Seven months after moving to the Ho Chi Minh Stock Exchange (HoSE), shares of the Saigon - Hanoi Commercial Joint Stock Bank (SHB) officially have the opportunity to catch the eye of the largest foreign exchange-traded funds (ETFs) in Vietnam’s stock market. Investors expect history to repeat itself and for SHB’s stock to accelerate strongly, as happened a year ago when Morgan Stanley Capital International (MSCI) decided to add the shares to its MSCI Frontier Market Index.

Creating momentum for success

The plan to transfer shares from the Hanoi Stock Exchange (HNX) to HoSE was approved by the Annual General Meeting of Shareholders of SHB in April 2021. By October 2021, SHB shares were officially on HoSE.

According to SHB leaders, the move to HoSE was a strategic step to promote SHB’s image among foreign strategic investors, boost its appeal among domestic investors, increase the market value of SHB shares, and bring the greatest benefits to shareholders.

At the same time, management also hopes that trading on HoSE will open up new opportunities for investors when SHB enters the portfolio of VNM ETF or VN30, confirming the position and potential of SHB shares on the stock market.

Previously, SHB improved its financial capacity by successfully divesting from SHB Finance, issuing preferred shares to existing shareholders and supplementing charter capital.

Thanks to these steps to create momentum, SHB’s stock has been on the right track, as set out by its leadership. Since listing on HoSE, SHB has proven to be one of the “liquidity stars” despite the continuous decline in overall trading value in the market. Since the beginning of the year, SHB has seen average liquidity of 10.6 million units per session.

In May 2022 alone, average liquidity per session was nearly 11 million shares, putting it among the most traded stocks on HoSE.

SHB is also one of the most-favored stocks among foreign investors, with it continually being net bought. Over the last week, SHB was the third-largest net bought stock on HoSE in terms of volume. Foreign investors bought more than 2.5 million units while selling just over 300,000. Total net buying reached more than 2.2 million units.

Most notably, many securities companies have begun to forecast the possibility of SHB shares joining ETFs during the portfolio restructuring period in the second quarter of 2022.

Specifically, SSI Research said SHB could be added to the FTSE Vietnam Index as it meets all conditions. More than 7 million shares may be bought by the FTSE ETF.

According to Yuanta Securities, the V.N.M ETF, which currently has total assets of nearly $545 million, is expected to net buy 13.8 million SHB shares, while FTSE ETF, with an asset size of more than $370 million, is expected to buy 15.3 million SHB shares. In total, these two ETFs could buy more than 29 million SHB shares in the portfolio restructuring period in the second quarter.

Is another major increase coming?

The fact that SHB is forecast to join two foreign ETFs with a total size of nearly $1 billion makes many investors immediately think of the strong acceleration of the stock seen previously.

Around this time last year, Morgan Stanley Capital International (MSCI) decided to add SHB shares to its MSCI Frontier Market Index - the reference index for the MSCI Frontier Markets Index ETF.

Immediately after, SHB shares gained over many consecutive sessions, with two sessions seeing dramatic increases.

Calculated at the adjusted price, the market price of SHB jumped from VND18,600 ($0.8) per share to VND27,000 ($1.1) per share, equivalent to an increase of 45 per cent in just over a dozen trading sessions.

Of course, this trading history is only a basis, but the fundamental value of the bank is the main factor in investors anticipating a rally. Expectations are changing strongly based on both business results and operating strategy.

Accordingly, at this year’s Annual General Meeting of Shareholders, many shareholders expected to receive dividends as soon as possible, especially as the stock price is attractive. They believe that the market has not properly appreciated the bank’s value, so the stock price will soon accelerate. And then, they will benefit much more.

SHB continues to set a positive profit growth plan for 2022 compared to 2021 and results posted so far this year are on track.

Profit in the first quarter was VND3.227 trillion ($140 million), up 94 per cent year-on-year, total assets VND515.553 trillion ($22.4 billion), up 1.8 per cent since the beginning of the year, capital mobilization from the market VND388.116 trillion ($16.8 billion), up 2.6 per cent year-on-year, and the credit balance VND388.196 trillion ($16.8 billion), up 5.3 per cent year-on-year.

According to SHB leaders, in the next phase, digital transformation will continue to be the mainstay of development, modernizing the bank and boosting its effective business and international reach. At the same time, SHB will continue to implement its customer development strategy, focusing on developing new customers and target customer segments, traditional customer files, and multi-industry customers, and bringing greater efficiency in accordance with the potential of regions and locations.