Vietnamese companies thrive despite divestment of foreign shareholders

The blast-furnace No 1 of Hoa Phat – Dung Quat Iron and Steel Integrated Complex. — Photo hoaphat.com.vn

The increase in Viet Nam’s stock market has helped foreign shareholders implement their disinvestment plans in Vietnamese enterprises. However, these activities will not have a significant effect on companies’ internal systems.

Foreign shareholders play important roles in supporting business activities and creating a good image for public listed companies. After achieving initial cooperative targets, some organisations plan to disinvest.

Vietnamese companies witnessed the withdrawal of many foreign investors, but their businesses are still growing due to accumulative management skills during the cooperation period.

Lucerne Enterprise Ltd and NS Advisory Inc Pte.Ltd of Nikko Indonesia sold millions of Licogi 16 (LCG) shares at the end of 2020. The Indonesian shareholders started to invest in LCG in 2014.

The LCG shares price ended last Friday at VND14,750, up 96.4 per cent year-on-year. The share price almost hit a ten-year high of VND16,000 in the second week of January.

On April 2020, Dragon Capital sold off Century Land JSC (CRE) shares and the price reached a historic high of nearly VND29,000 at that time, 2.3 times higher than its bottom level.

Earlier this year, PENM III Germany GmbH & Co. KG also registered to sell more than 66.5 million shares of Hoa Phat Group JSC (HPG) shares which accounts for 2.01 per cent of the company’s charter capital. The deal will be held from January 7 to February 2.

According to PENM III, the investment to Hoa Phat has brought great profit, and the sale is due to the expiry of the fund which closes in 2021.

The share selling pressure has made the share price fluctuate, but it is still on course for a high of nearly VND45,000.

Last Friday, the shares traded at VND43,650, up nearly 69 per cent against the same period last year.

Recently, Creed Investments VN-1 Ltd of Creed Group registered to sell more than 4.5 million shares of An Gia Real Estate Investment and Development Corporation (AGG), equivalent to 5.5 per cent of its charter capital. On the first trading day of the deal which was on January 19, the market recorded the amount of buying in AGG stocks almost the same with the amount that Creed Investments registered to sell.

The AGG share price edged higher last Friday to VND36,000.

“These disinvestments were calculated in most of foreign investors’ long-term strategies and were for profit booking when the stock market surged to a historic peak of 1,200 points,” a senior market analyst told Viet Nam News on the condition of anonymity.

The analyst also added that with the current conditions of Viet Nam’s market including the control of the COVID-19 pandemic and positive economic growth, more foreign capital is coming.

Companies also expect the disinvestment of big foreign shareholders and have prepared for it, according to the analyst. The cooperation with foreign investors helps improve the companies’ management skills and business strategies. Hence, the disinvestments according to plans will not affect the companies’ internal factors.

Moreover, foreign investors like Creed Investments, PENM III and Dragon Capital will use money from the share sales to reinvest in the same or different companies and projects in the future. — VNS