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Vietnam listings boost size of Asia’s best performer
Vietnam’s stock market value is set to grow by at least 10 percent as a rally in the benchmark VN-Index, Asia’s best performer this quarter, prompts the government to resume sales of state-owned company shares.
Joint-Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), the nation’s third-biggest bank by assets, listed Tuesday on the main Ho Chi Minh Stock Exchange following Bao Viet Insurance & Finance Group, Vietnam’s biggest insurer, last week. Vietnam Bank for Industry & Trade, the country’s fourth-largest bank, starts trading on July 16.
The additions may make Vietnam more attractive to overseas fund managers as the VN-Index rebounds from a record 66 percent drop last year, said Templeton Asset Management Ltd.’s Mark Mobius. The 161 companies on the exchange are worth VND286 trillion (US$16 billion), less than the market value of Sunnyvale, California-based Yahoo! Inc., and the new listings will boost that by at least VND43.8 trillion, according to data compiled by Bloomberg.
“It will increase the liquidity of the Vietnamese market, and that’s very positive,” Mobius, the Singapore-based executive chairman of Templeton, which oversees about $20 billion, said in a June 25 interview.
In Vietnam, where stocks trade on the Ho Chi Minh Stock Exchange and the Hanoi Stock Exchange, companies typically complete initial public offerings several months before their shares start trading.
Privatization program
Hanoi-based Vietcombank on Tuesday rose by 20 percent, the maximum allowed by the exchange on the first trading day, to close at VND60,000.
The VN-Index rallied 60 percent in the second quarter, the best performer in Asia and second in the world to Ukraine’s PFTS Index, which jumped 78 percent among 89 benchmark measures tracked by Bloomberg. The VN-Index is up 42 percent this year, the world’s ninth-best performer.
“We need the market to have a significantly larger capitalization,” said Beat Schuerch, the Ho Chi Minh City-based chief representative of Indochina Capital Advisors Ltd., which manages a fund holding shares of Bank for Foreign Trade, known as Vietcombank. “Now we hope that the privatization program will start to kick in again.”
Share sales revive
The government said December 30 it delayed a planned share sale for Bank for Investment and Development of Vietnam, the country’s second-largest lender by assets. EVN Telecom Co., a phone operator owned by a state utility, said May 15 it plans to sell shares in the fourth quarter.
The government is selling shares in state-owned companies through its equitization, or privatization, process, as part of the more than two-decadeold doi moi (renovation) policy.
The rally in Vietnam’s nine-year-old stock market “opens up the possibility” of a revival of share sales, the Washington-based World Bank said in a June 8 report, citing a need for “key structural reforms which are required to sustain long-term growth.”
Hanoi-based Bao Viet closed to VND53,000 Tuesday, adding 38 percent from the 38,500 starting price at its June 25 listing, and valuing Vietnam’s biggest insurer at VND30.4 trillion, the largest company on the main exchange.
The 112.3 million shares that Vietcombank listed Tuesday added VND6.7 trillion to the value of the index, according to data compiled by Bloomberg.
The market capitalization of Vietcombank would total at least VND72 trillion, based on the 1.2 billion outstanding shares, making it Vietnam’s largest publicly traded company.
Record trading
The VN-Index, which in 2008 posted its biggest yearly loss since the market’s inception in July 2000, has doubled from a four-year low on February 24. It fell 2.6 percent to 448.29 Tuesday.
Foreign investors bought 59 million shares on the Ho Chi Minh Stock Exchange in June, and 71 million in May, up from 19 million in January, according to data on the exchange’s website.
The daily value of shares traded on the Ho Chi Minh Stock Exchange rose to a record VND3.3 trillion on June 10, from VND130 billion at the start of the year. On Tuesday, VND1.4 trillion worth of shares traded, according to data from the exchange’s website.
“Listing at this time is good as the market has recovered,” Vietcombank Chairman Nguyen Hoa Binh said in an interview from Hanoi Monday.
‘Overreaction’
The market’s gains may not last, said Louis Nguyen, chief executive officer of Saigon Asset Management, which manages about $125 million.
The VN-Index is trading at 20 times earnings estimates, up from 10 times at its lowest of the year on February 24, according to Sacombank Securities Co., Vietnam’s third-biggest brokerage.
“There’s been a slight overreaction, there’s an exuberance on the streets here that you don’t see in London,” Nguyen said. “I don’t think the locals realize that if you’re sitting in New York or California, it’s still pretty scary.”
The MSCI Frontier Markets Index, which includes Vietnam, dropped for two straight days after the World Bank predicted June 22 that the global economy will contract this year more than previously forecast. Vietnam’s exports fell 10 percent in the first half, the biggest drop since January, the government said June 25.
“People are more positive about the stock market and company earnings but we have also to consider how much the global economy is going to hit Vietnam and its exports,” Nguyen said.
Raising capital
Hanoi-based Bank for Industry & Trade, the country’s fourth-largest lender, will probably add at least VND6.7 trillion to the value of Vietnam’s listed companies when the lender starts trading from July 16, according to Chairman Pham Huy Hung. Hung said on June 4 that the shares would trade for the first time at no less than VND50,000.
Vietnam’s stock market has become an “important channel to raise capital for the economy,” Deputy Prime Minister Nguyen Sinh Hung said in Hanoi on June 24. An increase in both the number and value of listed companies has made the market “more and more attractive to investors,” he said.
thanhnien, bloomberg
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