Overseas listing to require new share issue

Published: 19/04/2011 05:00



Companies that wish to list on a foreign stock exchange will have to issue new shares in that market if the latest draft decree prepared by the State Securities Commission (SSC) is approved by the Ministry of Finance. The decree aims to guide implementation of the amended securities law that will take effect in July.

Apart from satisfying requirements of the foreign stock exchange, the draft decree requires that either the exchange or its market watchdog should have a co-operation agreement with Viet Nam’s SSC or local bourses.

The draft decree regulates that depository receipts or DRs will not be allowed for listing and trading in Viet Nam. However, if the DR listings in foreign exchanges are cancelled for some reason, they can be listed and traded in the country.

The draft defines real estate investment funds as funds in either closed or public form that sell securities to the public to raise capital for investing in the property sector. Its securities, or fund certificates, must be listed on a stock exchange.

The funds should be managed by fund management firms under the monitoring of supervising banks, the draft decree says.

No less than 65 per cent of the fund’s total asset value must be invested in real estate projects, it stipulates.

To ensure liquidity, the draft decree says up to 35 per cent of the fund should be invested in listed securities, monetary market tools and Government bonds.

The purchase and sale prices for a property will not exceed or drop by more than 10 per cent of its value as fixed by an independent pricing organisation. Prices outside this fluctuating band can be allowed only if they have been approved at the last annual meting of the fund’s investors. The funds will also be required to make cash dividend payments equal to a minimum 90 per cent of net profits every year.

For listing on the domestic stock exchanges, companies will be required to have an ROE (return on equity) of at least 5 per cent for the year prior to listing. Current regulations only require that listing firms are profit-making.

Under the draft decree, businesses that want to list on the Ha Noi exchange should have a minimum charter capital of VND30 billion, instead of current VND10 billion. To get on the southern bourse, the minimum charter capital will be increased to VND120 billion against the current VND80 billion.

Buy real estate: experts

Experts say people with idle capital should invest in the real estate market, especially the second home sector.

“The economic realities facing Viet Nam leave few attractive stable investment opportunities,” said Richard Leech, managing director for property services firm CB Richard Ellis. He cited difficulties in gold, foreign currency as well as the stock market.

Tightened Government control over gold and foreign currency trading has left the local markets very quiet. This was highlighted by last week’s hike in world prices not having a significant impact in Viet Nam. The difference in exchange rates between official and unofficial markets has narrowed down considerably. Meanwhile, price and liquidity in the stock market has been declining. Furthermore, many companies plan share issues this year, which means supply is likely to further exceed demand.

Richard said investors can have weekend getaways at established tourism location and earn profit through timeshare programme.

Coastal localities like Da Nang, Nha Trang, Phan Thiet, Vung Tau and Con Dao Island have great potential in this market, he said.

Meanwhile developers have been offering potential customers a wide range of choices.

Ocean Hospitality launched sales last Thursday for its Condotel StarCity Nha Trang property. This four-star project on Tran Phu Street along the longest beach in the city is now under development and scheduled for completion in 2014.

The complex will have more than 200 hotel rooms and 66 apartments with a minimum area of 33sq.m for sale at prices starting from VND33 million per square metre.

Buyers will also be able to join a timeshare programme that will give them 45 days of free accommodation per year. For the remaining 320 days, the apartment will be leased out, earning profits for the owners for the whole year. During the launch, potential investors showed strong interest in the programme, posing very detailed questions.

The Cotec Housing and Investment joint stock Company (Cotecland) recently began sales of almost 400 apartments on its beachfront Blue Sapphire Project in Vung Tau and attracted buyers for around 20 per cent.

In Da Nang, Indochina Land, the property arm of Indochina Capital has begun selling villas in its golf course project Montgomerie Links Viet Nam and condominiums at the Hyatt Regency Da Nang Resort and Spa.

The CBRE managing director said more developers will launch sales over the coming weeks.

Dr. Le Tham Duong, head of the business management department at HCM City Banking University, cited factors that favour purchases of residential properties: developers having been lowering prices even as the price of building materials go up and many transport infrastructure projects are being carried out. However, he noted that this should be seen as a long term investment.

Non-life insurance

For the first time, PetroVietnam Insurance Corp. (PVI) has taken the lead in Viet Nam’s non-life insurance market in terms of premium turnover at VND843 billion (more than US$41 million) in the year’s first two months, according to the Ministry of Finance. The amount points to a market share of more than 26 per cent for PVI.

Meanwhile Bao Viet, the insurance firm with the longest experience in the Vietnamese market, has been pushed down from its pedestal to the second position. Its premium collection in the first two months was VND710 billion, a market share of 22 per cent.

Bao Minh was in third position with a turnover of VND532 billion, representing a 16.5 per cent share.

The market’s total turnover was VND3.248 trillion, up almost 30 per cent over the same period in 2010.

PVI has earned its position thanks to revised contracts in the areas of equipment installation, exploration and exploitation of oil and gas, and for the first time, providing an insurance package contract for an oil well development project that would bring in total premiums of US$27 million.

Its position will be further strengthened by the cooperation agreement reached last week with the Viet Nam Shipbuilding Industry Corporation (Vinashin) to provide the latter with insurance consultancy, insurance and risk management services.

Most non-life insurance firms recorded positive growth compared to the same period in 2010. Insurers with foreign direct investment, though representing less than 10 per cent of the market share, achieved the highest growth rates. For instance, Groupama (French) grew 170 per cent for a turnover of VND6 billion in the first two months of the year, while ACE (US) increased its premium by 115 per cent to reach VND 9.3 billion and Fubon (Taiwanese) grew over 88 per cent, to post VND12.4 billion.

Around 30 non-life insurance companies currently operate in Viet Nam, more than one-third of them foreign.

The ministry expects an additional 10 firms to join the market by 2020.

Source: VNS

Provide by Vietnam Travel

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