Pha Lai Thermal Power.—File Photo

HA NOI (Biz Hub)— Listed companies are showing a trend to favour the HCM City Stock Exchange over that of Ha Noi.

The sizes of the two stock exchanges are significantly different. As of July 31, market capitalisation of the HCM City Stock Exchange reached VND817.3 trillion (US$38.5 billion) compared to the Ha Noi Stock Exchange's VND94.55 trillion ($4.4 billion).

The more stringency in regulations on capital and business results of the southern exchange made listed companies on the bourse more attractive to investors than those on the Ha Noi bourse.

Firms which wish to list shares in HCM City must have a minimum capital of VND120 billion ($5.6 million) while it is VND30 billion ($1.4 million) in Ha Noi.

Both exchanges require a return on equity ratio of at least 5 per cent, but the HCM City bourse also requires making a profit during the last two years, while the Ha Noi bourse does not.

In the first six months of this year, foreign investors were net buyers in HCM City by VND3.5 trillion ($165 million), quadrupling the figure in Ha Noi.

The VN-Index has so far gained 11.76 per cent while the HNX-Index rose only 5.56 per cent. That is why companies favour the HCM City Stock Exchange to list their shares.

Pha Lai Thermal Power (PPC) rose from VND36,000 ($1.60) to VND65,400 during eight months trading on the Ha Noi Stock Exchange in 2010 and 2011. When it moved to HCM City just two weeks later, the reference price was VND105,000 ($4.90).

Although PPC price is currently only VND23,200, it has become one of the 30 largest stocks tracked by the VN30 and selected into the FTSE Vietnam ETF index. Retailer Pan Pacific Corporation (PAN) also had a higher reference price in HCM City than the closing price in Ha Noi. On the first trading day in HCM City, PAN rose 20 per cent to the ceiling price of VND19,900 ($0.90). After three years switching place, PAN is currently traded at VND31,000 ($1.40).

Construction Investment Corporation 3-2 (C32) and Bien Hoa Packaging Company (SVI) were the same stories.

Finance firm floats

Financial firm FLC (FLC) will list shares on the HCM City Stock Exchange next Tuesday. Initially, the company announced the reference price for the listing would be VND10,000. However, it then immediately adjusted to VND5,500, its price previously on the Ha Noi Stock Exchange.

FLC chief executive Doan Van Phong said Saigon Securities Inc had assessed its book value at VND15,000 per share. "However, due to unstable stock market conditions, the VND10,000 reference price is no longer appropriate," he said. — VNS