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Large SOE listing creates high expectations   2009-07-28 - VNS

Within one months, all three banking-finance institutions including Vietnam Bank for Foreign Trade (Vietcombank), Vietnam Industrial and Commercial Bank (Vietinbank) which are also among Vietnam's equitised largest businesses, alternatively listed in the stock market and brought about various expectations to the market.


Taking the lead among the country's largest listed businesses is Bao Viet Group. from June 25, Bao Viet listed 573 million ordinary shares with total value of 5.73 trillion dong and starting price of 38,500 dong in HCM City Securities Stock Exchange (Hose). Vietcombank went on the bourse on June 30 and listed 112.3 million shares, or 9 percent of its chartered capital with total value of over 1.112 trillion dong and starting price of 50,000 dong.

All three state businesses, when announcing their listing, became a big event for not only themselves, but also for the stock market and investors' and other state agencies. Bao Viet and Vietcombank's going public was to realise their promises with investors after repeated delays. Vietinbank actively equitised and succeeded when the market went as bottom, and Vietinbank's listing was closely watched as many businesses expected that the IPO would establish new benchmark prices for them to negotiate with foreign strategic partners.

The large state IPOs at a time when the stock market is in the doldrums is expected to add new impetus to share prices overall after a prolonged slump in the market.

Nguyen Thi Phuc Lam, general director of Bao Viet said that in the informal share market trading, Bao Viet shares were changing hands at 38,000-50,000 dong. Compared to the starting prices, an uptrend of Bao Viet share price is expected and the fact showed that Bao Viet realised such an expectation when its price rose after going to the bourse.

Vietcombank is also considered successful when its listing price increased over many sessions. An official of Vietinbank even predicted at the last shareholders meeting that Vietinbank's share price would without doubt increase from the starting price of 50,000 dong to 70,000-80,000 dong¸which understandably perked up their interest.

Meanwhile, with long-term views, Vietnam Association for Financial Investors said that listing of big businesses will make a breakthrough in bringing the still small stock market to a new level and giving more liquidity to investors.
Particularly, such banks as Vietcombank, Vietinbank, will help propel this process.

Another expected outcome is a renewed effort at equitisation of large state-owned enterprises, which had slowed down considerably during the current economic crisis and the market downturn. Large SOEs including Bank for Investment and Development of Vietnam (Bidv), Mekong Housing Bank (MHB) and others that had previously announced equitisation plans are understood to putting plans back on track.

After a sharp increase for a short time, the stock market fell back again. Share prices, after an initial spurt post-listing, soon saw sharp falls during some sessions. This made investors worry over warnings of possible share dilution caused by a big supply of banking-finance giants.

But should the market fluctuations be attributed to a few large IPOs? In fact, among the three giants, only Bao Viet listed the entire 573 million ordinary shares at a total value of 5.73 trillion dong and in addition, only about 8 percent of the shares can be traded, as the remaining shares are held by SOEs and strategic investors that are subject to trading restrictions.

The other two banking giants list shares only when being licensed to post small part of their shares, some 10 percent more or less of their equity on the bourse. Nguyen Hoa Binh, chair of Vietcombank's executive board, said that the listing volume was 112.3 million shares or over 9 percent of the bank's chartered capital. With the starting price of 50,000 dong a share, total value of Vietcombank's listed shares was some five trillion dong. To some extents, when going to the bourse, Vietcombank may be considered one of the businesses having the biggest market capitalisation, however, the bank's capacity of shaking the market is modest because total volume of shares to be traded is insignificant compared to the current market's scope.

Pham Huy Hung, chair of Vietinbank's executive board, said that the bank lists some 10 percent with over 120 million shares, however, only 74 million shares are traded freely, 47 remaining shares are subject to restricted transactions including shares of domestic strategic shareholders, members of leaders of the bank's executive board, the controlling board and the trade union of Vietinbank. Currently, Vietinbank owns chartered capital of over 11.252 trillion dong or 1.125 million shares.
Thus, the volume of freely-traded shares is small compared to the bank's capital and the market scope.

The stock market's scope is now some 26 percent of GDP, equivalent to over $24 billion. Based on total capital of big businesses listed in the market, total capital is only over 10 trillion dong -- still a small figure. Even, compared to trading value of the recent highest trading sessions of up to five trillion dong injected into the stock market, the above figure is modest.

Recent statistics of VFAI showed that from March, the amount of money injected into the stock market has been increasing. Total daily trading value in Hose and Hanoi Trading Securities Centre (Hastc) is some three to five trillion dong, which is far higher than the value in the hot growth of the stock market in 2006 and 2007.



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