The ministry stressed that only companies with strong business development and strict compliance with regulations can maintain a long-term listing on the stock exchange.

The warning follows recent mandatory delistings and underlines the importance of understanding the rules governing such actions.

“The mandatory delisting contributes to a fair and transparent market environment. Only companies with sound business operations and compliance with legal regulations can remain listed on the stock exchange in the long term,” the ministry said.

This regulatory approach is consistent with practices in other developed markets. For example, South Korea’s KOSPI market uses 11 criteria to assess mandatory delisting, while Japan uses six sets of criteria to ensure that only qualified companies remain listed.

Investors were advised to carefully examine the market, financial health and future prospects of companies before making decisions about stocks.

“Investors should be cautious when selecting their stocks and pay particular attention to the company’s general legal compliance, particularly with regard to securities law, as well as management’s compliance with regulations,” advises the SSC.

Under current regulations, shares subject to mandatory delisting can continue to trade on the Unlisted Public Companies Market (UPCoM), where the 15 percent trading spread is more than double the 7 percent of the Ho Chi Minh Stock Exchange (HSX). These shares must trade on the UPCoM for at least two years before they can apply for relisting on the exchange, provided they meet all the required conditions.

Recently, the HSX announced the mandatory delisting of two stocks: HBC of Hoa Binh Construction Group and HNG of Hoang Anh Gia Lai Agricultural International, effective September 6. The delistings were due to years of poor financial results.

Hoa Binh Construction Group reported a cumulative consolidated loss of VND3.24 trillion (about USD130 million) by the end of 2023, exceeding its registered capital of VND2.74 trillion (about USD110 million). The company posted two consecutive years of losses, exacerbated by a “frozen” real estate market that led to a decline in revenue and a rise in bad debts that required significant provisions. In addition, the company faced internal conflicts that further destabilized its operations.

Similarly, HNG recorded losses for three consecutive years: the parent company’s shareholders recorded after-tax losses of VND1.12 trillion (US$45 million) in 2021, VND3.58 trillion (US$143 million) in 2022, and VND1.1 trillion (US$44 million) in 2023.

Following the HSX announcement, both stocks experienced significant market volatility. In the first trading session following the news, HBC and HNG experienced massive sell-offs. HBC’s share price fell more than 30 percent in just over two weeks. HNG’s stock also lost more than 20 percent at one point, but has since recovered.

In response, Hoa Binh Construction Group denied the reasons for its mandatory delisting in a letter to HSX. Tran Ba ​​Duong, chairman of HNG, had previously assured shareholders that the delisting had been anticipated and there was no cause for concern.

“Despite the relocation of trading venues, the company will continue to disclose transparent information and with good management the share price could still improve,” said Duong.

Vietnam and Singapore sign memorandum of understanding to promote stock market development The Singapore Stock Exchange signs a memorandum of understanding (MoU) with the Vietnam Stock Exchange to promote the development of the stock markets in Singapore and Vietnam.

Hong Kong facilitates stock market listings for Vietnamese companies Hong Kong is exploring ways to strengthen bilateral relations in various industries, with a particular focus on the financial market. Bonnie Y Chan, CEO of Hong Kong Exchanges and Clearing (HKEX), spoke to VIR’s Luu Huong about how Hong Kong can contribute its expertise in developing financial centres and facilitate overseas listings of Vietnamese and other Southeast Asian companies.