Businesses postpone IPOs as VN-Index drops

The latest report from audit firm Deloitte demonstrated that Vietnam’s IPO market is currently among the least active in Southeast Asia.

This year to date, the Vietnamese stock market has seen only three IPOs, from Dong Duong Construction and Trading Joint Stock Company, Tu Hai Ha Nam Joint Stock Company, and Royal Production and Investment Joint Stock Company. Altogether, the three listings raised a combined total of US$7 million in capital.

This year, the net capital withdrawal by foreign investors has been on the rise due to global economic factors that have negatively impacted Vietnamese stock market liquidity.

Coupled with regulators tightening IPO registration and listing rules, and the decline of the benchmark VN-Index, many companies seeking IPOs have postponed their plans until a more appropriate time.

Bui Van Trinh, head of assurance services at Deloitte Vietnam, said local stock market indexes had been recovering lately but are still far from their 2021 and early-2022 peaks.

The government could also bolster investor confidence by introducing measures to stimulate the economy, as well as by implementing upgrades to the stock market, Trinh argued.

In Southeast Asia, Deloitte has recorded a total of 153 IPOs year to date.

Despite the overall healthiness of the above number, the audit firm reported that the total amount of capital raised through IPOs has fallen to US$5.5 billion, the lowest point in eight years. Some 98% (US$5.4 billion) of the total was raised by companies in Indonesia, Thailand and Malaysia.

By comparison, 2022 saw 163 IPOs worth a total of US$7.6 billion.

Indonesia has the most active IPO market in the region, with 77 transactions this year translating to US$3.6 billion in capital.

With that achievement, the Indonesian stock market became the fourth strongest in the world this month, trailing only China, the U.S., and the UAE.

Energy, industrials and consumer goods have been the most active stock market sectors in Southeast Asia this year.

Tay Hwee Ling, Deloitte’s head of IPO services in Southeast Asia and Singapore, said that in many markets, local companies want to list on larger foreign markets to access more capital and investors, or better pricing.

For some companies, listing on the U.S. stock market has been exceedingly lucrative thanks to the country’s large community of investors and higher liquidity.