Vietnam’s Techcombank shares drop 20 pct on debut

Vietnam’s Techcombank saw its shares fall as much as 20 percent from their reference price on Monday, hitting the lowest trading limit allowed on a stock’s maiden day of trading.

Techcombank, formally known as Vietnam Technological and Commercial Joint Stock Bank, raised $922 million in April in one of Vietnam’s biggest offerings, aiming to expand aggressively into retail banking to capitalise on booming demand for an array of financial services.

The shares are allowed to move 20 percent higher or lower than the reference price on the first day of listing, according to exchange trading rules. In morning trade, Techcombank hit a low of 102,400 dong ($4.49), falling from its 128,000 dong reference price.

Vietnam’s benchmark VN Index dropped 10 percent in April after touching a record high, prompting fund managers and strategists to warn valuations may have peaked. The index lost a further 7.5 percent in May.

“We obviously can’t select what’s happening at the market when we come to listing,” Chief Financial Officer Trinh Bang said last week.

The 25-year-old bank is seeing strong growth in services such as credit cards, auto loans and bancassurance. Its cornerstone investors included Singaporean sovereign wealth fund GIC Pte Ltd, Fidelity Management & Research and domestic fund Dragon Capital.

Techcombank’s appeal stems from a boom in financial services while the economy expands at record rates.

Vietnam reported annual credit expansion of about 18 percent for the past two years, with banks posting strong profit growth. A manufacturing boom spurred the export-dependent economy to grow 7.4 percent in January-March – the fastest first-quarter pace in a decade – after growing 6.8 percent in all of 2017.

($1 = 22,790 dong)