Transparency evates the standing of listed companies

Information transparency helps maintain trust in the stock market. Source: Internet

Transparency: A pillar of investor confidence

At the 2024 Annual Business Conference organized by HNX, Deputy General Director Do Van Tam shared insights into the performance of listed companies during the first half of 2024. Over 84% of listed firms on the Hanoi Stock Exchange reported audited semi-annual financial statements with profits, amounting to a total of VND 12.7 trillion.

While the number of profitable firms slightly decreased compared to 2023, the total profits in the first half of 2024 accounted for 66% of the previous year’s total. Among registered companies, 77% of large public enterprises posted profits of VND 38.4 trillion in their reviewed semi-annual reports. On the UPCoM market, many businesses displayed robust financial performance and high dividend-to-book value ratios. However, numerous enterprises still face significant financial difficulties and questions about their ability to continue as going concerns.

Deputy Chairman of the State Securities Commission (SSC), Bui Hoang Hai, noted that 2024 was a volatile year for Vietnam’s stock market, impacted by both domestic and global factors. Business results for the first nine months of 2024 on HNX grew by over 28% year-on-year. However, the HNX-Index fell by 1.6% compared to the end of 2023, and the average trading value on HNX dropped by 6.9%. Foreign investors have also shown a net-selling trend recently.

In this context, timely disclosure of information and operational transparency among listed companies are pivotal to maintaining trust in the stock market. This transparency supports the market’s efficient, fair, and sustainable functioning. “For enterprises, it reflects accountability to shareholders and the investment community. It is also a key factor in building trust and credibility. Raising standards for information disclosure and transparency not only solidifies a company’s position but also enhances the overall quality of Vietnam’s stock market,” emphasized Bui Hoang Hai.

Over the past two years, the number of companies under warning or restricted trading status on the listed and registered markets has risen compared to 2022. Some stocks have faced multiple monitoring designations simultaneously. Common reasons include negative undistributed post-tax profits, delayed financial reporting, or financial statements with qualified audit opinions. Additionally, violations of deadlines for holding annual general meetings are more prevalent among UPCoM-listed firms.

Vietnam’s transparency ranking remains modest

HNX representatives acknowledge improvements in companies’ compliance with reporting and disclosure obligations compared to previous years. However, violations in periodic disclosure remain high, particularly among companies with prolonged financial difficulties and losses. Violations related to treasury stock transactions, public tender offers, and trades by insiders or connected parties have decreased significantly, thanks to stricter oversight, penalties by SSC, and enhanced compliance.

Starting January 1, 2025, large public companies and listed firms will be required to disclose periodic information in both Vietnamese and English, as mandated by Circular 68/2024/TT-BTC. Enterprises are advised to prepare for this transition.

Despite progress, Vietnam's corporate governance and transparency scores, including information disclosure, remain modest compared to other countries assessed by the Asian Corporate Governance Association (ACGA). While there have been positive developments, the improvements have yet to elevate Vietnam’s ranking significantly.

Deputy Chairman Bui Hoang Hai stressed the need for Vietnam to enhance its information disclosure practices to meet regional and international standards. Such improvements are essential for increasing the stock market’s appeal, competitiveness, and overall value. The SSC continues to propose policies to improve the legal framework, aiming to boost transparency in corporate governance and information disclosure.“Listed companies must recognize that transparent information disclosure and sound corporate governance are not just obligations but strategic advantages. These practices enhance corporate image, facilitate access to capital, and reduce funding costs,” Hai concluded.