Numerous companies have suspended share issuance plans due to unfavorable stock market conditions. DIC halted plans to issue 200 million shares, while other firms, including NHA and HPX, adjusted or canceled their public offerings. This trend raises questions about the capital market’s attractiveness and the need for policy reforms to enhance investment opportunities. Experts emphasize the importance of diversifying capital sources to support economic growth.
Numerous listed companies have recently announced the suspension of share issuance plans amid declining stock market conditions, prompting concerns regarding the capital market’s attractiveness. The Construction Development Investment Joint Stock Corporation (DIC) halted its plan to issue 200 million shares priced at VNĐ15,000 each, intended to raise VNĐ3 trillion. DIC’s management cited shareholder interests during these unfavorable market conditions as the reason for the suspension, opting to consider alternative capital-raising strategies.
Similarly, the Hanoi South Housing and Urban Development Investment Corporation (NHA) suspended its earlier approved plan to offer 8.8 million shares to existing shareholders at VNĐ10,000 per share, allowing for adjustments to better suit current business conditions. The Hải Phát Investment Joint Stock Company (HPX) also temporarily suspended its offering of 152.08 million new shares, which aimed to raise over VNĐ1.5 trillion.
In the banking sector, several banks have put a hold on their share issuance plans for 2024. The Lộc Phát Commercial Joint Stock Bank (LPB) announced a suspension of its proposed increase of 800 million shares to supplement its charter capital, while the Orient Commercial Joint Stock Bank (OCB) also cancelled its plans for new share offerings. The Vietnam Tourism and Transport Marketing Joint Stock Company (VTR) has paused its application for public share offerings for adjustments in capital allocation.
The companies’ decision to suspend their share offerings highlights the bleak performance of the stock market, as liquidity remains low. DIC emphasized the unfavorable environment characterized by adverse exchange rates, high interest rates, and continued net selling pressure from foreign investors. Furthermore, this trend raises questions regarding the overall appeal of the capital market, especially for investors.
Dragon Capital Vietnam Chairman Dominic Scriven pointed out that for the capital market to regain attractiveness, necessary conditions must be established amidst current lackluster conditions. He noted that governmental policies currently serve as significant bottlenecks, with limited incentives for indirect investors despite efforts to enhance conditions through new regulations.
Local institutional investors, such as life insurance and social insurance agencies, are restricted primarily to government bonds, hampering significant investment diversification. The Central Economic Committee’s Director, Dr. Nguyễn Tú Anh, highlighted that current reliance on bank credit poses major risks, particularly amidst alarms about the banking sector’s health.
The overwhelming dependence on banking credit limits many enterprises’ access to various capital sources, impeding overall economic growth. Dr. Anh advocated for improving investment quality by diversifying capital-raising channels to foster development. A mature economy should not be exclusively reliant on banks but should cultivate diverse financial markets, including equity and bond markets, to promote sustainable growth.
The recent suspension of share issuance plans by various listed companies reflects the ongoing challenges in the stock market, predominantly characterized by low liquidity and investor hesitance. Faced with unfavorable conditions, these companies are reevaluating their capital-raising strategies to protect shareholder interests and adapt to the prevailing market landscape. Their decisions have stimulated discussions surrounding the attractiveness and functionality of the capital market, particularly in light of existing investment policies and investor behavior.
The suspension of stock offerings by several companies underscores serious concerns regarding market conditions and the viability of capital raising through equities. The need for policy reform and enhanced investment mechanisms is crucial to revitalize the capital market, enabling companies to access diversified funding streams while mitigating risks associated with over-reliance on bank credit. A more attractive capital market could foster growth across various economic sectors.
Original Source: vietnamnews.vn
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