Tiếng Việt
普通话
The information that the new index will be applied next Monday boosted the stock market, especially the VN-Index of the Ho Chi Minh Stock Exchange (HOSE) in the first week after the long holiday.
Many stocks in the list of the VN30 Index have marked a strong rally recently compared to pre-Tet periods, including CTG (37.8 percent), BVH (36.5 percent), HAG (27.6 percent), and STB (23.8 percent).
The 30 stocks with largest market capitalization and highest liquidity listed on HOSE will be put in an official “basket” to calculate the VN30 Index.
This group of stocks account for about 80 percent of total capitalization and 60 percent of the total transaction value of the market.
HOSE also announced the free float rate and the number of outstanding volumes for calculating the index as well as the list of 10 back-up stocks on Monday.
The free float rate aims to eliminate the risk of distortion of the VN-Index. It is calculated by the number of shares freely traded on the total number of outstanding shares, instead of listed shares as presently.
VN30 Index is expected to overcome the disadvantages of the VN-Index, which does not reflect the current density of components of freely traded shares as well as promoting trade, especially with foreign investors.
BVH, MSN, VIC, VNM and HAG now lead the southern bourse for capitalization, making up 45 percent of the VN-Index’s calculation, but their freely traded shares account for just 28 percent of total listed shares.
Proactive move
Dr. Tran Hoang Ngan, chairman of the committee managing the VN30 Index, said the introduction of the index had a positive impact on investor psychology, which makes the stock market flourish this week.
“With the introduction of the index, many investors said that state management agencies have begun to move proactively to help the market be more attractive and thus, making investors feel more secure when investing in the stock market ,” he said.
Sharing this opinion, Nguyen Viet Duc, director of research and economic analysis of Saigon – Hanoi Fund Management Joint Stock Co, said that the recent rise of the stocks in the VN30 basket could be easily understood, and those stocks may definitely be paid more attention for the coming time.
Investors expect that current or planned-to-be index funds will buy more stocks in the basket for fund construction.
According to Hoang Thach Lan, director of Mekong Housing Bank Securities Brokerage Co (MHBS), with high capitalization and liquidity, VN30 meets the main criteria for index funds.
To build up the funds, fund management companies need to buy the shares in the VN30 basket with corresponding proportions, ensuring the fund’s portfolios to change correspondingly to the VN30.
Therefore, the fact that investors rushed to buy the shares of the VN30 is only to catch up with future opportunities.
Some experts say that after administration agencies gave the go-ahead for the operation of opened funds, a large number of domestic investment funds have started to establish investment funds and index funds that are expected to appear soon.
However, though this is an important basis for firms to establish index funds, the market needs more time to accept the VN30, said Le Yen Quynh – portfolio manager of Dragon Capital.
Also, as there is now no more room for foreign investors in some stocks of the VN30, it may be too optimistic to forecast a boom in the establishment of investment funds for the VN30.
Worries persist
In a recent comparative chart between the VN30 and the VN-Index using simulated data in the past three years, many investors expressed disappointment at the similarity in the evolution of the two indices.
Huynh Duc Anh, an investor on the ACBS trading floor, said one of the goals for the building of the index VN30 is to provide the market with a new indicator reflecting the evolution of the market in a more realistic manner.
Many investors believe that some stocks do not deserve to be listed in the basket VN30.
The VN-Index has been distorted by the impact of major stocks recently, and the simulation chart shows that there is not much difference between the 2 indices.
Nguyen Viet Duc said that the effects of large capitalization stocks on the VN30 are inevitable, because it uses the same method as in the calculation of the VN-Index.
The only difference is that the VN30 Index is calculated on the rates of free float transactions and the limitation in the proportion of each stock to no more than 10 percent.
Therefore, only a few stocks, such as BVH, CTG, and VCB, scale down their influences under the VN30 calculation scheme as against the VN-Index calculation.
Hoang Thach Lan said that based on the formula, VN30 cannot eliminate price manipulation activities.
According to Lan, the selection of stocks for the VN30 is not based on quality standards of the listed firms but on other factors like capitalization, free float, and liquidity.
Lan also says the limitation of VN30 is unavoidable. After all, the biggest goal in the inclusion of the VN30 is to create another investment product for the market, a specific indicator of investment funds in the future.