VietNamNet Bridge – What will happen if Vietnam allows foreign investors to
hold 50 percent or more of listed companies’ shares? The answer is that foreign
groups would set one foot on Vietnamese enterprises and then take other steps to
take over the enterprises.
The suggestion by the Vietnam Association of Financial Investors (VAFI) to offer
more “room” to foreign investors in listed companies to help revive the stock
market has been advocated by experts and financial institutions.
However, the proposal has raised a worry that Vietnam may lose its well-known
brands forever, if it opens the doors too widely to foreign investors.
A securities brokerage director said in the eyes of foreign investors, Vietnam’s
economy, though not being in a big economic crisis like the one which once
occurred in Thailand in 1997, would still see a new wave of enterprises
Rumors have been spread out on the stock market that a lot of big enterprises
have sold stakes to foreign investors, which may pave the way for the foreign
investors to swallow up the whole businesses in the near future.
Regarding the share sale prices, observers have noted that in the deals, the
share prices were much higher than the prices of the same shares available on
the Hanoi or HCM City bourses. This makes the sellers think that they could sell
their shares at good prices.
VAFI, in its report released just some days ago, also pointed out that there
exists the price gap of the unlisted and listed companies’ shares. The
association believes that the current regulation on the ceiling foreign
ownership ratio in Vietnamese enterprises is the reason behind the paradox that
unlisted companies can sell shares at higher prices than listed companies.
VAFI stressed that the problem has hindered Vietnam to call for investment and
attract foreign strategic investors. The limited foreign ownership ratio should
be seen as the big hindrance that prevents the efforts to change the
However, the above said director said that the shares are not as expensive as
people think, if considering the businesses’ long term potentials. The current
market prices are just for investors’ reference, while they would consider the
business performance and the prospects of the companies when they set prices.
The investors, who plan to take over Vietnamese enterprises would also consider
many other things, including the businesses’ brand value, the advantages in the
land use and associated agreements.
Securities experts said that in early 2007, when the Vietnamese stock market was
in its golden age, a lot of foreign investors accepted to buy shares at the sky
high prices of VND300,000-400,000 per share. While Vietnamese investors thought
the foreign investors were overcharged, the foreign investors still felt happy
with the purchases.
The experts have warned that once Vietnam accepts higher foreign ownership ratio
in its businesses, the big enterprises in the most important industries would be
the first targets of foreign groups.
For example, if the ceiling foreign ownership ratio is raised to 50 percent,
Vinamilk and GAS, the enterprises, where the foreign ownership ratio always hits
the ceiling, would become the aiming points of foreign investors. Therefore, the
experts have called on management agencies to think carefully before deciding
how much room to reserve for foreign investors.