Foreign investors at the Ho Chi Minh Stock Exchange (HoSE) (Photo: thoibaotaichinhvietnam.vn)Hanoi (VNS/VNA) - The domestic exchange-traded fund VFMVN Diamond (HoSE:FUEVFVNĐ) on September 8 issued an additional 300,000 certificates to raise thetotal amount of certificates to 148.3 million.
The issuancehelped boost the value of certificates listed on the Ho Chi Minh Stock Exchangeto 1.483 trillion VND (63.9 million USD) from 1.48 trillion VND.
As ofSeptember 6, the net asset value (NAV) of the fund was 1.9 trillion VND, equalto 12,884.58 VND (0.56 USD) per certificate.
The funddebuted on HoSE on May 12 at 11,693.36 VND per certificate with charter capitalof 102 billion VND.
The fund hasrecently become a target for foreign investors, especially Taiwan-basedinvestment fund CTBC Vietnam Equity Fund. The Taiwanese fund will buy 21million certificates of VFMVN Diamond between September 7 and October 6.
TheTaiwanese fund in late August reported it had raised 160 million USD to investin the Vietnamese equity market, targeting high-potential listed companies onthe Ho Chi Minh and Hanoi stock exchanges. In addition, part of the fundingwould flow into VFMVN Diamond ETF, which allows foreign investors to buy thestocks that have run out of foreign ownership limit (FOL) in the VN-DiamondIndex on HoSE.
The markethas reportedly reacted positively to the appearance of the Taiwanese fund in Vietnamon expectations the fund will boost the price of the stocks listed in VFMVNDiamond ETF’s portfolio.
TheVietnamese ETF on September 7 reported there were 14 stocks in its portfolio.The biggest heavyweights were retailer Mobile World Investment (MWG), techgroup FPT Corp (FPT), Techcombank (TCB), VPBank (VPB), Vietinbank (CTG),Military Bank (MBB) and Phu Nhuan Jewellery JSC (PNJ).
Tocapitalise on the investment by CTBC Vietnam Equity Fund, domestic securitiesfirms and investors have reportedly bought shares of the 14 companies inadvance.
Since lateAugust, Mobile World Investment shares have gained as much as 15.6 percent, Techcombankshares have increased by as much as 10 percent and VPBank shares haverisen 11 percent.
Le QuangMinh, analysis director at Mirae Asset Vietnam Securities Co, said foreigninvestment funds would buy fund certificates at exchange-traded funds (ETFs)because they were not bound by the foreign ownership limit (FOL) rules.
“Their(foreign investors) purchases will help increase the market liquidity,especially boosting the trading volume in the stocks targeted by ETFs, and liftshare prices,” he said.
Nguyen TheMinh at Yuanta Vietnam Securities Co said ETF certificates were quiteattractive in Taiwan and that could explain why the Taiwanese fund wasinterested in buying the Vietnamese fund’s certificates.
“Investmentfrom Taiwan may increase in the near future through the strong development ofdomestic ETFs,” he forecast.
However, theETF capital would not flow into Vietnam in short term, instead, the funds wouldhave long-term plans, Nguyen Minh Hanh, ETF director at SSI Asset Management(SSIAM), said.
Foreigninvestment funds would have to pay a premium for the same stock compared todomestic investors, he said.
“Foreignfunds will have to keep their decisions stand by depending on the quality ofthe target stocks and how much the premium is,” he said. “Investors won’t behappy if they lose once the purchase is done.”
Minh alsosaid that a new source of capital always helped boost market morale, especiallywhen large-cap stocks in the VN30 basket account for 70 percent of the market’stotal capitalisation.
“At themoment, the Taiwanese fund has little impact on the overall market as its sizecannot match the Vietnamese market’s,” he added. “But this is still a goodchance for Vietnam to draw the attention of Taiwanese investors.”
According toanalysts, the valuation of the Vietnamese stock market is about 20 percentlower than other markets in the region. But it is not a decisive factor toattract foreign investors.
On April 9,2018, the VN-Index hit its all-time high of 1,204.33 points but profit growthhas slowed down and outpaced the decline of the market since then, makingVietnamese shares much cheaper than regional markets.
Foreigninvestors have not paid much attention to Vietnamese stocks because the localmarket is still at the frontier level, while accounting standards are verydifferent from international ones. Foreign funds will be drawn if marketprospects are good and profitable./.
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