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Market volatility delays share-issuance plans

As the Vietnamese stock market has been volatile in recent months, many listed firms have given up on plans to issue shares to raise charter capital.
Market volatility delays share-issuance plans ảnh 1Employees load goods at a Digiworld Corporation branch in HCM City (Photo: tinnhanhchungkhoan.vn)

Hanoi (VNS/VNA) - As the Vietnamese stockmarket has been volatile in recent months, many listed firms have given up onplans to issue shares to raise charter capital.

Doan Hong Viet, chairman cum general director ofDigiworld JSC (HoSE: DGW) said at the firm’s annual shareholder meeting onMarch 22 that the company had decided to not issue six million shares to raisecharter capital because the market was trading negatively beyond the firm’sexpectations.

In late August 2018, property developer Nam LongInvestment Corp (HoSE: NLG) postponed its plan to issue 40 million shares toincrease its capital.

The company planned to set prices at 26,500 VND(1.14 USD) per share, expecting to raise at least 1.06 trillion VND (45.6million USD).

TTC Land had also planned to raise funds throughshare issuance to acquire three real estate projects. However, the firm’s boardof directors said the issuance might not be successful due to a volatile marketand the uncertain prospects of the targeted projects.

Meanwhile, Da Nang Securities JSC (UPCoM: DSC)also decided against trying to issue eight million shares to raise capital.

The volatility of the stock market was alsolisted as a reason for other listed firms – most of which are real estatecompanies – not to issue shares, according to analysts.

Vietnam’s benchmark VN-Index on the Ho Chi MinhStock Exchange dropped as much as 27 percent to around 880 points in earlyJanuary 2019 from its record high of 1,204.33 points on April 9, 2018.

The benchmark index bounced back but has tradedaround the 990-point level for the last two months with low liquidity.

According to securities firms, low liquidityindicates the market’s bearish condition and investors are unwilling to risktheir money buying local stocks.

In addition, local commercial banks aretightening their lending policies after Circular 36 issued by the State Bank ofVietnam cut the rate of short-term capital allowed for medium- and long-termloans from 45 percent to 40 percent.

The rate was lowered to make sure thebanking-financial system is strong enough to fight risks. Firms have eitherlooked for other options or made no moves at all.

Nam Long and TTC Land have not made any newmoves regarding their share-issuance plans.

Meanwhile, Digiworld has decided to issue 1,500non-convertible corporate bonds for maximum of 100 investors to raise 150billion VND.-VNS/VNA
VNA

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