BVH drives the market

All the major shareholders are committed to holding stakes for at least five straight years since Bao Viet was equitised in July 2007, meaning their stocks were bound until July 2012. Hence SCIC has not sold shares even though BVH stocks have recorded sharp rises, according to Le Quang Binh, chairman for SCIC.

BVH has been strongly gaining over the last year thanks to great interest from foreign investors, though the company’s inside value saw no sudden increase during the time the stock appreciated. Last week, BVH hit ceiling for the sixth straight sessions to reach VND103,000 per unit, adding more than 300 per cent against its price at the beginning of 2010.

The amazing rise is said to be increasingly distorting the local stock market as BVH, in fact, is one of a number of leading stocks, which have a great effect on VN-Index. Actually, the benchmark would have fallen several times, if there had been no support from the insurance stock.

Meanwhile, almost all Bao Viet shares, which are mainly held by major shareholders, could not be sold to the market, hence the stock cannot cool off.

Up to 77.54 per cent of Bao Viet Holding is held by the Ministry of Finance while SCIC holds 3.56 per cent and HSBC has 18 per cent. Nearly 10 per cent is freely traded in the market.

That stake structure (with such restrained floating shares volume) is believed to be one of the factors some foreign investors have backed BVH through last year.

But yesterday (24 January, 2011), BVH suddenly turned heads when it fell to VND98,000 after adjustment from foreign investors. Some analysts saw this movement as a reaction to foreign investors concerns over a possible watchdog-inspection of the stock.

In 2010, Bao Viet Holding had VND12.884 trillion ($644.2 million) in revenue with pre-tax profit at VND1.332 trillion ($66.1 million). The target for 2011 was VND14.795 trillion ($739.75 million) and VND1.510 trillion ($75.5 million) respectively.