bank stocks, broadly recognised as one of themain pillars of the stock market, have declined despite earnings growth ratesof about 50-250 percent.
The poor market sentiment has resulted inState-owned banks’ failures to offload their stakes in other financialinstitutions to comply with anti-cross ownership rules.
The Joint Stock Commercial Bank for ForeignTrade of Vietnam (Vietcombank) this month failed to sell its shares in theMilitary Joint Stock Commercial Bank (MBBank) and the Vietnam Export ImportJoint Stock Commercial Bank (Eximbank).
A similar scenario is seen in other SOEs’share-selling deals. The Vietnam National Petroleum Group (Petrolimex), amember of the Vietnam National Oil and Gas Group (PetroVietnam or PVN), recentlyasked the Government’s permission to change its share selling plan to 2019-2020from 2018 as the market share price is lower than expectations and due tomarket volatility.
Other deals either received little attentionfrom investors, including the initial public offerings (IPOs) of the PowerGeneration Corporation 3 (Genco 3) and the Vietnam Rubber Group, or werecancelled like the IPO of the Vietnam Television Cable Corporation (VTVCab).
According to securities companies, the stockmarket may keep declining and investors should not buy local stocks at themoment.
Sai Gon-Hanoi Securities JSC (SHS) said in anote last week the long-term market outlook has worsened and the downtrend maycontinue until the market meets a new balance point.
MB Securities JSC (MBS) said the market is quitevulnerable to external factors and news, badly affecting investors’ sentimentand making them ignore positive internal elements.
Investors should stay calm and focus oncontrolled risks now by offloading more stocks from their portfolios, MBS said.The statement indicates the market may remain quiet in the coming weeks.
As the Vietnamese market is highly connected toregional emerging ones, which have been suffering from low investor confidence,this could damage the local market’s future outlook, according to HCM CitySecurities Corporation.-VNS/VNA
VNA
