VietNamNet Bridge – The sharp decreases of bank share prices have been giving investors insomnia. However, experts have said that bank share prices will recover, and that the fall is just in the short term.
The sharp decreases of bank share prices have not surprised experienced investors, but worried many investors who hold bank shares. The stock market is now in its periodic downturn; therefore, it is understandable why bank share prices are also decreasing.
Meanwhile, the massive share issuance has also led to the oversupply of bank shares on the market. A lot of banks have been and are planning to issue shares in order to raise their chartered capital in 2007. It is estimated that some VND100,000bil ($6.25bil) worth of shares will be issued this year to raise more funds from the public and from existing shareholders. A series of big banks plan to make IPO (initial public offering) in the second half of the year, which means that a big volume of commodities will be available on the market.
However, experts said that it would be wise if investors still put high hopes on investments in bank shares. This is because of several reasons.
First, in the long term, bank shares prove to be the most secure and lucrative kind of securities. According to Bien Viet Securities Company, the CBV index for the banking sector remains at a high level, the second highest level, just after the CBV index for the real estate sector. The CBV-banking index has increased by 43.84 points so far this year.
Second, the operation of commercial banks proves to be very satisfactory. The growth rate of Vietnam’s banks is 50% on average. The figure proves to be very impressive if compared to the growth rates obtained by other regional banks.
Third, if someone is worried about the stability of bank shares, he should feel assured about this. The Government and the State Bank of Vietnam always play a very important role in supervising and maintaining the normal operation of the banking system, especially since Vietnam has joined the WTO.
Experts, including foreign ones, all are optimistic about the performance of the banking sector. The presence of foreign banks in Vietnam under WTO commitments will act as the impetus for the development of local banks.
Fourth, the prediction about the oversupply of commodity on the market proves to be not worrying. It would be good if the market was full of commodities; this would make the market more bustling.
As such, the freezing of bank shares should be seen as only a short-term problem. In the long term, bank shares will prove to be a good choice for investors.
(Source: Viet Nam Net) | 
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