This discussion paper examines the current state and future prospects of equity financing activity in Vietnam, focusing on 1) the stock market and 2) venture capital. Vietnam’s stock market has been operational for over three years, and the number of listed companies has grown from 2 to 22. In addition, the opening of the stock market should make venture capital activity a more attractive proposition to investors. However, equity financing is still relatively new and undeveloped in Vietnam; thus it will take time for companies, financial institutions, policy-makers, and individual investors alike to fully understand these new financing vehicles and feel comfortable with their application.
Currently the stock market in Vietnam is relatively small, and most listed companies are actually equitized SOEs that enacted public shares well before listing on the market; few companies have used the stock market as a platform for raising funds. There are a number of constraints that inhibit the development of the stock market and of greater venture capital activity in Vietnam, including low levels of financial transparency among private companies and inadequate protection of minority shareholder rights. However, there have been positive changes to the laws and regulations governing equity finance in recent years, which should result in more equity financing activity in the years ahead.
As the private sector in Vietnam develops, the spectrum of eligible companies for equity financing should steadily increase. Looking ahead, the ability of larger Vietnamese companies to raise long-term financing through both private and public share issues can be expected, as the obstacles and constraints to equity financing improve.
July 2004
Full report English 
(420kb) | Full report Vietnamese 
(512kb)
