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Business Times
13-05-2025
- Business
- Business Times
Vingroup's Vinpearl lists amid tariff hit to Vietnam IPOs
[HANOI] A wave of optimism that buoyed Vietnam's stock market in the first quarter of 2025 is fading fast as a harsh US tariff blow derails fundraising plans and stalls initial public offering (IPO) momentum, with hopeful aspirants now eyeing a potential rebound by year-end. Several high-profile listings on the Ho Chi Minh City Stock Exchange (HoSE) this year, including Masan Consumer and Techcombank Securities, are now on hold until the last quarter of this year, with issuers citing the impact of US reciprocal levies of up to 46 per cent on Vietnam and volatile market conditions. 'Our IPO is tentatively planned for the end of this year. However, the exact timing will depend on financial market conditions, the impact of (US) reciprocal tariffs, and the pace of Vietnam's stock market upgrade,' Ho Hung Anh, chairman of Vietnamese private lender Techcombank, parent of the brokerage firm Techcombank Securities, said at last month's shareholder meeting in Hanoi. Investor sentiment took a hit in April, with the benchmark VNIndex sliding 6.2 per cent month on month, wiping out earlier gains. The index, which gained 4 per cent by the end of March, slipped to a year-to-date loss of 3.2 per cent by Apr 29, before rebounding to a 1.3 per cent gain on May 12. Before the latest headwinds, several Vietnamese companies had already taken key preparatory steps, signalling a potentially more vibrant listing market in 2025 after a prolonged slowdown that saw just one IPO in 2024. Across South-east Asia, the IPO market was also sluggish last year with 136 IPOs versus 163 in the preceding year, based on a Deloitte report. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up On Jan 17, Binh Son Refining and Petrochemical – majority owned by state oil firm PetroVietnam – transitioned from the secondary Unlisted Public Company Market (UPCoM) to the HoSE. The company operates the US$3 billion Dung Quat Refinery, the country's second-largest oil refinery. Momentum continued in February with HoSE-listed Becamex IDC announcing plans for a share issuance worth 20.88 trillion dong (S$1 billion) on Apr 28. However, roughly two weeks after US President Donald Trump announced his tariff tantrum, the state-backed industrial park developer decided to push back the share sale to a time it deems 'more suitable'. Meanwhile, in March, Masan Consumer shareholders approved the delisting of the company's shares from UPCoM to prepare for a blockbuster public listing on HoSE. The ownership of a major shareholder was also adjusted to meet the requirements for the move. However, due to volatile global market conditions, the IPO of the consumer goods subsidiary of Vietnamese retail giant Masan Group is reportedly being pushed to the fourth quarter instead of the second quarter as earlier announced. 'The market is currently a lot more challenging,' said Michael Hung Nguyen, deputy chief executive at Masan Group, during a conference in Hanoi on Apr 22. 'You don't want to be the only guy going to the market… We would like to see other peers making the market more active for us.' Vinpearl appears to be leading the charge. On May 13, the hospitality arm of Vietnam's largest private conglomerate Vingroup, became the first major listing in the wake of the tariff-driven turbulence. It floated 1.8 billion shares on HoSE, bringing its market capitalisation to nearly as high as 153 trillion dong in the first trading session. The stock offering followed a successful rights issue in February, during which the firm raised more than five trillion dong. Turning point Market observers anticipate a turning point in Vietnam's IPO landscape by late 2025 amid the government's push to bolster the private sector and strengthen the domestic economy to mitigate external shocks. 'A key driver of the anticipated rebound is firms' urgent demand for capital,' said Tyler Nguyen, chief market strategist at Ho Chi Minh City Securities Corporation. 'We also expect improved approval processes and a stronger institutional focus on facilitating capital market access.' However, Nguyen said an unfavourable trade deal with the US could weaken investor sentiment in Vietnam, potentially delaying IPO timelines or complicating the book-building process. 'The strength of any IPO recovery will heavily depend on the outcome of ongoing trade negotiations between Vietnam and the US,' he added. In light of this context, an increasing number of companies, including commercial lenders VietABank, BVBank, Saigonbank, and Kienlongbank, have announced plans to upgrade from UPCoM to the country's main bourses in the latter half of this year. 'This strategic transition marks a significant advancement in corporate governance maturity, strengthens brand visibility, and signals these companies' readiness to capitalise on anticipated increases in capital inflows,' said Bui Van Trinh, transactions accounting support partner at Deloitte Vietnam. 'Looking ahead, sectors likely to lead the IPO recovery include financial services and, in the long run, technology – all aligned with Vietnam's broader shift up the value chain,' he added. Upside for startup listings At the other end of the spectrum, local tech startups are eagerly awaiting positive developments as Vietnam is actively exploring a specialised secondary bourse within its planned International Financial Centres (IFC) in Ho Chi Minh City and Da Nang. This aims to enable high-growth companies to raise funds through public listings based on revenue potential or innovation capacity rather than profitability, which is currently a key criterion for domestic IPO. The proposed board would introduce simplified disclosure requirements, tech-specific valuation metrics, and streamlined post-listing obligations, as part of broader IFC initiatives to attract investment and improve market liquidity, including a pilot crypto exchange. However, experts warned of existing challenges, including domestic investors' limited understanding of pre-profit valuations, immature risk assessment frameworks, and the need for stronger legal protections for public shareholders. Chris Milliken, a partner at Baker McKenzie, noted that foreign investors may face obstacles when investing in Vietnamese companies of various sizes and stages due to certain unfamiliar local regulations. These include foreign ownership limits, sector-specific licensing requirements, and transaction practices that differ from international norms. 'Investing in Vietnam certainly involves some careful upfront thinking and strategising both about the incoming investment and also about a future exit,' he said. 'If foreign investors can see that there are meaningful and compelling pathways to exit investments in Vietnam through capital markets, then more foreign investors will want to invest.'
Business Times
05-05-2025
- Business
- Business Times
Vietnam launches long-awaited new trading system, moves closer to market upgrade
[HANOI] Vietnam's Ho Chi Minh Stock Exchange (HoSE), on Monday (May 5), officially rolled out the most comprehensive infrastructure overhaul to date. This will serve as a foundational step for it to align with international standards and unlock a potential equity-market upgrade to emerging status this year. The new system, known as KRX, has been under development via a partnership between HoSE and Korea Exchange since 2012. It is expected to address earlier technical challenges, such as order congestion, as well as enable a wide range of advanced features aimed at shortening the settlement cycle and increasing trading capacity, according to an earlier statement from the State Securities Commission. The upgraded platform launched on Monday has enabled new trading practices, including changes in negotiated and odd-lot transactions, order amendment, derivative contract symbols, trading of securities under restriction, foreign room, as well as margin-value control time. However, full functionalities will be activated gradually in phases. Some key features are expected to be introduced next year, including the same-day trading (T+0) and central clearing counterparty (CCP) mechanisms, which are crucial to reduce settlement complexity as well as the time and costs associated with accessing funds and securities. KRX is also designed to facilitate more financial products and instruments in the near future, such as short-selling, algorithmic trading, and options contracts. In addition, it will integrate and develop comprehensive databases encompassing transactions, settlements, ownership, and risk analysis, thus aligning with international standards and enhancing its connectivity with global financial institutions. 'While the system's launch marks a significant step forward, its full operational impact will take time to materialise,' said Tyler Nguyen, chief market strategist at Ho Chi Minh City Securities Corporation (HSC). A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Petri Deryng, portfolio manager at PYN Fund Management, believes that once KRX is fully operational, Vietnam's stock market could see its daily liquidity reach four to five times higher than the current level. The average daily trading value on the HoSE was about US$850 million in 2024, marking a nearly 20 per cent increase compared with that in 2023, with an end-of-year market capitalisation of listed stocks surpassing US$290 billion. This puts HoSE's liquidity on a par with that in Indonesia's and Malaysia's stock exchanges, which are classified as secondary emerging markets by global index provider FTSE. In a note to investors on Mar 24, Deryng stated that FTSE emphasised the importance of getting the new KRX trading system up and running in Vietnam, 'as its features create a path to other changes and are an important factor in the market status assessment'. Potential market upgrade in 2025 The London-headquartered index provider has included Vietnam in its watch list for a possible upgrade to emerging-market status since 2018. However, according to its interim report released on Apr 8, Vietnam fell short of meeting two criteria. The first one was 'Settlement Cycle (delivery versus payment)', which was rated as 'restricted' due to the current practice of a pre-trading check to ensure the availability of funds prior to executing trades. This prevents trade failures artificially, which leads to the unrated criterion of 'Settlement – costs associated with failed trades'. Last November, Vietnam's authorities addressed these impediments by removing the prefunding requirement. This had asked foreign institutional investors to deposit the entire funds before placing 'buy' orders, thus reducing capital efficiency and making the country less attractive compared with other markets. With the new rule in place, securities companies with sufficient capacity can place orders on behalf of these investors before the funds are fully transferred, as long as payment obligations are met by the settlement date. 'Given this development, FTSE Russell continues to monitor the market and seek feedback from market participants on the (non-prefunding) model and the management of failed trades,' the index provider added in the April report. Some brokers are already planning to offer T+0 settlement and a netting mechanism – which consolidates multiple transactions into a single net obligation – to top-tier institutional clients, such as exchange-traded funds (ETFs), which are major investors in the FTSE. According to market watchers, this early adoption could facilitate a smoother transition and accelerate the broader market upgrade. However, the current broker-led model places the credit and settlement risk on the brokers. The CCP, which is slated to be enabled by KRX in the coming year, could mitigate this systemic risk by becoming the legal counterparty to both sides of a trade, guaranteeing settlement even if one party defaults, thereby eliminating the need for prefunding. Foreign capital could play bigger role As technical barriers are lifted, HSC's Nguyen believes that foreign capital, particularly from ETFs tracking indices such as MSCI Emerging Markets or FTSE Emerging Markets, is likely to play a larger role in Vietnam's equity market. 'The anticipated initial inflows of US$3 billion to US$4 billion from a potential FTSE upgrade represent only the beginning; greater allocations are likely to follow as Vietnam further integrates into the global financial system,' he noted. The World Bank forecast that the stock-market upgrade could bring up to US$25 billion in new investments from international investors to Vietnam by 2030. However, short-term and medium-term prospects remain uncertain, especially after US President Donald Trump hit Vietnam with one of Asia's highest reciprocal tariffs of 46 per cent on Apr 2. The benchmark VN Index then showed heightened volatility and dropped a sharp 17 per cent on Apr 9. It was down 6.2 per cent on a monthly basis as at the end of April, bringing the year-to-date performance from a gain of 4 per cent as at the end of March to a loss of 3.2 per cent as at May 2. The VN Index closed at 1,240.05 on May 5, up 1.1 per cent after the official launch of the KRX system, which coincided with the first trading day after a five-day-long holiday. 'In the interim, we expect positive sentiment around the roll-out to benefit brokerage stocks,' Nguyen added. '(However,) trade-war tensions remain a key sentiment driver.'
