Recently, stocks of the Finance sector, especially bank stocks, received support from many sides. From the middle of September 2019, investors received much information related to the group of Bank stock. Assessing this group of stocks, Tran Duc Anh, director of Macro and Market Strategy of KB Securities Vietnam Joint Stock Company (KBSV), said that the bank share group had many attractive factors, from positive business results, declining operating rates, and the information that Hochiminh Stock Exchange (HSX) would build the VN-Capped Financial Index.
According to Duc Anh, in general, the bank stocks had experienced relatively positive growth since the beginning of the year. The space for further breakthroughs was quite small (unless new supportive factors continue to appear). However, the adjustment risk in this industry was not considerable.
Further evaluation of the information on HSX would build the VN-Capped Financial Index as a basis for VietFund Management (VFM) to build financial sector Exchange Traded Fund (ETFs). Duc Anh said that the chances of success of financial ETFs were relatively positive due to hitting the market demand at present, which would help increase the demand in selected stocks. On the one hand, this product enabled domestic investors to diversify their portfolio, minimise risks, instead of investing in one or two unique codes in the financial industry. On the other hand, this was also a tool to help foreign investors indirectly own more shares in businesses.
Also related to bank stocks, recently, in the September 2019 report of PYN Elite Fund assessed that bank stocks were ready to take off. According to the report, the total net asset value of this fund increased by 1.9 percent thanks to the positive movements of MWG, HDB, KDH, and CII. By the end of September, the portfolio of PYN Elite Fund was worth euro 415 million, of which the proportion of stocks in the collection amounted to 91 percent, and nine percent was cash.
MWG share was the most significant proportion of PYN Elite Fund’s portfolio, with 17.43 percent, followed by bank stocks of TPB (10.53 percent) and HDB (8.75 percent).
After visiting banks and insurance companies, the fund said that bank shares seemed ready to take off with the support of the following factors.
Fee income: According to PYN Elite Fund, life insurance products were now very popular in the Vietnam market and had a fast penetration rate. For non-life insurance, some Banks can receive commission rates up to 80 percent without any exclusive agreement.
Strong demand for loans: Retail-focused banks faced such a strong demand that they had to mobilise deposits at a fast pace. Banks need to follow deposit-related ratios. In mid-August, some banks tried to raise savings interest rates to 10 percent per year, but the State Bank of Vietnam (SBV) quickly warned. According to PYN Elite Fund, this was in stark contrast to European banks. Specifically, Denmark’s Jyske Bank only provides customers with 10-year mortgages with an interest rate of -0.5 percent and charging customers a savings deposit of -0.6 percent.
Other catalysts: The adjustment of Gross Domestic Products (GDP) would reduce the credit to GDP ratio, giving banks more flexibility in credit growth. On the other hand, banks such as Vietnam Prosperity Joint-Stock Commercial Bank (VPB) and HCM City Development Joint Stock Commercial Bank (HDB)
were also starting to buy treasury shares. Besides, the introduction of ETFs based on FOLs and financial indicators would support bank stocks.
