Compiled by Thu Hà

Many listed companies have announced the suspension of plans to issue and offer shares in the context of an unfavourable stock market. However, the move has raised questions about the attractiveness of the capital market, especially the stock market.

The Construction Development Investment Joint Stock Corporation (DIC) has recently announced the suspension of the issuance of 200 million shares to the public, at a price of VNĐ15,000 per share. This means DIC will stop its plan to raise VNĐ3 trillion from the stock market.

According to DIC, the reason for this move is to ensure the interests of shareholders in unfavourable stock market conditions. The company’s board of directors decided to stop the implementation and adjust the capital raising plan through other means.

In early December 2024, the Hanoi South Housing and Urban Development Investment Corporation (NHA) also said it suspended a public offering plan that had been approved by the company’s 2024 annual general meeting of shareholders. According to the initial plan, NHA was set to offer 8.8 million shares to its existing shareholders, equivalent to 20 per cent of the outstanding shares at an issue price of VNĐ10,000 per share.

NHA said it needs to change the offer to suit the current business and production situation. The company’s board of directors will consider, decide and re-implement the public offering at another time.

Previously, the Hải Phát Investment Joint Stock Company (HPX) announced the temporary suspension of its share offering plan to existing shareholders. The plan offered an additional 152.08 million shares to shareholders to raise more than VNĐ1.5 trillion.

In the banking sector, some banks have temporarily suspended their plans to issue shares in 2024.

The Lộc Phát Commercial Joint Stock Bank (LPB) held an extraordinary general meeting of shareholders, presenting to shareholders the plan to adjust the charter capital increase plan in 2024. Accordingly, the board of directors of this bank decided to temporarily suspend the implementation of a plan to offer an additional 800 million shares to existing shareholders, halting the raising of VNĐ8 trillion. The capital increase plan includes only issuing shares to pay dividends to existing shareholders at a rate of 16.8 per cent.

The Orient Commercial Joint Stock Bank (OCB) also decided to stop the plan to issue 900,000 individual shares and 5 million ESOP shares to increase charter capital.

The Vietnam Tourism and Transport Marketing Joint Stock Company (VTR) has recently also temporarily suspended the application for public offering of shares, which has been submitted to the State Securities Commission (SSC), to adjust the detailed capital use plan, ensuring the actual needs of the business.

VTR stated that after finalising a new plan, the company will resubmit the application to offer additional shares to the public to the State Securities Commission.

According to the companies, they have to suspend plans to offer shares due to the unfavourable stock market.

DIC's leadership assessed that transactions in the stock market are currently quite gloomy with low liquidity. Besides adverse impacts of exchange rates and interest rate policies, the stock market is under a strong net selling pressure from foreign investors, which has been continuous since the beginning of this year.

Capital market

However, the suspension has raised questions about the attractiveness of the capital market, especially the stock market.

Chairman of Dragon Capital Vietnam Dominic Scriven said there must be necessary conditions for the capital market to become attractive to both buyers and sellers, in the context that the market is still not as vibrant as expected.

According to Dominic, the biggest bottleneck at present is still policy, because there are still few policies that create great motivation for indirect investors.

The Ministry of Finance and the securities market management agency have so far made efforts to address specific problems, such as issuing Circular 68/2024/TT-BTC on stock trading, to better attract foreign capital. However, in reality, foreign investors have not considered this message to have a clear enough impact.

Meanwhile, domestic buyers lack a robust mechanism for making significant investments. Large domestic institutions, such as life insurance companies or social insurance agencies, have very large capital sources, but are not really allowed to diversify their investment channels. According to the current legal regulations, life insurance companies and social insurance agencies can mainly invest in government bonds.

According to the Director of the Central Economic Committee’s Centre for Economic Information, Analysis and Forecasting, Dr Nguyễn Tú Anh, domestic companies currently still tend to rely heavily on bank credit, which is one of the biggest challenges facing the Vietnamese economy.

“Relying too much on credit capital can cause many big risks when the health of the banking system is showing many alarming signs, such as the increasing risk of bad debt,” Anh said.

According to Anh, the lack of diversity in capital raising channels makes it difficult for many Vietnamese enterprises, including both small and medium-sized enterprises, to access capital. This also prevents many local enterprises from growing, affecting the overall development of the entire economy.

Anh said it is necessary to promote investment and improve the quality of investment by diversifying capital-rising channels.

“A developed economy cannot rely on banks forever. We must develop other key capital markets, including the bond and stock markets. As the capital market develops and diversifies, the economy will also have new developments," Anh noted. — VNS