Bank tickers not losing charm

Good-performing banks are hot tickers in the stock exchange

According to the Hanoi Stock Exchange (HNX), from March 8 to April 5, 2018, Dragon Financial Holdings Limited (a subsidiary of Dragon Capital—a leading investment management company in Vietnam) registered to sell more than 6.99 million shares of Ho Chi Minh City-based private commercial lender ACB to restructure its investment portfolio.

Simultaneously, another investment fund under Dragon Capital registered to buy the same stock volume. As Dragon Financial Holdings has reached the foreign ownership limit in ACB, the transaction may be an internal agreement among Dragon Capital member firms in an attempt to raise their cumulative stake in ACB.

Earlier, in January 2018, ACB’s two major foreign shareholders—Standard Chartered APR Limited and Standard Chartered Bank (Hong Kong) Limited—transferred a total of 154 million ACB stocks to other investors.

After the transactions, these shareholders completely divested ACB and received more than VND6 trillion ($272 million) in proceeds.

IN the same month, France’s BNP Paribas divested the entire 18.68 per cent stake in local private lender OCB after a 10-year investment.

Earlier, HSBC took a total exit from local lender Techcombank after long years of investment.

While several foreign shareholders divested local banks, a lot of other foreign investors have been mulling teaming up with local lenders.

After bidding farewell to HSBC, Techcombank recently announced receiving more than $300 million investment into the bank from two separate legal entities managed by US private equity firm Warburg Pincus.

Early this year, HDBank succeeded in raising $300 million from international organisations after selling 21.5 per cent stake via the book building method.

The corporate investors partaking in buying HDBank’s stake are leading international institutions, such as Japan’s Credit Saison and CAM Bank, Germany’s Deutsche Bank AG, and JPMorgan Vietnam Opportunities Fund, among others.

In the face of the Vietnamese stock market’s recent rally, bank stock have witnessed a sharp growth in value. Recently debuting tickers like HDBank and VPBank moved far from their initial price.

The VCB, ACB or MB tickers showed impressive surges in price. This trend was mirrored in the over the counter (OTC) and the unlisted public company market (UpCom).

For example, the price of Techcombank ticker sometimes exceeded VND60,000 ($2.7) a piece.

Last year’s upbeat profit picture and the lessening bad debts threat, especially after the application of the government’s Resolution No.42/2017/NQ14 presenting breakthrough measures to tackle bad debts, banks’ better health due to restructuring have contributed to the positive movements of bank stocks.

Regarding the banking sector’s development prospects in 2018, VinaCapital CEO Andy Ho assumed the growth momentum will continue, particularly in credit activities. The real estate market warming up presents opportunities for banks to push up selling mortgaged assets to recover capital and accelerate credit flows.