Market slump hits securities share offer

HA NOI — Stock market declines have forced securities companies to delay plans to issue shares to raise capital this year.

Among the firms affected are Trang An Securities Co, which was looking to raise its charter capital from VND139 billion to VND300 billion (US$15 million); Tan Viet Securities Co, that was looking to raise its capital from VND350 billion to VND500 billion ($25 million); and Vietinbank Securities Co, that planned to raise its capital from VND790 billion to VND900 billion ($45 million).

Le Ho Khoi, general director of Trang An brokerage, said the timing of the company's share offering would depend on market conditions.

"Companies are likely to fail if they carry out their capital increase plans at this time," Khoi said, adding that a share offering could only succeed if a strategic partner had been found.

He said that not only securities companies but also listed firms needed to revise the timing of their share issue so as not to flood the market.

"Mobilising capital through the stock exchange is posing a major challenge for most companies at the present time, particularly in the context of tightened credit conditions and high interest rates," Khoøi said.

Vietinbank Securities Co plans to sell more than 11 million shares, worth almost 12.3 per cent of its charter capital, to a Japanese strategic partner, but its plan will almost certainly be put on hold until next year due to unfavourable market conditions.

SME Securities Co, which earlier succeeded in raising its charter capital from VND150 billion to VND300 billion ($15 million), also announced that it would postpone hiking its capital to VND500 billion ($25 million).

Competition among securities firms for market share is fierce and small companies are looking to raise capital to boost their financial capacity and expand, a director of a Ha Noi-based securities company said.

"However, maintaining business performance is difficult at the current time, as is increasing charter capital," he said.

Earlier this year, listed companies flooded the market with new shares, with the result that supply now greatly exceeds demand, making investors hesitant to buy stock.

The total number of new shares in the first nine months of this year reached 34.6 trillion, a year-on-year increase of 79 per cent, according to the State Securities Commission.

Meanwhile, the VN-Index has declined 13 per cent since the beginning of the year, while the HNX-Index has plummeted 41 per cent, with many shares losing 50-60 per cent of their value.

Source: vnagency.com.vn