Vietcombank’s IPO has unclear impact on other banks’ shares

(07-12-2007)

HA NOI — Trading in banking shares in recent sessions has risen since the release of information regarding Vietcombank’s upcoming IPO earlier this week.

In HCM City on Monday when Vietcombank released its initial information on IPO, Sacombank (STB) closed unchanged at VND70,000, with more than 1.9 million units traded on the first full day of trading impacted by Vietcombank’s IPO news.

In Ha Noi, Asia Commercial Bank rose to VND177,900 on the same day, up 1.2 per cent, on a volume of 354,900 million shares.

Nguyen Ngoc Truong Chinh, deputy director of Dong Duong Securities Co, suggested that the offer price of VND100,000 set for Vietcombank shares was a positive factor.

Some investors in banking shares would sell of shares in advance of the Vietcombank IPO, perhaps to free up capital or out of fear that Vietcombank’s entry would put a downward pressure on competing bank shares. Meanwhile, others were finding greater enthusiasm in the banking sector generally.

In the end, Chinh said, buying and selling in banking shares would likely be balanced.

"There are two trends of banking shares going on at the same time," said Bien Viet Securities analyst Nguyen Kim Trinh. "On the one hand, some investors who own ACB and STB shares are tending to sell off shares for profit while prices were up. On the other hand, those who could not afford to participate in Vietcombank’s IPO may be buying ACB and STB for a long-term investment in the sector."

On the over-the-counter (OTC) market, banking stocks were also increasing in price, such as East Asia Bank (EAB) and Military Bank (MB).

Nguyen Hoang Hai, general secretary of the Viet Nam Association of Financial Investors (VAFI), said that, while "market growth won’t be hot like in previous years, [the Vietcombank IPO] will help give a year of market fluctuations a happier ending."

"The number of listed banks on the stock market at present is just two, a modest number for investors, especially overseas investors," said Catherine White, an analyst from Thien Viet Securities.

Both of these banks have issued additional shares to fund increases in charter capital, leading to an increased supply of shares on the market.

"The result will be the falling of banking shares after Vietcombank’s offering," White said.

"Including the additional supply from banks on the OTC market, the capital of investors has already been spread thin," said White. Meanwhile, a lot of capital was being held back for the Vietcombank IPO, she added.

"When the cap on foreign holdings in banks is lifted next year, the shoe will be on the other foot," said Hai. "Good business results will also be a factor to stablise the position and price of bank stocks," he said. "These stocks will continue to be a defensive investment in most investors’ portfolios." — VNS