The Hanoi Stock Exchange announced relaxed listing requirements on Monday for its over-the-counter (OTC) market, but low investor interest and resistance from state firms to open their books could delay the expected opening next month. Up to seven firms were expected to submit applications to list shares, exchange officials said. Vietnam has had difficulty establishing a vibrant equities market. The Ho Chi Minh City exchange was launched in 2000, but it suffers from low daily trading volume of less than $300 million and has only 28 firms' shares traded. On March 8, the government established the Hanoi exchange with lower listing requirements to encourage smaller companies to tap the public market.
Securities officials said on Monday that firms can trade on the over-the-counter market with 5 billion dong ($316,300), half the registered capital required for the country's main exchange in Ho Chi Minh City. Companies must also have at least 50 shareholders and have posted a profit in the previous fiscal year. Shares will be allowed twice the daily volatility, with a daily trading band of 10 percent.
Bonds were exempt from a trading band, and all trade in bonds and shares would be conducted via direct negotiation, the exchange directive said. A directive issued on Monday by the Finance Ministry-run State Securities Commission said the Hanoi OTC market would open for two hours of trading on Mondays, Wednesdays and Fridays, starting at 9 am (0200 GMT). Firms seeking to list on the Ho Chi Minh City exchange must have at least 10 billion dong in registered capital and have reported two consecutive profitable years. The shares are allowed to move within a 5-percent daily band.
Deputy Prime Minister Nguyen Tan Dung told parliament last week that the government hoped to see an additional 100 companies listed, a target Finance Minister Nguyen Sinh Hung said may only be reached by early 2006.
Hung told the VNexpress e-newspaper (vnexpress.net) on Friday that rising interest rates at home and abroad had made local investors cautious.
"The Finance Ministry has been step by step tackling barriers such as taxes and administrative procedures to attract more investors, but time is needed and a transition can't be rushed," Hung was quoted as saying. Industry experts have said executives of state-run firms are reluctant to expose their companies to public scrutiny, creating an obstacle to new listings.
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