Net asset value of seven exchange-traded funds in Vietnam as of July 16, 2021 (Source: Bloomberg, VNDIRECT)
VNDiamond ETF, which tracks the VN Diamond index, has recorded an impressive growth of 149.1 per cent year-to-date in net asset value (NAV) by reaching $573 million and becoming the largest ETF so far in Vietnam. Besides, the VN Diamond index has surged 35.9 per cent year-to-date, outperforming the VN Index (10.7 per cent) and VN30 Index (25.9 per cent), according to VNDIRECT.
The Ho Chi Minh City Stock Exchange (HSX) has announced some changes in the rules for the VN Diamond index on June 15 and is expected to take effect in October. According to VNDIRECT, the new rules will criteria for listing time, capitalisation, liquidity, and foreign ownership limit in order to enhance the quality of index.
According to VNDIRECT’s estimates, some stocks will be affected by the new rules.
First and foremost, new rules require stocks to have freefloat adjusted market capitalisation above VND2 trillion ($86.96 million) to be eligible for inclusion in VN Diamond. This mean listed companies like Coteccons (HSX: CTD) and Thanh Cong Textile Garment Investment Trading JSC (HSX: TCM) may be excluded from the index in the next review period.
Second, new rule adds liquidity ratio into the index calculation, meaning stocks with lower liquidity ratio will have their weight reduced in the VNDiamond index. Based on data from June 2021, the weight of Eximbank (HSX: EIB), VIB (HSX: VIB), Mobile World Group (HSX: MWG), and PNJ (HSX: PNJ) will likely be reduced due to their current low liquidity ratio.
“Third, the new rules also tighten VN Diamond's foreign ownership limit (FOL) ratio screen. This will make it more difficult for stocks with a set foreign ownership limit to enter VN Diamond. For example, SHB (HNX: SHB) and Viet Capital Bank (UPCoM: BVB) are planning to lower their FOL to 10 and 5 per cent, respectively, and are planning to move to the HSX in the future. Even though these stocks always fill out their FOL, they will also not be eligible to enter VN Diamond,” the brokerage noted.
By Nhat Minh
- New Rules Impacting Disclosure, Governance and Capital Raising Efforts
- FINRA Proposed Rule Change to Extend Temporary Limit on Application of FINRA Rules to Security-Based Swaps
- The New Rule 506: a Useful Crowdsourcing Tool
- SEC Adopts New Rules for Compensation Committees and Related Disclosures
- SEC’s Recent Order Approving FINRA Rule Change Relating To Qualification and Registration Requirements
- New Rules on Migrant Children, Family Detentions Expected
- How a New SEC Rule Changed the Way Companies Look at Risk Management
- SEC Adopts New Rules Mandating Open-End Fund Liquidity Risk Management Programs and Permitting Swing Pricing
- SEC Proposes New Rule Governing Funds’ Use of Derivatives
- The New Rules of Professional Conduct: Significant Changes for In-House Counsel
- FINRA Proposes Rule Change to Codify Reporting Requirement for Accounts Acting in Concert
- Significant Multiemployer and Single Employer Benefit Rule Changes Take Effect
- 60-Day Public Comment Period Commences On Proposed FLSA Overtime Exemption Rule Changes
- Final Rule Change to FLSA Salary and Salary Basis Tests for Overtime Exemption
- Are You in Compliance? Be Prepared! FLSA Rule Changes and OSHA Penalty Increases Will Happen in 2016
- Rule Change Approved by the North Carolina Supreme Court
- The Rules Change with Age
- Rule Changes Affect the Composition of Arbitration Panels in FINRA Disputes
- Take “Special” Care: Not all United Kingdom Insolvency Rules Change on 6 April
- SEC Rule Change Would Require High-Frequency Traders to Register with FINRA
How new rules will change the securities basket of VN DIAMOND index have 554 words, post on vir.com.vn at July 25, 2021. This is cached page on Talk Vietnam. If you want remove this page, please contact us.