IPO and dividend plans to weigh down stock market, experts warn

The losing streak of the bearish stock market will likely to extend further as many listed enterprises planned to issue more shares to either raise their capital or pay dividend, stock market analysts warned.

The bullish market in 2009 encouraged many companies to set up IPO and share issuing plans on the exchanges in Hanoi and Ho Chi Minh City in 2010.

Statistics showed up to 643 companies listing on both exchanges at the end of 2010, an increase of 189 from 2009.

However the slow cash flow on the stock market forced some of them to delay the plans to this year.

Therefore they are trying to list shares on the bourses this year before the Law of Securities which is expected to provide strict regulations on listing will become effective.

“I’m afraid that there will be a large supply of shares on the market this year,” said a veteran broker in Ho Chi Minh City.

The market sentiment is also anxious on the central bank’s requirement, asking commercial lenders to raise their registered capital to VND3 trillion (US$150 million).

An individual investor at a HCMC-based brokerage told Dau Tu Tai Chinh newspaper that the requirement would be an obstacle to the cash flow.

Despite the central bank extending the deadline for local lenders to raise their registered capital by one year, many investors worry that the capital supply to asset classes including the stock market will be under pressure this year.

New bank stocks make debut in 2011
Many banks will carry out their IPO plan this year, according to the Au Viet Securities JSC.

Analysts expect bank stocks will regain its healthy performance as the monetary is gradually getting stable.

The Vietnam International Securities JSC said the market’s recovery will start in May, which the period that the foreign direct investments will begin to flow strongly into Vietnam.

“It [FDI] will combine with the money from speculators who cash in into the market’ recovery to boost the stock market to get back on the winning track,” said a financial expert.

He also expects the VN-Index of the Ho Chi Minh Stock Exchange will jump to 650 this year as the government will stabilize foreign exchange rate, inflation and interest rate.

By Hai Ho – Translated by Hoang Anh

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