Vietnam’s stocks climbed, with the benchmark index rising the most in Asia, as valuations fell to a three-month low and concern more bankers will be arrested eased.
The VN Index gained 1.9 percent, the most since July 19, to 393.06 at the close in Ho Chi Minh City. Joint-Stock Commercial Bank for Foreign Trade of Vietnam and Vietnam Dairy Products Joint-Stock Co. advanced at least 1 percent. A 21 percent slump through yesterday from its high this year on May 8 dragged the index’s valuation to 9.4 times estimated profit, the lowest level since May 25, data compiled by Bloomberg show.
The VN Index slumped 12 percent from Aug. 20 to yesterday after Nguyen Duc Kien, a founder of Asia Commercial Bank, was detained for what the central bank called conducting “business illegally.” The lender’s former Chief Executive Officer Ly Xuan Hai was subsequently arrested for alleged economic mismanagement, according to a police statement, fueling concerns of instability in the nation’s financial system.
“While the fundamentals of companies essentially haven’t changed, their prices fell 20 percent,” Nguyen Hoai Nam, deputy head of research at Kim Eng Vietnam Securities Co., said by phone from Hanoi. “It’s now a good opportunity to take advantage of such cheap valuations. Foreign investors have been buying, which helped stabilize sentiment.”
Overseas institutions bought more Vietnamese equities than they have sold each day since Aug. 20 except for yesterday, when they divested $1.7 million, according to Ho Chi Minh City exchange data compiled by Bloomberg. Foreigners bought a net $16.4 million of stocks last week, the biggest weekly purchases since the period to March 30.
Asia Commercial Bank gained 5.3 percent to 20,000 dong in Hanoi trading. The stock had slumped 27 percent from Aug. 20 through yesterday. Moody’s lowered the lender’s credit rating to B2 from B1 on Aug. 24 and put the company on review for future downgrades following the “negative developments at the bank,” it said.
Deposit levels at the lender yesterday were similar to before Kien’s arrest, Nguyen Thanh Toai, deputy chief executive officer, said by phone today. The bank received 33.4 trillion dong ($1.6 billion) of deposits from Aug. 21 to Aug. 27, he said, without giving a figure for withdrawals.
Tram Be, deputy chairman of Saigon Thuong Tin Commercial Joint-Stock Bank, or Sacombank, denied what he claimed are rumors that he had been summoned or detained by police, according to an e-mailed statement from the bank today. The stock fell 2 percent to 19,600 dong, extending its decline since Aug. 20 to 14 percent.
“The market will likely stabilize in the next few days as rumors about more arrests of banking executives turned out to be unfounded,” Pham Ngoc Bich, managing director of institutional sales at Saigon Securities, wrote in a note to clients today.
Fitch Ratings also placed Asia Commercial Bank on review for a possible downgrade, it said on Aug. 24. The lender’s long-and short-term issuer default ratings may be cut if there’s sustained weakening in the bank’s liquidity and reputation, it said.
Prime Minister Nguyen Tan Dung’s government is seeking to shore up a banking system saddled with the highest bad debt in Southeast Asia that credit-rating companies cite as a threat to the economy.
State Bank of Vietnam Governor Nguyen Van Binh said Aug. 21 the monetary authority stands ready to ensure banks have adequate cash after Kien’s detention. The central bank injected 13 trillion dong into the financial system through open-market operations on Aug. 22, the most over a seven-day period this year. It added 2.4 trillion dong yesterday.
Vietnam Joint-Stock Commercial Bank for Industry and Trade, the second-largest listed lender, climbed 0.5 percent to 19,100 dong. The stock slumped 12 percent from Aug. 20 to yesterday.