A number of listed companies have announced offers to buy back shares since recent market declines have driven their share prices below valuation.
Pomina Steel Corporation (POM) has registered to buy back 9 million shares, while Vinh Son-Song Hinh Hydropower Company (VSH) will buy back 4 million.
Three other companies have also declared their intent to buy back 2 million shares each, including Tan Dai Hung Plastics Company (TPC), Pha Lai Thermal Power Companny (PPC) and Transport Engineering Construction and Business Investment Company 584 (NTB).
Viet Nam-Germany Steel Pipe Company (VGS) and Vinaconex Investment and Tourism Development Company (VCR) have each registered to buy back a million shares, with a number of other companies planning lesser buybacks.
"The decision to repurchase shares aims to boost share demand on the market and help lift share prices," explained Hoa Binh Securities Company Deputy Director Nguyen Huy Duong.
It also allowed companies to profit over time by buying back their own shares at low prices and then re-issuing them later when the market had rebounded, Duong said.
"However, any investment decision contains risks," he noted. "Companies can only sell the shares after six months have elapsed from the time of the buyback."
Several companies incurred losses when their shares continued falling after they were bought back in 2008, including seafood exporter Nam Viet Corporation (ANV), commercial baker Kinh Do (KDC) and property developer Vincom Comapny (VIC).
Nevertheless, the announced decision by a few companies that they will buy back shares has already positively affected investor psychology and share prices.
POM rose for five consecutive days from VND30,000 (US$1.55) to VND37,000 ($1.92) after its buyback announcement. NTB, TPC and VSH have also risen lightly.
"Even if such a decision does not affect share prices that much, it demonstrates the companies' responsibility in protecting its shareholders' interests," Duong observed.