Singapore's initial public offering (IPO) market only raised US$715 million against Vietnam’s US$6.2 billion, which made up more than half of the total of US$12 billion across Southeast Asia, according to professional services firm Deloitte.
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The rise of Vietnam’s capital market was largely attributed to the Vietnamese government’s privatization drive and market reforms, strong interest from foreign investors and local funds, as well as a high gross domestic product (GDP) growth of 6.8% in 2018, according to Deloitte.
The Singapore Exchange (SGX), on the other hand, raised a total of US$715 million across 13 initial public offering (IPO) deals as of November 2018, which is 85% lower than the $4.6b raised for the full year in 2017.
Ernst & Young (EY) noted that IPOs in Singapore, as well as other parts of the region like Indonesia and Malaysia, have predominantly been small-cap listings amidst market uncertainty and trade tensions.
In fact, delayed IPOs have been piling up in Singapore on the back of market volatility, according to Bloomberg, with firms either struggling to get deals done or piling into equity offerings in nearby, and now frontrunner, Vietnam.
This was echoed by a report from Bloomberg which cited that instead of Singapore, more IPOs are eyeing Vietnam. Back in the first quarter, Vinhomes JSC, which had attracted an investment from GIC, was looking to conduct a share sale worth as much as US$2 billion. Techcombank was planning to raise US$922 million during the same time period. Now the same firms are leaving the rest in its dust and leading the pack across Southeast Asia.
Tay Hwee Ling, global IFRS & offerings leader at Deloitte Southeast Asia and Singapore, said to the SBR that Vietnam's government has embarked on an ambitious privatization drive and plans for market reform, which has pushed IPO activities in particular, for the bigger government-linked organizations that has not been privatized and are seeking funds to grow and expand.
In the last annual review published by FTSE Russell, a leading global provider of financial services, in September 2018, Vietnam was added to the watch list for possible upgrade to Secondary Emerging Market in the future, and the country is projected to reach this status in September 2020.
Consulting firm Bain & Company forecast that 90% of private investors considered Vietnam and Indonesia ideal markets in ASEAN in the upcoming 12 months. The firm stated that the capital inflow into these two countries accounted for 20% of the total in the region over the last five years, which would increase strongly in the next few years.
Total FDI registered in Vietnam in the January – November period reached US$30.8 billion. Don Lam, VinaCapital’s founder and CEO, said the trade war would push more FDI inflow into Vietnam as companies relocating their production facilities.
Vietnam would benefit from the trade war in the short-term, he added.
Vietnam's effort to raise funds from the public-sector reforms is expected to triple in 2018 - 2020 compared to levels seen in the 2011 - 2017 period, according to Saigon Securities Inc (SSI), the largest brokerage house in the country.
Specifically, the total proceeds from initial public offerings (IPOs) and the share sales of SOEs in the next two years are expected to reach US$26.3 billion, 2.75 times higher than the sum raised for the whole period between 2011 and 2017.
Of the total, the value of IPOs will reach US$9.7 billion, while the total amount of divestment could hit US$16.6 billion.
"Vietnam could end up being the only country in the world that embarks on a new wave of SOE reform in 2018 - 2020, placing large and profitable SOEs on public offer," stated SSI.
