FLC “ecosystem” insignificantly affects Vietnam’s economy

After Trinh Van Quyet, Chairman of the Board of Directors of FLC Group, was arrested and detained, many experts said that although stocks in the "ecosystem" of FLC attracted many investors, because of its rather small scale, it cannot affect the stock market in particular, as well as the economy in general.

On the stock market, the FLC "ecosystem" related to Trinh Van Quyet includes seven stock codes, namely FLC, ROS, HAI, AMD, KLF, ART, and GAB. By March 25, 2022, the total capitalization of this group exceeded VND23.3 trillion, accounting for 0.36 percent of the capitalization on the two officially listed exchanges, HoSE and HNX.

Market analyses show that the influence of the FLC "ecosystem" is insignificant. In the trading session on March 28, due to mixed news about Trinh Van Quyet, FLC shares and all stocks in the FLC family hit the floor prices. The negative effect on the market caused the stock market to lose more than 25 points. However, the losing momentum was lessened to 16 points at the end of the trading session. The next day, the market rallied again, recouping almost all the points lost in the previous trading session. In the trading session on March 30, after the official information that Trinh Van Quyet was prosecuted and taken into custody to investigate the act of manipulating the stock market, although stocks in the FLC family continued to hit the floor prices, the VN-Index only decreased 7 points.

Securities experts said that the extent of influence of stocks in the FLC family was insignificant because the capitalization, as well as the business scale of this "ecosystem", was quite small. According to analysis data of FIDT Company, which specializes in consulting and providing financial investment solutions, the total revenue of the FLC "ecosystem" is about VND13 trillion, only equal to 0.014 percent of Vietnam's GDP. Their short and long-term bank debts, excluding Bamboo Airways (there is no specific data because it is not listed), are at VND8.4 trillion, so it has no impact on the current economy.

According to Mr. Huynh Minh Tuan, Brokerage Manager of Mirae Asset Securities Company, this incident will only negatively affect the stock market in the short term. In the long run, this is good news because investors' gambling and speculation psychology will be eliminated. The cash flows will be directed to groups of large-scale stocks with good business performance and transparency in business activities and reputable enterprises.

According to the consolidated financial statements for the fourth quarter of 2021, at present, FLC's liabilities are more than VND24.06 trillion, accounting for more than 70 percent of the total capital. The bank that gives FLC the highest loan is Sacombank with more than VND1.84 trillion, followed by BIDV with nearly VND1.75 trillion, OCB with roughly VND1.4 trillion, NCB with more than VND634 billion, Agribank with nearly VND170 billion, and other banks with more than VND273 billion.

On March 30, Sacombank's leader affirmed that “FLC Group's loans at Sacombank comply with the law and are safe, with full collateral.” Up to now, FLC Group is still operating normally and fully fulfilling its debt repayment obligations on time under the credit contract signed with Sacombank.

On the same day, Mr. Nguyen Dinh Tung, General Director of OCB, also said that FLC's loans at OCB are mainly investment loans for projects besides a small part of short-term working capital loans with Bamboo Airways. Currently, the total value of assets secured by real estate that OCB holds is more than VND2 trillion, much larger than FLC's loans at OCB.

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