Illustrative image (Photo: VNA) Hanoi (VNA) - Vietnamstocks are among the best performers in Southeast Asia to start 2024, and the VanEckVietnam ETF (VNM) is participating in the rally, reported the US’s etftrends.comon March 19.
As of March 15, the original ETF dedicated to Vietnamequities is beating the MSCI Emerging Markets Index by a margin of better than3-to-1 this year. That index is the gauge to which Vietnam is angling for amarket classification promotion.
The financial services sector, specifically brokerage firms,is one of the groups leading the way in Vietnam this year. That’s good news forVNM investors because that’s the ETF’s largest sector exposure, at a weight of27.63%.
According to the newswire, there are a few reasons Vietnamesebanks and brokerage firms are rallying in the first quarter. One is that risingliquidity in the previously illiquid market. Another is expectations Vietnamwill, at the very least, be promoted to emerging markets status by FTSE Russellat some point this year. The country is currently classified as a frontiermarket.
Bloomberg said the liquidity boost and retail trading boomhave benefited the overall market as well, with the VN Index thebest performer among benchmarks in Southeast Asia this year. The daily trading value ofVietnamese stocks hit an almost seven-month high on March 8 while the newbrokerage account openings reached 113,300 last month, up 80% from a year ago.
Further supporting upside for VNM and its financial servicescomponents this year is a belief among market observers that the long-awaitedpromotion to the emerging markets designation is bringing more local retailinvestors into Vietnamese markets.
On a global basis, there is significantly more capitalallocated to emerging markets funds — active and passive –than there is tocomparable frontier markets products. If Vietnam earns the desired emergingmarkets promotion, fund managers and issuers that benchmark to indexes thatwill be new homes to Vietnamese equities must buy those stocks, including someVNM holdings.
The country is also making technological strides in itscapital markets. And those strikes aim to lure more global investors and enhanceliquidity.
“The nation plans to introduce a platform that can handle 3-5million orders per day, compared with the current capacity of about 1 million,and make settlement smoother. The central bank, meanwhile, has carried out fourrounds of policy easing, helping spur an economic rebound and lure moreindividual investors”, according to Bloomberg./.
