ETF trading to shake markets

Monday, Sep 10, 2018 07:47

An investor at MB Securities Company during a trading session. — VNS Photo Truong Vi

The latest announcement from UK-based FTSE Russell’s exchange-traded fund FTSE Vietnam ETF to add Vinhomes shares to its quarterly-reviewed investment portfolio is expected to shake the Vietnamese stock market in the coming week.

The benchmark VN-Index on the HCM Stock Exchange on Friday gained 1.12 per cent to end at 968.90 points after having fallen total 3.17 per cent since the beginning of the week.

The HNX Index on the Ha Noi Stock Exchange was up 1.11 per cent to finish last week at 111.70 points.

The VN-Index fell 2.08 per cent week-on-week and the HNX Index dropped nearly 1 per cent.

An average of more than 216.3 million shares was traded on the two local exchanges in each session, worth VND4.36 trillion (US$193.8 million).

After the VN-Index approached its old peak of 1,000 points, the stock market was on the downtrend for four consecutive sessions starting from Friday (August 31), as stocks ran out of momentum under pressure from international trade tensions, the possibility of a Fed rate hike this month and the quarterly portfolio reviews of exchange-traded funds (ETFs).

A strong market rebound on Friday gave investors confidence about the VN-Index having consolidated around the range of 960 points, Viet Capital Securities Corp (VCSC) analyst Chau Thien Truc Quynh told online newspaper

However, there was still uncertainty about that as some investors assumed the VN-Index may continue rising and consolidate in higher ranges, for example, 972-977 points, Quynh said.

According to Quynh, one of the main factors that could have an impact on the stock market this week is the trading of FTSE Vietnam ETF.

FTSE Vietnam ETF on Friday announced it would buy in shares of high-end property developer Vinhomes and the Vietnam Electrical Equipment Joint Stock Corporation (Gelex) while removing shares of Binh Minh Plastic JSC from its portfolio.

Trading of the FTSE Vietnam ETF will complete by the end of September 21, which will have a big impact on the stock market as Vinhomes (VNM) is a blue-chip stock with significant influence on the local market, Quynh said.

Vinhomes is listing nearly 2.68 billion shares on the HCM Stock Exchange with ticket VHM and market capitalisation of VND280.8 trillion ($12.5 billion). VHM is the second-largest stock by market capitalisation behind its own parent firm Vingroup (HoSE: VIC).

Gelex is listing 338.8 million shares on the HCM Stock Exchange with ticket GEX and market capitalisation of VND9.43 trillion.

According to BIDV Securities JSC (BSC), FTSE Vietnam ETF will buy in $47 million worth of 10.5 million Vinhomes shares and $4.4 million worth of 3.67 million Gelex shares.

Therefore, the UK-based ETF will have to sell some blue-chip stocks in its portfolio to afford the purchase of VHM and GEX, Quynh said.

The trading of ETFs from now to the end of September will create more pressure on the stock market and there will be more falling sessions until the ETFs complete their portfolio shake-ups, Vietinbank Securities JSC (VietinbankSC) analyst Nguyen Nhat Cuong said.

Large-scale tariffs

On Friday, US president Donald Trump threatened his government will impose tariffs on all Chinese imports, shaking global markets about the escalation of the China-US trade war.

The US Federal Reserve (Fed) is also expected to hike lending rates this month after keeping them stable in early August.

According to VietinbankSC analyst Cuong, those are the macro-economic factors that could drive market sentiment either in a positive or negative way.

Foreign capital will remain a problem despite foreign investors scoring a net buy value of VND156.7 billion. “Our data shows that foreign investors have generally net-sold in the last 10 sessions” and “it proves foreign capital has not completely returned to the Vietnamese market,” he said. — VNS

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