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Eximbank’s listing to give a fillip to bank stocks: analysts   2009-11-03 - Thanh Nien, Bloomberg

Eximbank is the fourth-biggest company by market value on the Ho Chi Minh City stock exchange  
The listing of Vietnam Export-Import Commercial Joint-Stock Bank (Eximbank) will give a boost to other bank stocks, which have gone sideways recently, and help attract more listings in the market, experts said.



The lender, partly owned by Sumitomo Mitsui Financial Group Inc, rose 3.6 percent on Tuesday to close at VND29,000 on its first day of trading at the Ho Chi Minh Stock Exchange after listing VND24.5 trillion (US$1.4 billion) of stock in the nation’s biggest banking share debut. Eximbank shares declined 3.8 percent to close at VND28,200 on Thursday.

The listing brings to four the number of banks in the VN-Index, one of the best performing indices in Asia this year. An increase in the size and liquidity of the index may lure more international funds to invest in Vietnam.

“The listing of Eximbank will certainly add more depth to the market and broaden the choices for investors,” said Mark Canizares, head of equities at Ho Chi Minh City-based Manulife Vietnam Fund Management, which has $280 million of assets under management. An increase in liquidity is “helping attract listings in the market,” he said.

After Eximbank’s listing the VNIndex, now consisting of 180 stocks, has surged 84 percent this year after plunging 66 percent in 2008. The index dropped 18.37 points, or 3.06 percent, to finish at 581.49 on Thursday.

Ho Tan Dat, manager of Corporate Finance Department 1 of Viet Dragon Securities Corporation, said, “Many investors are asking whether Eximbank’s listing will initiate a new wave [upward trend] for banking stocks. As many are thinking about that, it will create a real wave.

“Personally, I expect the lender’s listing will send banking stocks higher, though not as much as construction and property stocks.”

Explaining why banking stocks have gone sideways recently while construction materials and property stocks have increased significantly, even though all these sectors posted healthy earnings, Dat said that, during the economic slowdown, lenders still did good business while construction materials and property companies were hit in that period.

“So, ‘suddenly’ good financial reports [from the latter] amid the economic recovery have attracted investors,” he said.

Hoang Thach Lan, vice director of SME Securities Corp.’s HCMC branch, said banking stocks kept rising in the first six months of this year [thanks to their thriving business] when production and trading companies were at the mercy of the economic slowdown.

“But from the third quarter, investors have digested some news that isn’t good for banking stocks. For example, credit is growing ‘hot’; the key rate will not be raised until 2010 while deposit rates are close to lending rates.

“Meanwhile, construction materials and property companies posted impressive results. They aren’t better than banks’ but they are better than themselves in the economic slowdown, thanks to not only the government’s 4-percent loan subsidy program but also its spending in the sector.

“In the long-term, Eximbank’s listing is good as the banking sector is the stock market’s ‘backbone’. Lenders have direct impacts on businesses in all sectors. Most long-term investors prefer bank stocks.”

Approaching investors

“The exchange will be a channel for us to approach investors,” Truong Van Phuoc, the bank’s chief executive officer, said by phone Tuesday from HCMC. “Our bank has been in business for more than 20 years with a large market value, so it’s important for us to be listed to make it easier for investors to trade our shares.”

The HCMC-based bank, which finances import and export activities and has 38 branches throughout Vietnam, made a pretax profit of VND1.2 trillion in January-September, compared with VND1.1 trillion in the same period last year.

The rally in the VN-Index since February has prompted the Joint-Stock Commercial Bank for Foreign Trade of Vietnam, or Vietcombank, and the Bank for Industry & Trade, or Vietinbank, to start trading their shares.

Prior to these listings, the only bank that traded on Vietnam’s biggest exchange was Saigon Thuong Tin Commercial Joint-Stock Bank, known as Sacombank.

‘Remarkable’ growth

“The growth of the joint-stock banks like Asia Commercial, Sacombank and Eximbank has been remarkable,” said Fred Burke, a partner in the HCMC office of the law firm Baker & McKenzie, who has lived in Vietnam since 1991.

In Vietnam, companies usually hold an initial public offering first, then list on the stock exchange at a later date. Vietcombank’s listing was 18 months after the Hanoi-based bank sold its first stock. In the case of a joint-stock bank, such as Eximbank, shares are typically issued to investors and employees in the company before they can be bought and sold via the stock exchange.

Eximbank is the fourth-biggest company by market value on the Ho Chi Minh Stock Exchange after Vietcombank, Vietinbank, and Vietnam Dairy Products Joint-Stock Co.

“The listing of Eximbank will help to increase market capitalization as well as liquidity,” said Do Hiep Hoa, Hanoi-based head of equity research at Thang Long Securities Inc., Vietnam’s biggest brokerage. With a larger scale, the market will “garner more attention from big investment funds looking to enter Vietnam.”

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