Waiting for a boost in the IPO market

In 2024, the IPO (initial public offering) market witnessed a necessary slowdown to prepare for stronger and more solid acceleration in 2025.

Mr. Bui Van Trinh, Deputy General Director of Assurance Services, Deloitte Vietnam, shared optimistic expectations and looked forward to a breakthrough in the Vietnamese market in general and IPO activities in particular.

Mr. Bui Van Trinh, Deputy General Director of Assurance Services, Deloitte Vietnam

The Vietnamese IPO market had a lackluster 2024 with only one deal. Moving into 2025, what factors should investors expect to see good IPO deals?

We remain optimistic about the market’s stability and acceleration, driven by GDP growth, market recovery, policy changes and foreign investment.

First of all, Vietnam's GDP is forecast to maintain a stable growth rate and could reach 7% according to HSBC Bank's forecast or 6.5% according to the World Bank. With the latest general assessment for Southeast Asian countries, Vietnam is also considered the leading country in terms of growth rate in the region, regardless of which of the two scenarios above occurs.

Second, the real estate industry, one of the important sectors of the economy, is showing signs of strong recovery after a series of supports from management agencies. It is expected that next year, this industry will be able to boost the demand for capital mobilization through many channels, including the stock market.

Third, many government policies approved in 2024 focus on economic development and investment environment reform. These factors aim to increase public investment, achieve the goal of upgrading the stock market and GDP growth of 7-7.5% in 2025, which will open up opportunities for businesses, especially new businesses that want to list on the stock market.

Finally, foreign investment in Vietnam is expected to continue to increase, along with economic growth thanks to the return of many foreign investors to catch the wave of profit growth when the market is upgraded and the economy accelerates compared to some other investment markets such as China.

Vietnam's stock market will soon be upgraded in 2025. Photo : Duc Thanh

In your opinion, which IPOs in which sectors are worth waiting for investors in the near future?

Vietnam’s economic growth in this period and the coming period will not come from just one or two specific industries, but will be a joint effort from public investment, domestic investment and foreign investment. Opportunities are scattered in many places and also depend on some macro factors beyond control, so it is difficult to make specific comments on which names will be bright candidates for investors. However, if we talk more broadly about the industry, we believe that there are a few options that investors can consider.

We see that there is a diversity in the assessment of businesses and investors when identifying industries with high growth potential in 2025. According to the Vietnam Report conducted with the group of 500 largest enterprises in Vietnam in October 2024, information technology - telecommunications, transportation - logistics and electricity - energy were chosen by the majority.

Meanwhile, according to Vina Capital Investment Fund, the three sectors that will lead growth in 2025 are real estate, construction materials and consumer goods, respectively. In general, these are all sectors that will receive attention and benefit in the context of the Government's policy of increasing budget spending and public investment to boost the economy in the coming time.

We also see that some niche industries such as chip manufacturing, semiconductor technology, artificial intelligence (AI), and renewable energy are receiving a lot of attention and support from the Government and are investment trends in countries like the US and South Korea in recent years.

These industries may not have the time to make a strong change in the short term, but are expected to have many breakthroughs in the future, leading to the growth of ancillary products and services. At the same time, this will be a launching pad for businesses to take advantage of the combination of modern technology into traditional operating models such as retail or online commerce.

What factors does Vietnam need to improve to create a boost for IPO businesses and strengthen investor confidence?

The Vietnamese market is chosen as a favorite investment environment for investors due to many factors. Among them, the inflation rate is well controlled, the credit source is relatively abundant and the public policy reforms are strong to attract investment. On this favorable foundation, to create a push for businesses when implementing IPOs and strengthen investors' confidence in the Vietnamese market, we believe that efforts are needed not only from the management agency but also from the businesses themselves.

How have the efforts of the management agency over the past year been recognized by foreign investors and organizations, sir?

Regarding economic policy, in recent years, the Government has continuously adopted many initiatives and changes with the determination to promote economic growth and at the same time upgrade the stock market.

Specifically, Decree No. 60/2015/ND-CP abolishes the limit on foreign investors' ownership ratio in a number of industries; Circular No. 68/2024/TT-BTC supplements regulations allowing foreign investors who are organizations established under foreign law to buy shares, without requiring them to have enough money at the time of placing the order.

In addition, the amended Law on Accounting has been passed, allowing the Ministry of Finance to prescribe accounting standards based on international accounting standards suitable to the specific conditions of Vietnam and provide guidance on the subjects, scope, modalities, roadmap and other contents related to the application of international accounting standards.

At the Bloomberg Businessweek Vietnam Conference held in Ho Chi Minh City in December 2014, a representative of FTSE Russell said that they will evaluate Vietnam in the next 6-9 months, focusing on reviewing the actual experiences of international investors.

Currently, Vietnam has not met two of the nine criteria for upgrading by FTSE Russel, which are related to pre-deposit, allowing securities companies to receive purchase orders from foreign institutional investors even though their accounts do not have 100% of the order value, and failed transaction processing. However, with many changes in procedures and regulations, a quick survey at the conference showed that 68% of participating businesses believe that the Vietnamese stock market will soon be upgraded in 2025.

Thus, if management agencies continue to take drastic and timely actions to resolve business difficulties, create favorable conditions for foreign investors to participate in the market, and improve the quality of stock market operations, we can completely hope for much more impressive figures in terms of capital flows into Vietnam.

To have a successful IPO for both investors and businesses, what do you think is the first step a business needs to take?

That is to assess one's actual situation, then come up with a reasonable and suitable roadmap so that the business can also reap benefits from this journey in terms of management, people, processes and systems, without losing the core values that make up the business.

When determining the timing of an IPO, a company must consider both the macro factors of the economy or market and its readiness to achieve the best and most reasonable valuation. An IPO or becoming a public company is actually just the first step or milestone on a long journey ahead, and is not and should not be seen as a destination.

We observe that, while in the past only a small group of large leading enterprises were interested in building internal governance and control mechanisms according to international good practices, meeting the expectations of foreign investors and strategic partners, now the number of Vietnamese enterprises implementing this work has increased significantly.

In addition to the business model that brings good growth rate or high profit margin, the corporate governance mechanism that emphasizes transparency, established and applied risk management policies along with full and honest financial information are also points that many investors are interested in before starting to invest in cooperation.

With what has been happening, we are very optimistic and expect a breakthrough in the Vietnamese market in general and IPO activities in particular in 2025.

Source: https://baodautu.vn/cho-cu-huych-tren-thi-truong-ipo-d237522.html