Poor Habubank debut mirrors ailing market

Habubank's shares, (HBB), had been traded on the over-the-counter (OTC) market since 2007 and since  November 23 the bank listed all its 300 million shares on the Hanoi bourse (HNX).

HBB ended its first day trading at VND9.600, down 16.5 per cent from VND11,500  at the opening bell, according to HNX data. The stock kept hovering above VND11,000 and peaked VND12,000 a week earlier on the OTC market.

Habubank is one among 10 largest commercial banks of Vietnam by scale with VND3 trillion ($150 million) in chartered capital and total assets standing at VND34.9 trillion ($1.74 billion). Deutsche Bank has  held a 10 per cent stake of the bank since 2007.

Analyst said HBB's price reflected the stock market's poor state. "It [HBB's price] follows the ongoing down trend of stock market, in which bank shares are decreasing most," said research director for Saigon-Hanoi Fund Ngo Van Minh.

HBB's dip comes as an entirely downward trend in local bank shares price. The average price of the seven bank stocks listing on the country’s two bourses has fallen to more than 25 per cent for the nearest 75 days to 9 November, according to a report released by Lien Viet Securities Joint Stock Company.

The major codes like Vietcombank's VCB, Vietinbank's CTG and Asia Commercial Bank's ACB, which among the 10 stocks with the largest capitalisations on Vietnam’s stock market, saw their prices drop from 10 to 18 per cent against three months ago to around VND33,600, VND18,400 and VND23,300, respectively.

The small bank Nam Viet even saw its price sharply fall far below the face value to above VND8,000 from VND11,500, down nearly 30 per cent after its HNX debut in mid September.

As the report showed, the bank shares plump was caused by a macroeconomic factors combination including gold price, exchange rate and interest rate. While gold hit records nonstop throughout this year, interbank exchange rate was nudged up 2.09 per cent higher from VND18,544 to VND18,932 by the State Bank, followed by the benchmark base rate increasing from 8 per cent to 9 per cent on November 5.

"Gold, exchange rate accompany with interest rate all have reverse effects on bank shares," said the report.

In fact, Vietnam’s banks have seen their shares plunge down throughout this year due to heavy pressures putting on this sector by government's tightening credit policy. Investors largely tend to fear this kind of stock. Many major shareholders auctioned their rights to buy additional bank shares, those auctions in their turn has failed due to too few order, according to HNX and HoSE data.

There have been questions about Habubank's reason to make its listing even leading to rumours Deutsche Bank was looking for the exit.

"The listing was in the long-term strategy that had been already approved by shareholders since early this year", said general director of Habubank Bui Thi Mai.

"The listing only aims to help increase the stock's liquidity and transparency, also promote our image out to the public."

Kelly Wong, representative for the bank's listing adviser Hochiminh Securities Corp. (HSC), said: "I do not believe Deutsche Bank intends to sell through [the holding], especially since they have an interest in growing the relationship," Wong told VIR Online.

Habubank stock's book stands at VND11,600, while its rational price estimated by HSC is VND15,000, according to the bank's listing prospectus.